Recently, the CBDT has issued Circular no. 2 dated 3 March 2021, wherein it has provided guidance on determination of residential status of such individual, whose movement was restricted due to Covid related restrictions.

The CBDT has elaborated on the broad provisions of the Income Tax Act and also the DTAAs, wherein the provisions are flexible to provide individuals relaxations with respect to their no of days stay and the resulting issue of residency. Some of the provisions elaborated in the CBDT circular include, the provisions of section 6 under the Income Tax Act, Tie-breaker rule under the DTAAs, relaxation under Article 16 (OECD mode) for Dependent personal services, etc.

However, if any individual is still facing dual residency/double taxation even after taking into consideration the relief provided by the respective DTAAs, then he/she may furnish the information in Form NR (enclosed for reference) by 31 March 2021 to the Principal Chief Commissioner of Income-tax (International Taxation) who in turn, will examine the situation and provide specific / general relaxation, if required.

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