Resident and Ordinarily Resident Conditions for Income Tax purposes: To provide relief to people who have not been able to move out of India because of lockdown, the Central government has issued a clarification in residency under Section 6 of the Income Tax Act, 1961. The decision of the government came after it received various recommendations saying several individuals had come on a visit to India during the previous year 2019-20 for a particular duration and intended to leave before the end of the previous year for maintaining their status as a non-resident or not an ordinary resident of India.

The nationwide lockdown suspended the operation of international flights and such people were had to prolong their stay in India. They were concerned that the extra stay due to lockdown may make them a resident of India for tax purposes under section 6 of the Act. However, the government has now given them some relief.

An official notification of the Ministry of Finance said that to “avoid genuine hardship in such cases” the CBDT has decided that for the purposes of determining the residential status under section 6 of the Act during the previous year 2019-20 in respect of an individual who has come to India on a visit before 22nd March, 2020 and:

  • has been unable to leave India on or before 31st March 2020, his period of stay in India from 22nd March, 2020 to 31st March, 2020 shall not be taken into account; or
  • has been quarantined in India on account of Novel Corona Virus (Covid-19) on or after 1st March, 2020 and has departed on an evacuation flight on or before 31st March, 2020 or has been unable to leave India on or before 31st March, 2020, his period of stay from the beginning of his quarantine to his date of departure or 31st March, 2020, as the case may be, shall not be taken into account; or
  • has departed on an evacuation flight on or before 31st March, 2020, his period of stay in India from 22nd March, 2020 to his date of departure shall not be taken into account.

The notification also said that since it is not yet clear when international flight operations would resume, “a circular excluding the period of stay of these individuals up to the date of normalisation of international flight operations, for determination of the residential status for the previous year 2020-21 shall be issued after the said normalisation.”