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SC directed NRI looking for Non-Resident Standing in FY 2020-21 to method CBDT

The Apex Court directed Non-Resident Indian to make a representation before Central Board of Direct Taxes in order to claim relief for NRIs paying taxes under Income Tax Act, 1961 for the financial year 2020-21 due to the situation caused by COVID-19.

This plea was filed by Gaurav Baid, a NRI based in Dubai, who came to India in March 2020 on a visit and was unable to return to return due to the pandemic, because of which involuntarily his stay in India extended 182 days.

The petitioner feared that due to the occurrence of unpredictable circumstances, he might lose his “non-resident status” and his global income might be subjected to taxation in India.

The plea highlighted the problems faced by a number of NRIs who had to stay back in India due to imposition of lockdown and suspension of international air transport.

The counsel for petitioner submitted that this issue concerns all NRIs residing in India who are unable to leave the country due to the pandemic, and thus relief should be provided.

The Ministry of Finance, against whom this plea has been filed, issued notifications regarding residential status for the FY 2019-20, but did not provide any clarification for FY 2020-21.

The Supreme Court issued directions that the petitioner’s NRI status be continued for the FY 2020-21, irrespective of his prolonged stay in India due to pandemic, and that his global income should be dispensed from the liability of being taxed in India for the current financial year.

The Apex Court asked petitioner to make representation before CBDT as this authority only issued circulars which provided benefit to taxpayers for the previous year 2019-20 and it would be appropriate if CBDT only grants relief.

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