The Central Board of Direct Taxes (CBDT) will relax the ‘residency rule’ if forced to stay in India due to COVID-19 resulted in double taxation.
The Board has received various representations requesting for relaxation in the determination of residential status for the previous year 2020-21 from individuals who had come on a visit to India during the previous year 2019-20 and intended to leave India but could not do so due to the suspension of international flights.
It can be seen that OECD as well as most of the countries have clarified that in view of the provisions of the domestic income tax law read with the DTAAs, there does not appear a possibility of the double taxation of the income for PY 2020-21.
The possibility of double taxation does not exist as per the provisions of the Income-tax Act, 1961 read with the DTAAS.
However, in order to understand the possible situations in which a particular taxpayer is facing double taxation due to the forced stay in India, it would be in the fitness of things to obtain relevant information from such individuals.
After understanding the possible situations of double taxation, the Board shall examine whether any relaxation is required to be provided in this matter, and if required, then whether general relaxation can be provided for a class of individuals or specific relaxation is required to be provided in individual cases. Therefore, if any individual is facing double taxation even after taking into consideration the relief provided by the respective DTAA, he may furnish the information in Form-NR.
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