The compensation structure of Indian employees working from home needs to be assessed in terms of whether it has led to an extra tax burden on them.
The year 2020 will go down in history as the year of uncertainty and volatility as the covid-19 pandemic outbreak led to business shutdowns and cessation of economic activity on a global scale. The socio-economic impact of the pandemic on people across the economic and social spectrum was unprecedented in terms of increasing livelihood crises and a drop in earnings. Moreover, on account of the worldwide lockdown and global travel restrictions, people were stuck in different countries and could not fly back home giving the concept of work from home a new dimension. As populations around the world focused increasingly on taking care of their health and ensuring the well-being of their families, ascertaining the impact of tax on incomes has taken a backseat.
There have been several instances where the Covid-19 induced lockdown led to additional tax compliances on individuals working from remote locations in foreign countries. Employees based in India and working for overseas employers qualify as Resident and Ordinarily Resident (ROR) of India. Their global income is subjected to tax in India. However, the residency provisions for FY 2019-20 were relaxed by the Indian Government, restricting the cut-off date for considering one’s physical presence to 22 March 2020 instead of 31 March 2020, thereby excluding the COVID-19 lockdown phase.
Source: Financial Express