Requirement of Tax Clearance Certificate. Persons  who require the tax clearance certificate before leaving India.

1. A person leaving India by land, sea or air is required to obtain from the Competent Authority a certificate that he has no liabilities under the Direct Tax Laws or that  he  has  made satisfactory arrangements for payment of his existing tax liabilities as also for payment of the tax that may become payable by him. The tax clearance certificate will be in FORM NO.33 given at page 18.

2. The A.C./I.T.O.   (Foreign Section)  is the Competent Authority for issuing such clearance certificate. Their offices are located in different cities in the country. Information regarding the same can be obtained from the local Public Relation Officer of Income Tax Department.

3.  But the A.C./I.T.O. (Foreign Section) will in most cases require the applicant to submit a clearance certificate in Form No.32 from the Assessing Officer exercising jurisdiction over the territorial area where he normally resides.

Persons who require the tax clearance certificate before leaving India.

4.Income Tax Clearance for leaving India is required by persons-

(a)	not domiciled in India;
(b)	domiciled in India at the time of departure but-
	(i) intends to leave India as an Emigrant or (ii) intends to leave India on a work permit for employment or occupation abroad or (iii) in respect of whom Income-tax authority considers that a clearance certificate is necessary.

5. Normally, a person holding a foreign passport is considered to be not domiciled in India. But domicile of a person is different from his citizenship. Domicile is a place of habitation without any intention of leaving therefrom. The intention is to reside there forever. Thus, a foreign national may be domiciled in India if he has fixed residence and has the intention to reside forever in this country. Similarly, an Indian citizen may not be domiciled in India if he has no intention to reside in India for ever.

The cases where Income-tax authority may consider that a clearance certificate is necessary include persons who, according to information received, are likely to leave India for good and against whom there is a present or anticipated tax liability.

The anticipated liability refers to liability that may arise in respect of the income on the date of departure. In such a case the income tax authorities may communicate the name and address of the persons to all the Collectors of Customs and various Airports and Seaports with the request that the said person should be asked to produce a tax clearance certificate before his departure from India. A copy of the information is also sent to the person concerned for his information. A specimen Form of this communication is given at page 9.

6. The Collector of Customs sends a copy of the communication to the customs authorities at various air/sea ports and asks them to require the person concerned to produce his tax clearance certificate when he arrives for clearance at the time of departure.

7. If the clearance certificate is not produced,the customs authorities send the copy of the communication received by them to the Officer-in-Charge of the ship or aircraft by which the concerned person is likely to travel.

8. The carrier will then insist on the clearance certificate. The owner or charterer of ship or aircraft carrying the person is likely to be treated as assessee in default in respect of the tax payable by such person allowed by them to leave India and the tax can be recovered from them.

Procedure for obtaining the clearance certificate. To whom to apply.

9. 

a)	In the case of a domiciled person-
	(i) Who is an existing tax payer, he should app\y to vms Assessing Officer (ii) Who is not an existing tax payer, he should apply to the Assessing Officer who has the jurisdiction over tax payers normally residing in the territorial area where he normally resides. (iii) Who does not know his Assessing Officer having jurisdiction over the territorial area where he normally resides, he should ascertain this from the local Income-tax Officer or the ER.O. of the Income-tax Department and apply to him.
b)	If the person is not domiciled in India, he should make an application to the A.C./l.T.O. Foreign Section of the area

i) Action by the Assessing Officer

10. The Assessing Officer will in the case of Assessing  existing tax payer-Officer

(a)

Verify if there are any tax demands still due. If there is no tax due, he may issue an authorisation to him in Form 32 (See page 16). This authorisation will enable him to get a proper Tax Clearance Certificate from the A.C./LT.O. Foreign Section who is the competent authority to issue it. It is advisable to take proof of all the tax payments to your Assessing Officer to facilitate such a verification.

(b)

In a case where there are tax dues, the Assessing Officer may still issue an Authorisation in Form 32 if the tax payer has made satisfactory arrangement for payment of these taxes

The Assessing Officer may in such a case by way of satisfactory arrangement ask the tax payer to obtain third party enforceable guarantee for payment of all his tax liability

If the guarantee is given by a company or any institution, it has to be ensured that it is signed by the person authorised for this purpose. Specimen form of the guarantee is given at page 10.

11. In case of a person who is not an existing tax payer, the Assessing Officer will verify the person's statement regarding his income and attempt to ascertain if he has been earning any Income which is liable to tax.

12. For this purpose, the Assessing Officer may order local enquiries to be made, or record a statement from the person, or ask for any evidence to prove that the person has no income which is liable to tax. Such evidence may take the form of an affidavit.

13.One of the methods of ensuring that satisfactory arrangements have been made for the payment of such taxes is by way of obtaining guarantee from the employer of the person leaving the country that if any tax is found due, it will be paid by the employer (guarantor). Under the existing procedure the guarantee tendered by the guarantor ceases to be operative three months after the return of the employee to India, if the employee remains in India during the said period of three months and the guarantor give prompt notice to the Assessing Officer concerned of the employee's return to India.

14.If the applicant earned any income liable to tax in India, he computes the tax liability on payment of the tax, then the clearance certificate is issued by him. Where no income liable to tax is earned in India, the A.C./I.T.O. (Foreign Section) obtains a declaration from the person concerned that he had not earned any income in India during his stay. Specimen Form of declaration is given at page 20.

ii)   Issue of one time clearance certificate in respect of foreign employees.

15.Obtaining the tax clearance certificate in the cases of foreign employees not domiciled in India, each and every time such employee wants to go abroad, is cumbersome and time consuming. In order to alleviate this difficulty it has been decided to provide the facility of one-time clearance certificateto the foreign employee not domiciled in India who has a fixed tenure of service in India of upto five years, to travel abroad any number of times during the period of the contract of his service.

16.This one-time clearance certificate will he given in the case of those foreign employees whose employer gives a guarantee in the prescribed form that if any tax is found due against the employee during the entire period of the contract of service plus two years the same shall be paid by the employer.

The guarantee may also cover the tax liabilities of the spouse and dependents of the foreign employee. In such a case the spouse and dependents of the employee, would also be entitled to the benefit of one-time clearance certificate. The form of guarantee which is to be used for the above purpose is at page 10. The above procedure will apply only in such cases where the employer of the foreign employee is an Indian concern, or a foreign concern which is assessed to tax in India and has a fixed place of business in India.

17. In cases where the guarantee in the above form is furnished, the tax clearance certificate issued by the Assessing Officer, Foreign Section will be valid for journeys to be performed by the foreign employee upto the last date of the contract of service as mentioned in the guarantee form.

iii) Issue of Exemption certificate

18.In genuine cases where the A.C./I.T.O. (Foreign Section) is satisfied that the person leaving India intends to return to India or he has adequate assets in India from which tax can be recovered if he does not return, instead of tax clearance certificate he may issue an exemption certificate which will be in Form No. 34 (page 19). An exemption certificate may be issued either with reference to the number of journeys or with reference to the period specified therein.

Persons not required to obtain clearance certificate for leaving India.

19. The Government has by general notification exempted the following categories of persons, foreign nationals as well as Indian citizens, from the requirement of obtaining tax clearance certificate before leaving India-

From

The Assessing Officer,

The Collectors of Customs/Central Excise & Land Customs,

Sir,

Whereas I have reason to    believe that Shri---------- of -----------(address)------- intends to proceed abroad and is not likely to return to India, and is being informed that he should obtain a tax clearance certificate under section 46A of the Indian Income-tax Act, 1922 before his departure, I request you to issue instructions to the customs authorities at the various air/sea ports in your jurisdiction to examine his tax clearance certificate, when he arrives for clearance. They may also please be advised that in the event of his failure to produce a tax clearance certificate, the officer-in-charge of the ship or aircraft by which he is travelling should be informed of it in writing and that in the event of his being allowed to proceed without a tax clearance certificate the undersigned should be intimated of the fact.

Yours faithfully,

Assessing Officer

To,

Sir,

Yours faithfully,

Place :
Date :

Signed in the presence of :

And certified as correct.

ACCEPTED  FOR AND  ON  BEHALF OF THE PRESIDENT OF INDIA.

I ..................... son/daughter of ................. age of .......... residing at ............... ................... (here give bio-data, purpose of travel, occupation including details of earnings for the last 5 years and bank account and about pocket expenses etc.)

I, further declare that:-

* (Strike off whichever is not applicable)

(Whatever stated above is true and correct)

SIGNATURE

Note :

To

THE ASSESSING OFFICER

Foreign Section____________

Sir,

I request that a *Tax Clearance Certificate/an Exemption Certificate be granted to me. I give below the necessary particulars :-

I declare that to the best of my knowledge and belief the information furnished in the application is correct, complete and is truly stated.

Authorisation form obtained from the Assessing Officer ____ is enclosed herewith. $

Yours faithfully

Signature (Applicant)

Place:
Date:

* Delete the inappropriate words.
$ This applies only if the applicant is a person domiciled in India or a person who has been assessed by an Assessing Officer anywhere in India.

Folio No._____                 

To

The I [Assessing Officer],

Foreign Section______________

1. Full name (in block letters)_________________
2. Name of father (or husband)________________
3. *Passport No./Emergency Certificate No._______

*  (i) The above mentioned applicant has been assessed/is assessable by me up to____________________ He/She* has :

* (a) no liabilities outstanding:
* (b) made satisfactory arrangements for the payment of tax due/ which may become due in respect of the assessment up to date/up to ______________ under the Income Tax Act, 1961(43 of 1961), the Indian Income Tax Act, 1922 (11 of 1922), the Excess Profits Tax Act, 1940(15 of 1940), the Business Profits Tax Act, 1947 (21 of 1947), the Wealth Tax Act, 1957 (27 OU957), the Expenditure Tax Act, 1957 (29 of 7957>, or the Gift Tax Act, 1958 (18 of 1958). He/She* may accordingly he issued a clearance certificate in Form No. 33.

*(ii) The above mentioned applicant is assessable in my jurisdiction. He/She* intends travelling abroad leaving India by air/sea/land* from _________ . As he/she* intends to return to India, he/she* may be given an exemption certificate in Form No. 34.

Valid for presentation to Assessing Officer (Foreign Section) within one month from date of issue.

Place:
Date :

Assessing Officer
Designation

(SEAL)

Notes :

Folio No.______                

1. 1. Full name (in block letters)_________________
2. 2. Name of father (or husband)________________
3. 3. Passport No./Emergency Certificate No._______

This is to certify that above mentioned applicant has

*       (a) no liabilities outstanding

*       (b) made satisfactory arrangements for the payment of taxes which are or may become payable under the Income-tax Act, 1961 (43 of 1961), the Indian Income-tax Act, 1922 (11 of 1922), the Excess Profits Tax Act, 1940 (15 of 1940), the Business Profits Tax Act, 1947 (21 of 1947), the Wealth-tax Act, 1957 (27 of 1957), the Expenditure Tax Act, 1957 (29 of 1957), or the Gift tax Act, 1958 (18 of 1958).

This certificate is valid for a journey or journeys to be commenced on or after and  before

Place:
Date:

Assessing Officer
Foreign Section

(SEAL)                                                                                     

*Strike out the paragraph which is not applicable.

1. 1. Full name (in block letters)_________________
2. 2. Name of father (or husband)________________
3. 3. Passport No./Emergency Certificate No._______

This is to certify that the above mentioned applicant who intends to travel abroad is exempted from producing a Clearance Certificate under section 230(1) of the Income-tax Act, 1961(43 of 1961), in respect of the journey/journeys to be undertaken on or after                            and before

Place:
Date:

                                                          Assessing Officer
Foreign Section

(SEAL)                                                                                    

I solemnly affirm that the declaration made above is correct to the best of my knowledge and belief.

Signature of applicant

(Before me)

Dated :                                                                                             

Assessing Officer, Foreign Section
New Delhi.