'Make A Representation To CBDT': Supreme Court Directs NRI Man Seeking Maintenance Of 'Non-Resident Status' In FY 2020-21 On Account Of COVID19

A Bench headed by Justice UU Lalit issued the directions in the plea filed by a Non-Resident Indian,seeking a direction that his "non-resident status" for purposes of Income Tax Act,be maintained for financial year 2020-21 regardless of number of days spent in India on account of the pandemic, and he be immunised from liability to tax in India on his global income for the present financial year.

The Court observed that since in respect of the previous year 2019-20, benefits were granted by CBDT through its circulars, it would be appropriate for petitioner to approach CBDT. The petitioner has been asked to make a representation to CBDT in three days and CBDT has been directed to decide the same

During the hearing today, Senior Advocate Mukul Rohatgi submitted that the this issue is effecting hundreds and lakhs of people in the country, as the NRIs are unable to leave India due to the pandemic.

"Their business will be affected and it will create havoc! I request that a notice be issued to the government. "- Rohatgi stated

The Bench then inquired about stand taken by CBDT in terms of the previous year. Mr Rohatgi informed the Court that Circular and clarification was issued and exemptions were granted to people.

"So far as current financial year is concerned, have you made appropriate representations?"- the Bench asked.

"Yes but no action has been taken. A representation was made addressed to the Finance Minister." – Mukul Rohatgi responded.

"What we can say is that since in terms of previous year CBDT had taken a stand, and we can let CBDT take a stand on the matter and see what they decide" the Bench observed.

The plea has been filed by Gaurav Baid, a Non Resident Indian, presently based in Dubai, United Arab Emirates, who came to India in the month of March 2020 on a visit and was finally able to travel back after spending upwards of 182 days in India in the Financial Year 2020 – 21. This involuntary extended stay in India, it is alleged, may result in the Petitioner losing his "non-resident status" for the purposes of the Indian Income Tax Act, 1961, thereby exposing his global income to tax in India. The Petitioner was assessed as an NRI in Financial Year 2019-20.

The plea has been filed against the Ministry of Finance, Government of India. The Ministry of Civil Aviation and the Ministry of Home Affairs have also been arrayed as parties. The plea has outlined the various hardships which have occasioned to Non-Resident Indians on account of International travel restrictions imposed at various levels due to the Covid 19 pandemic specifically in the context of the "non-resident" status for taxation purposes under the provisions of the Income Tax Act.

The problem highlighted in the petition is that many NRIs who were already in India when the lockdown was imposed have had to extend their stay as the government decided to suspend international air travel for most part of the present financial year.

According to the clarification issued by Ministry of Finance dated 8 May 2020, for Financial Year 2019-20, on the aspect of residency under Section 6 of the Income Tax Act, various relaxations were provided to non-resident Indians who were on a visit to India at the time of imposition of the lockdown and consequently could not travel back to their country of work/residence. However, no such clarification has been provided till date for Financial Year 2020 – 21. In most cases, NRIs in India would have crossed the 182 day limit specified in the Income Tax Act and consequently run the risk of being classified as a resident for Financial Year 2020 – 21 thereby resulting in their global income being taxed in India.