By Amarpal S. Chadha
Till a handful of months ago, folks would fly down to a foreign nation for a business enterprise meeting and fly back household on the exact same day with out even a second believed. There have been lots of operating 5 days at a neighbouring nation and spending weekends back household. With international travel restrictions coming into impact, points have changed to such an extent that, neglect about the cross-border movement, even domestic travel has been impacted. This has led to a predicament exactly where folks have been stranded in various places, spending days, weeks or months in areas which have been not initially on their itinerary. To add to the complications, folks stranded in India continue to perform for their foreign projects/employer.
Unplanned days of physical presence in India have led to different implications from an revenue-tax point of view. For instance, days of unexpected keep in India do influence the residential status and thereby influence the scope of revenue chargeable to tax, which in turn will additional influence revenue tax return filing (ITR) in India. There is an obligation to file ITR in India, if the individual’s total revenue exceeds maximum quantity not chargeable to tax, i.e., above the standard exemption limit.
Visit to India
If you are an Indian citizen settled outdoors India, who had come on a stop by to India and due to the travel restrictions are now operating from India for your foreign employer, the salary revenue attributable for the period of service in India could be taxable in India (topic to exemption below the Double Taxation Avoidance Agreement amongst nations) even although the salary is paid into a bank account outdoors India. This once more could influence the scope of revenue chargeable to tax in India and thereby crossing the standard exemption limit and attracting tax filing requirement.
Even if total revenue does not exceed standard exemption limit, if the person holds any foreign asset and also qualifies as an ordinarily resident, he/she will nevertheless be essential to file ITR in India. Foreign assets consist of foreign bank accounts, foreign properties, economic assets, signing authority, and so forth.
Relaxations in residential status
While the government has announced relaxations in figuring out residential status for FY 2019-20, by excluding numbers of days spent (topic to specific circumstances) in India amongst March 22, 2020 to March 31, 2020, related relaxations are however to be announced for the FY 2020-21. Accordingly, after it is ascertained that you have a filing requirement in India, you should really make sure that you have a Permanent Account Number (PAN), else it can be applied by means of the portal of NSDL/UTITS. Also, after the PAN is obtained, an account desires to be designed in the e-filing portal of the revenue tax authorities in order to file the tax return making use of proper ITR kind.
Hence, it is of utmost significance that folks stranded in India maintain a verify on the quantity of days he/she has spent or would devote in India. A fantastic practice is to maintain the passport stampings handy, which will assistance in case of inquiries from the tax authorities. If tax filing obligation is triggered, proactive measures would assistance becoming compliant in India/ foreign nation and make sure there is minimal/no double taxation.
(The writer is tax companion & India mobility leader, EY India. Views expressed are individual.)