TAXAJ

Tax Clearance Certificate in India

A Tax Clearance Certificate is a document issued by the tax authorities stating that the taxpayer has cleared all his tax dues or is not liable for payment of tax. This article is an account of the need for a tax clearance certificate, for varying purposes.

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About This Plan

Get the Tax Clearance Certificate easily with TAXAJ

Created by potrace 1.15, written by Peter Selinger 2001-2017

Timeline

It usually takes 5 to 7 working days.

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Services Covered
Who Should Buy
How It's Done
Documents Required
Services Covered
  • Discussion about the matter with an Expert
  • Preparation & Filing of Forms
  • Follow Up with Income Tax Department
Who Should Buy
  • Resident & Non Resident Individuals
How It's Done

    • Upload documents on vault.
    • Review the drafted forms by our experts.
    • Filing of forms.
    • Following up with Income Tax Department
Documents Required

  • Full name and address of the applicant
  • Status (i.e. Individual, HUF, Firm, BOI, Company, etc.)
  • Nationality (in case of an Individual)
  • Country of incorporation/registration (in case of others)
  • Address of the applicant during the period for which TRC is desired.
  • Email ID
  • PAN/TAN No. (if applicable)

What is Income Tax Clearance Certificate and When is it issued?

Income Tax Clearance Certificate is a document issued by the Government of India validating that the person has duly paid all the taxes due and has no pending liability.

When and Who needs an Income Tax Clearance Certificate?

An Income Tax Clearance Certificate is required when any person is leaving the country and satisfies all the following 3 conditions, i.e.

  1. He/She is not a resident of India;
  2. Has come to India in connection with business, profession or employment; and
  3. Has income derived from any source in India,

Why do you need Income Tax Clearance Certificate?

To ensure that a non-resident has duly paid all the taxes on the income earned in India by means of employment or business, before he leaves the country.

How to get Income Tax Clearance Certificate?

If you are liable to get an Income Tax Clearance Certificate, the first thing that you have to do is,

  • If in employment: take an undertaking in the prescribed form from the employer
  • If in business: take an undertaking in the prescribed form from the person of the income,

to the effect that tax payable by you in respect of the income earned in India shall be paid by the Indian Resident, and then go to the IT department with the undertaking.

On receipt of the same you will immediately get a no objection certificate in the form of Tax Clearance Certificate for leaving India.

Who doesn’t need Income Tax Certificate?

A resident Indian who travels abroad for any purpose other than leaving India permanently is not required to get an Income Tax Clearance Certificate but has to furnish his PAN.

A non-resident Indian who had visited the country for any purpose other than business, profession or employment is also not required to get an Income Tax Clearance Certificate while leaving the country.

What happens on non-submission of Income Tax Clearance Certificate?

It is the duty of the carriage owner (aircraft or ship) to check the Income Tax Clearance Certificate of the passenger. If they fail to do so, then they personally become liable to pay taxes on behalf of that passenger.

And in case of a charter plane or ship the owner himself is liable to pay all the taxes due and get an Income Tax Clearance Certificate. If he fails to do so then it will be treated as an arrear of tax on his part and will be recovered by the Government.

What are the different types of Applicants for Tax Clearance Certificate?

Persons not Domiciled in India

A person who is not domiciled in India who has come to India for the purpose of business, profession or employment, and who holds income derived from any source in India must obtain a tax clearance certificate before leaving the country. For a person not domiciled in India, the certificate can be obtained through the employer or through whom such person is in receipt of the income.

Normally, the employer or person through whom the person is in receipt of income must state to the tax authorities that the tax payable by such person who is not domiciled in India, will be met by the employer or by the person from whom income was received. It should further state that the concerned authority shall, on receipt of the undertaking, immediately issue a no-objection certificate in Form No. 30B.

Persons Domiciled in India

Persons who are domiciled in India are only required to furnish permanent account number, the purpose of visit outside India and estimated period of stay outside India in case of travel abroad. A tax clearance certificate is not mandatory for most Indian Nationals and Residents.

However, if the income tax authorities decide due to various circumstances that a person must obtain a tax clearance certificate for travel abroad, such an order can be passed. This order for passing an order can be obtained only after taking approval from the Chief Commissioner of Income-tax.

Finally, a tax clearance certificate may be required to be obtained by persons, domiciled in India in the following circumstances :

  • Where the person is involved in serious financial irregularities and his presence is necessary in the investigation of cases under the Income-tax Act or the Wealth-tax Act and it is likely that a tax demand will be raised against him, or
  • Where the person has direct tax arrears exceeding Rs. 10 lakh outstanding against him which have not been stayed by any authority.

In case a person domiciled in India requiring tax clearance certificate is to travel abroad, the Assessing Officer, after satisfying himself that the departure of such persons from India will prejudicially affect the interest of revenue, can issue the relevant certificate.

Commercial Contractors

Income Tax Clearance Certificate is no longer required to be furnished by any person applying for tender or entering into commercial contracts. Also, tax clearance certificates are not required for registration or renewal of registration of contractors, renewal of import/export licences, renewal of post licences and renewal of shipping licences. However, all taxpayers are required to quote their Permanent Account Number in their tender or other relevant documents.