The rapid outbreak of the novel coronavirus led to global lockdowns and caused massive interruptions of international flights, stranding the citizens in different countries, including several foreign nationals in India last year. In order to provide clarity on tax residency, the Central Board of Direct Taxes had issued Circular No 11, dated 8 May 2020, providing relief to individuals who came to India on a visit before 22 March 2020 and could not leave or depart on or before 31 March 2020, due to the COVID-19 pandemic and related travel restrictions. This Circular clearly defined the residency status of NRIs, expatriates, and other foreign nationals for Financial Year 2019-20 who arrived in India but could not return to their countries. Similar clarification was awaiting FY 2020-21.
After receiving several representations from affected taxpayers, the CBDT has finally addressed this concern by issuing a fresh Circular No 2, on 3 March 2021. Please refer to the circular here.
