Do Foreigners Require Tax Clearance Before Leaving India?

The answer is Yes and No but before I explain the law , it is importanat to understand that here foreigner means a person not domiciled in India .
The answer is NO in case of following persons?
Those persons who are not domiciled in India and who come to India

• on tourist visa or
• for any purpose other than business,employment or
• who have no source of income in India ,

They are not required to obtain a tax clearance certificate from income tax department before leaving India.

The answer is YES in case of following persons?
The answer is Yes in case the person not domiciled in India visits India for any business purpose or employment or has any source of income in India . Subsection 1 of Section 230 of the I T Act is very clear on this which is given as under :
no person,
(a) who is not domiciled in India;
(b) who has come to India in connection with business, profession or employment; and
(c) who has income derived from any source in India, shall leave the territory of India by land, sea or air unless he furnishes to such authority as may be prescribed

(i) an undertaking in the prescribed form from his employer; or
(ii) through whom such person is in receipt of the income, to the effect that tax payable by such person who is not domiciled in India shall
be paid by the employer referred to in clause (i) or the person referred to in clause (ii), and the prescribed authority shall, on receipt of the undertaking, immediately give to such person a no objection certificate, for leaving India:

So what is the procedure?

Rule 43(1) of I T Rule provides the procedure of obtaining clearance certificate. It lays down that

1. the undertaking will be given in form 31 to the assessing officer by the employer or the person through whom the non domiciled person is in receipt of any kind of income .
2. After getting the undertaking in form 31 , the assessing officer shall issue a tax clearance certificate in Form 33.

The forms?
Form 31 can be obtained from here. and Form 33 can be obtained from here.

Did you read this?
Do You Need Tax Clearance For Foreign Visit?

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I have got job in Middle East.Do I need to take clearnce certificate from ITO ?

NO , the provision regarding the clearance certificate in case of going abroad permanently or temporarily has been changed for good. The provision in force today are as follows:

A) If you are domiciled in India and wants to go out of India.

As per Section 230(1A) , a person is required to tell the Assessing Officer
(a) the permanent account number allotted to him under section 139A. In case , PAN is not required or the income is below the exempted income as usch no return is filed , Annexure to Form 30C has to be filed too.

(b) the purpose of his visit outside India;

(c) the estimated period of his stay outside India:

Hence , you should furnish completely filled Form 30C to the Income Tax Officer having jurisdiction over your case. This is self declaration . A copy of this should be presented to the custom authorities at the time of departing if insisted by the custom authority as a proof that you have abide by the provision of Section 230(1A ) of the I T Act.

Now clearance certificates are not required by any domiciled Indian unless the Custom Authority is notified by the income tax authority. The notification can be done only after taking approval of the Chief Commissioner of Income Tax .

B) If you are not domiciled in India and wants to go out of India.

i)In this case , first thing that provision of Section 230(1A is not applicable in case of foreign tourists who have visited India for purpose other than Business , or employment or profession.

ii)In case of person not domiciled in India but who visited India for business or profession or employment , Section 230(1) applies which says "no person,shall leave the territory of India by land, sea or air unless he furnishes to such authority as may be prescribed

(i) an undertaking in the prescribed form from his employer; or

(ii) through whom such person is in receipt of the income,

to the effect that tax payable by such person who is not domiciled in India shall be paid by the employer referred to in clause (i) or the person referred to in clause (ii), and the prescribed authority shall, on receipt of the undertaking, immediately give to such person a no objection certificate for leaving India.

The prescribed form in this case is Form 30 which should be submitted to the A.O who is turn shall issue a certificate in Form 30B

Tags: Form 30, Tax Clearance Certificates

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