Residential Status of People unable to leave India due to COVID-19

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Residential Status of People unable to leave India due to COVID-19

COVID-19 has affected the lives of people very badly from almost past 1.5 years now. To contain the spread of novel coronavirus, The Government of India was forced to impose nation-wide lockdown in the country which was announced in March 2020.

There were certain categories of people who could not reach back home because of this sudden announcement, this also included people who intended to travel abroad, as the International Flights were suspended. Under Income Tax Act, the residential status of any individual is the first criteria as to what Income will be taxable in India. These foreigners would have intended to remain non-resident during the year 19-20 but due to COVID-19, residential status of these people was impacted.

Table of Content:

Who is a Non-Resident as per Income Tax Act?

Section-6 of the Income Tax Act contains the criteria as to who is to be treated as a resident ordinarily resident (ROR) / resident not ordinarily resident (RNOR)/ non-resident.

As per Sec.6 the resident is someone, satisfying any of the below conditions

  • Stayed in India for 182 days or more during the previous year, or,
  • Whose stay during 4 preceding previous years is 365 days or more and is 60 days or more in the relevant financial year.

Once a person qualifies as a resident it needs to verified if he is a ROR/RNOR
Further ROR (Resident Ordinarily Resident) will be a person who

  • Was a resident in 2 years out of past 10 immediately previous years.


  • Has stayed in India for at least 730 days in 7 immediately preceding years.

RNOR (Resident not ordinarily Resident) will be the person who satisfies any 1 of the above conditions.

Non- Resident will be the person who does not satisfy any of the above conditions.

What is the Impact of being a Non-resident in India?

For non-residents only following incomes will be taxable during a particular financial year:-

  • Income which accrue/arise and are deemed to accrue/ arise in India.
  • Income received/deemed to be received in India.

Issue at hand

However, if the residential status of these foreign national changes due to long stay then other incomes also might come in the ambit of taxation in India.

This was the reason that various representations reached government that COVID 19 lockdown is impacting residential status of foreign nationals who intended to leave the country before 31.03.2020, and wanted to keep their status as Non-resident.

Relaxation by government given in 2020

In response to the above queries and concerns raised, government responded by way of a CBDT circular 11/2020 on 08.05.2020 stating that,

In order to avoid genuine hardships to persons, for the purpose of determining the residential status under Sec 6 for previous year 2019-2020 for an individual who came to India on a visit before 22.03.2020, the following periods will be excluded :-

  • Unable to leave India on or before 31.03.2020- Period from 22.03.2020 to 31.03.2020 will be excluded.
  • Was under quarantine on or after 01.03.2020, and left on an evacuation flight or was not able to leave India- The period from beginning of quarantine to the date of departure/31.03.2020, as the case may be will be excluded.
  • Has departed on an evacuation flight on or before 31.03.2020- the period from 22.03.2020 to date of departure will be excluded.

Government’s take on COVID19 residential status of people for FY 2020-2021

Like PY 19-20, government was receiving requests to give relaxation for PY 2020-2021 as well on the ground that people had come to India during FY 19-20 and were unable to leave due to COVID-19 restrictions.

However, this year CBDT has issued circular 02/2021 on 03.03.2021, where they have rejected such requests and gave following observations on the issue:-

  • Short stay will not result in Indian residency: – Even if a person is stranded in India during FY 19-20 and he has to stay for a certain part of the year FY 2020-2021, then also he may not be attaining residential status during FY 20-21, just for this sole reason. As to become a resident generally a stay of 182 days is required during the previous year.
  • Possibility of a dual non-residency:- As in most of the countries, the criteria for being a resident is a stay of 182 days or more during the relevant previous year, a person may not be a resident in any country as a year has only 365 days. This will lead to the person not paying tax in any country despite staying in India for more than 182 days.
  • Tie breaker rule in DTAA( Double Tax Avoidance Agreement)-
  • As per Income Tax provisions a person can become a resident, in some cases, even if his stay is less than 182 days in a particular FY.
  • However, such situations are taken care by DTAA because of the Tie Breaker rule and a person will be considered resident only in 1 country. ( on the basis of permanent home, economic and financial relations, nationality)
  • Even if the person is considered the resident in both the countries due to non-satisfaction of conditions in tie breaker rule it can be settled through Mutual Agreement Procedure.
  • Still the person will only become RNOR in such cases, i.e. his income from foreign sources will not be taxed unless it is from a business/ profession controlled/set-up in India.
  • Taxability of Employment income also as per DTAA- If an employee of an employer outside India gets stranded in India, his remuneration, salary, wages can be taxed in India only
  • If his period of stay is more than 183 days.
  • Employer is resident in India
  • Employer has a permanent establishment in India who paid such remuneration during stay in India.
  • Credit for taxes paid in other country- Resident person also has the facility to take credit for taxes paid in other country as per Income Tax Rules.

The above observations are also in in line with observations made by OECD, i.e. The Organisation for Economic Co-operation and Development in their COVID 19 response report.

Considering the cases of Double Taxation

It has been stated that if any taxpayer is still facing the issue of double taxation even after   considering the DTAA provisions, such cases will be examined and it will be decided that

  • If any relaxation is to be given, and
  • If relaxation needs to be given to a particular class or on case by case basis.

For this purpose, details have been asked in a form-NR, format for which is available in the circular.


Government gave relaxation to determine residential status of people because of COVID-19 in the year 19-20 as the situations had emerged suddenly and people were not prepared for it. However, during 20-21 as the situation improved relaxations were given and people who were forced to stay in India had enough time and sources to reach their desired destinations. DTAA further takes care of the double taxation and residential status issues.

All said and done, government has still kept open the option to provide relaxation in cases where people are facing double taxation issues, if they find it is justified to do so.

Also Read: What to do if you forgot to file your Income Tax Return?

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CA Pulkit Goyal, is a fellow member of the Institute of Chartered Accountants of India (ICAI) having 10 years of experience in the profession of Chartered Accountancy and thorough understanding of the corporate as well as non-corporate entities taxation system. His core area of practice is foreign company taxation which has given him an edge in analytical thinking & executing assignments with a unique perspective. He has worked as a consultant with professionally managed corporates. He has experience of writing in different areas and keep at pace with the latest changes and analyze the different implications of various provisions of the act.

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