What is Section 6 of the Income-Tax Act, 1961
Section 6 of the Income-tax Act, 1961 (the Act) contains provisions relating to residency of a person.
The status of an individual is dependent on the period for which the person is in India during a year – to decide as to whether he is resident in India or a non-resident or not ordinarily resident.
How the Concern Regarding Residency Arises?
- There are individuals who had come on a visit to India during the previous year 2019-20 for a particular duration and intended to leave India.
- If they leave India before the end of the previous year, they will be maintaining their status as non-resident or not ordinary resident in India.
- Due to declaration of the lockdown and suspension of international flights owing to outbreak of Novel Corona Virus (COVID-19), they are required to prolong their stay in India.
- Concerns have been expressed that they may involuntarily end up becoming Indian residents without any intention to do so.
In order to avoid genuine hardship in such cases, the CBDT has provided clarifications in a circular. Basically, these clarifications are exemptions to people who were stuck in India due to the quarantine / lockdown from being considered as Indian residents without willing to do so.
Income Tax Act
- James Wilson who became India’s first finance (British) member, had introduced the first modern Income Tax Act in 1860.
- The Income Tax Act is a comprehensive statute that focuses on the different rules and regulations that govern taxation in the country.
- It provides for levying, administering, collecting and recovering income tax for the Indian government.
Budget and Income Tax Act
- The Government of India presents finance budget every year in the month of February.
- The finance budget brings various amendments in income tax act,1961 including tax slabs rates.
- The amendments are generally applicable to the next following financial year beginning from 1 April unless otherwise specified.
- Such amendments become part of the income tax act after the approval of the president of India.