Tax clarifications have come too late for NRIs stuck in India

Tax clarifications have come too late for NRIs stuck in India

When it comes to taxation, taxpayers often say that expecting any relief is just 'hoping against hope'. Indians are no exception. But in a surprise, India's tax authorities finally clarified the tax residency status for the 2020-21 financial year of those who had to stay on in India during the COVID-19 phase. The clarification not only increases the potential tax exposure of non-residents, but also increases compliance obligations under India's tax laws. Non-residents visiting India during the 2019-20 financial year phase found themselves struck either due to the ban on international flights from March 2020 or due to quarantine. In May, the tax authorities clarified that the period starting from the date of quarantine - March 22 - will not be counted for determining tax residency for the 2019-20 financial year. The pragmatic step was hailed across the board. No clarity was given at that time for the status on 2020-21 financial year. As the flights ban continued into 2020-21, non-residents expected that a similar concession will be extended. It is only on March 3, 2021 - near the end of the financial year 2020-21 - that the authorities issued a clarification after the intervention by the Supreme Court. The