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

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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.

Karan is CA by Qualification with the rare distinction of being awarded All India Rank 22. He is also the founder of this website and loves to help people with their Tax Queries.