Tax residence in year of Corona

Due to travel restrictions on account of Coronavirus pandemic, those on foreign work tours cannot commute back to the country of their residence. Determining the tax residence of the stranded individuals/employees is questionable. Further, adding fuel to the fire, the Indian government has made the norms for determining the tax residency of individuals much more stringent for this FY 19-20.

• An Indian citizen shall be deemed to be resident in India if his total income from Indian sources exceeds Rs. 15 lakhs during the year, if he is not liable to tax in any other country, even if he does not spend a single day in the year in India
• An Indian Citizen or a person of Indian origin whose total income (other than income from foreign sources) exceeds Rs. 15 lakhs during the year and who has been in India for a period of atleast 120 days in the year and atleast 365 days in preceeding 4 years would also become Indian tax resident.

Important Statutory developments

1. CBDT defers GST & GAAR reporting in Tax Audit Report by one more year amid COVID-19 pandemic.
2. CBDT clarifies that assessee shall be eligible for Vivaad Se Vishwas scheme in case where notice for initiation of prosecution has been issued and no prosecution is instituted.
3. CBDT to notify ITR forms for AY 2020-21 incorporating changes related to extended timelines. The utilities of ITR forms shall be made available by May 31, 2020.
4. CBDT clarifies that employer is liable to deduct tax as per Sec. 115BAC only after receiving intimation from employee.
5. CBDT clarifies that the assessee is not to be treated as an assessee-in-default for short deduction of TDS due to enhanced surcharge (notified by the Finance Act 2019 wef 5.7.19) if transaction and payment completed by 5.7.19.
6. Nil or Lower TDS/TCS certificate which were issued for a particular period during the financial year 2019-20, (say issued 01-10-2019 to 15-12-2019) to be valid till June 30, 2020 for financial Year 2020-21.
7. FinMin to release all pending Income-tax, GST and Custom refunds to provide immediate relief to taxpayers.
8. AO to dispose of pending applications for lower/nil deduction for FY 2019-20 by 27-04-2020 vide e-mail.
9. If a person had submitted Form 15G and 15H for FY 2019-20 to banks and other institutions then these forms will be valid up to 30.06.2020 for FY 2020-21 also.
10. Holders to PPF/Sukanya Samriddhi account can make a single deposit for FY 2019-20 till June 30, 2020.
11. In case where donation is made to PM CARE FUND by an employee through employer, employer makes consolidated payment, deduction u/s 80G to be allowed basis Form 16 issued by employer as no separate certificate issued to every employee.

Important Judicial Precedents

1. Mum ITAT stayed demand recovery so that salaries could be paid during COVID-19 by the taxpayer.
2. In view of the COVID-19 pandemic, Calcutta High Court allowed petitioner to operate bank accounts attached for recovery subject to setting aside demand amount.

Jaipur ITAT held that tax liability under MAT provisions could not be created on account of profit from agricultural land sale.