Income Tax Clearance Certificate (ITCC): What is It?

As the world is becoming more interconnected than ever, we are seeing plenty of Indians going outside India for career opportunities. Furthermore, organisations in India want their skilled employees posted in the right places in foreign locations. Hence, they’re offering Indians such posts outside India.Similarly, foreign nationals and expatriates are visiting India for their work-related matters. Even though this is great for global relations, it does lead to a few challenges with regards to labour and tax-related regulations.For example, individuals leaving India may need an Income Tax Clearance Certificate . In this blog, we shall be discussing the meaning of an Income Tax Clearance Certificate, who needs one, and how one can obtain it.

An Income Tax Clearance Certificate or a No Objection Certificate is a document issued by the relevant tax authorities in India. This document certifies that the individual leaving India has cleared all their tax dues in India and has made the necessary arrangements in order to discharge any future tax liabilities that may arise.The Income Tax Clearance Certificate gives clearance by the tax department relating to any dues. Once the concerned person obtains it, they can leave the country and won’t be stopped for reasons related to outstanding tax payments.

The ITCC is an important document that certifies the individual has no tax dues. But this document is not required for all persons leaving India. Let’s look at the individuals who are required to submit an Income Tax Clearance Certificate:The Indian Income Tax Laws stipulate that a person who is not a domicile of India, who is in India for reasons related to business, employment or profession, and has any income derived from India, must obtain an Income Tax Clearance Certificate before leaving India or repatriating to their home country.This basically means that foreign nationals visiting India for work-related purposes who also derive an income from India should apply for an Income Tax Clearance Certificate before returning to their home country.An ITCC can be obtained by filing a declaration through the employer or the person providing the income in India.Even though most Indian nationals and residents do not require an Income Tax Clearance Certificate, they may do so in the following situations:If the concerned person is involved in serious financial irregularities and their presence is necessary for investigation of the cases by the law and a tax demand may materialise, then he/she may be required to obtain an Income Tax Clearance Certificate.If the concerned person has tax arrears of more than Rs. 10 lakhs and which have not been stayed by any authority, then he/she is also required to furnish the ITCC.

An individual willing to obtain an Income Tax Clearance Certificate can do so by filing a declaration with their employer in India or through the person from whom they derive their income.A person not domiciled in India can obtain the ITCC from the jurisdictional tax officer by submitting the undertaking in the prescribed form, which is Form 30A.This undertaking must be from the employer of the concerned person or the individual through whom their income is received, to the effect that all tax dues which may be liable by the expatriate after leaving the country would be discharged by the employer or the person through whom income is received.On receiving such an undertaking along with the relevant documents, the income tax officer will issue the ITCC in Form 30B if they are satisfied with the information provided. The validity of the ITCC will be mentioned in the document.

As we discussed above, not everyone requires an Income Tax Clearance Certificate when they leave India. The following individuals do not require an ITCC:Persons domiciled in India are not required to furnish the ITCC when leaving the country. They are only required to submit PAN , mention the purpose of their visit outside India, and the estimated period of stay. This information is to be submitted in Form 30C.Similarly, persons not domiciled in India and visiting the country as a foreign tourist or for any other reason not related to business or employment do not require an ITCC before they return to their home country.

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.