TMI BlogResidential status of certain individuals under Income-tax Act, 1961X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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: (a) 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 (b) 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 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 (c) has departed on an evacuation flight 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. 3. Residential Status for Previous year 2020-21 The Board has received various representations requesting for relaxation in determination of residential status for previous year 2020-21 from individuals who had come on a visit to India during the previous year 2019-20 and i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not paying tax in any country. III. Tie breaker rule as per Double Taxation Avoidance Agreement (DTAA): As discussed above, a person may become resident in India in some cases even if he stays for less than 182 days in India. In that situation, there may be a case of dual residency. However, due to applicability of Double Taxation Avoidance Agreement (DTAA), such person will become resident of only one country as per the tiebreaker rule in the DTAA. For example, the Indo-USA DTAA contains following tiebreaker rule in Article 4(2): Where by reason of the provisions of paragraph 1, an individual is a resident of both Contracting States., then his status shall be determined as follows: (a) he shall be deemed to be a resident of the State in which he has a permanent home available to him; if he has a permanent home available to him in both States, he shall be deemed to be a resident of the State with which his personal and economic relations are closer (centre of vital interests); (b) if the State in which he has his centre of vital interests cannot be determined, or if he does not have a permanent home available to him in either State, he shall be deemed to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first-mentioned State, if; (a) the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in the relevant taxable year; (b) the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State; and (c) the remuneration is not borne by a permanent establishment or a fixed base or a trade or business which the employer has in the other State. 3. Notwithstanding the preceding provisions of this Article, remuneration derived in respect of an employment exercised aboard a ship or aircraft operating in international traffic by an enterprise of a Contracting State may be taxed in that State. The DTAA distributes the taxation rights between the employee s jurisdiction of residence and the place where the employment is exercised. Salaries, wages and other similar remuneration are taxable only in the country in which the employee is resident unless the employment is exercised in the other country. Gener ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the person is temporarily because of extraordinary circumstances, There are however rules in domestic legislation deeming a person to be a resident if he or she is present in the country, for a certain number of days, But even if the person becomes a resident under such rules, if a tax treaty is applicable, the person would not be a resident of that country for purposes of the tax treaty. Such a temporary dislocation should therefore have no tax implications. 32. In the second scenario, it is again unlikely that the person would regain residence status for being temporarily and exceptionally in the previous home country, But even if the person is or becomes a resident under such rules, if a tax treaty is applicable, the person would not become a resident of that country under the tax treaty due to such temporary dislocation. Thus, it has been recognised by the OECD that DTAAs contain the necessary provisions to deal with the cases of dual residency arising due to COVID-19 situations. B. Relief by other countries: A study of the measures taken by different countries reveals that there is mix response some of the countries have provided relief for certain number ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble 3. Taxpayer Identification Number of country of residence 4. Country code of country in which the taxpayer was resident in the previous year 2019-20 5. Whether taxpayer is Indian citizen or person of Indian origin Yes _ No _ 6. Whether total income from Indian sources (i.e. other than the income from foreign sources) exceed Rs 15 lakhs in previous year 2020-21 Yes _ No _ 7. Total number of days expected to stay in India during the previous year 2020-21 8. Date of last arrival in India 9. Date of departure/likely date of departure 10. Whether he/she could not return to its jurisdiction of residence solely due to COVID-19 travel restrictions Yes _ No _ 11. Whether he/she was present in India on each of the days since ..... X X X X Extracts X X X X X X X X Extracts X X X X
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