The CBDT has requested individuals facing double taxation for the financial year 2020-21 because of being stranded in India due to the Covid-19 pandemic to file prescribed form-NR by 31 March 2021. After examining possible situations of double taxation based on such filings, the CBDT may consider granting general or specific relief.

To contain the spread of Covid-19 several travel restrictions were imposed during the financial year 2020-21, leaving many individuals stranded in India. Given that Indian tax residency of an individual depends upon the period of physical stay in India, there were apprehensions that a prolonged stay in India could lead to such an individual qualifying as an Indian tax resident.

The Central Board of Direct Taxes (CBDT) had issued a circular on 8 May 2020 in response to various representations filed before the CBDT and the Revenue Secretary in this regard. The circular provided that while determining the residential status for the financial year (FY) 2019-20 in respect of an individual who came to India on a visit before 22 March 2020, the duration of extended stay in India due to the pandemic will not be included.

Similar representations were filed before the CBDT for FY 2020-21 as well. Following a press release issued by the CBDT in this respect, it was expected that a similar circular (excluding the period of stay of these individuals up to the date of normalization of international flight operations) would be issued for the determination of tax residential status for FY 2020-21. However, in the circular for FY 2020-21 issued on 3 March 2021, the CBDT has not provided any blanket exclusion/exemption for the determination of tax residential status for FY 2020-21. Instead,  the circular suggests that there does not appear to be a possibility of double taxation for an individual stranded in India due to Covid-19.

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