INCOME TAX CLEARANCE CERTIFICATE

Income Tax Clearance certificate

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

Section 230(1) of the Income Tax Act, 1961 (‘Act’ for short) provides that subject to such exceptions as the Central Government may, by notification in the Official Gazette, specify in this behalf, no person,-

• who is not domiciled in India;
• who has come to India in connection with business, profession or employment; and
• who has income derived from any source in India,

shall leave the territory of India by land, sea or air unless he furnishes to the Chief Commissioner of Income Tax or Director General of income tax or any other income-tax authority authorized by such Chief Commissioner or Director-General in this behalf-

(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).   The undertaking shall be in Form No.30A.  The prescribed authority shall, on receipt of the undertaking, immediately give to such person a no objection certificate, for leaving India.   A no-objection certificate to be issued by the prescribed authority under section 230(1) shall be in Form No. 30B and shall be valid for the period mentioned therein.  A copy of the undertaking referred to in sub-rule (1) and the no-objection certificate referred to in sub-rule (2) shall be forwarded to the Chief Commissioner or Director General, as the case may be, having jurisdiction over the persons referred to in clause (i) or clause (ii) of sub-section (1) of section 230.

Nothing contained in section 230 (1) shall apply to a person who is not domiciled in India but visits India as a foreign tourist or for any other purpose not connected with business, profession or employment.   In this case the application shall be made to the Assessing Officer who has jurisdiction to assess such person.  The information to be furnished by a person domiciled in India shall be in Form No. 30C.

Section 230(1A) of the Act provided that subject to such exceptions as the Central Government may, by notification in the Official Gazette, specify in this behalf, every person, who is domiciled in India at the time of his departure from India, shall furnish, in the prescribed form to the income-tax authority or such other authority as may be prescribed-

• the permanent account number allotted to him
• the purpose of his visit outside India;
• the estimated period of his stay outside India.

In case no such permanent account number has been allotted to him, or his total income is not chargeable to income-tax or he is not required to obtain a permanent account number under this Act, such person shall furnish a certificate in the prescribed form. An application under the first proviso to sub-section (1A) of section 230 may be made in Form No. 31.   A tax clearance certificate issued under the first proviso to sub-section (1A) of section 230 shall be in Form No. 33 and shall be valid for the period mentioned therein.

The second proviso to section 230(1A) provides that no person-

• who is domiciled in India at the time of his departure; and
• in respect of whom circumstances exist which, in the opinion of an income-tax authority render it necessary for such person to obtain a certificate under this section,

shall leave the territory of India by land, sea or air unless he obtains a certificate from-

• the income-tax authority stating that he has no liabilities under this Act; or
• the Wealth-tax Act, 1957; or
• the Gift-tax Act, 1958; or
• the Expenditure-tax Act, 1987; or
• that satisfactory arrangements have been made for the payment of all or any of such taxes which are or may become payable by that person.

Owner or charter of ship or aircraft

The expressions 'owner' and 'charterer' include any representative, agent or employee empowered by the owner or charterer to allow persons to travel by the ship or aircraft.

Section 230(2) of the Act provides that If the owner or charterer of any ship or aircraft carrying persons from any place in the territory of India to any place outside India allows any person to whom sub-section (1) or the first proviso to sub-section (1A) applies to travel by such ship or aircraft without first satisfying himself that such person is in possession of a certificate as required by that sub-section, he shall be personally liable to pay the whole or any part of the amount of tax, if any, payable by such person as the Assessing Officer may, having regard to the circumstances of the case, determine.

Section 230(3) of the Act provides that In respect of any sum payable by the owner or charterer of any ship or aircraft under sub-section (2), the owner or charterer shall be deemed to be an assessee in default for such sum, and such sum shall be recoverable from him in the manner provided in this Chapter as if it were an arrear of tax.

Grant of certificate

If the Assessing Officer is satisfied that the applicant has either paid or made satisfactory provision for payment of all existing liabilities under the enactments specified in clause (a) of sub-section (1) of section 230A or that the registration of the document referred to in the application will not prejudicially affect the recovery of any such liability, grant the certificate and forward the same to the registering officer concerned within 60 days of the receipt of the application.

Rejection of certificate

If the Assessing Officer is not satisfied that he may pass order in writing refusing to grant the certificate, recording his reasons therefore.

Production of certificate to Customs Officer

Any person leaving India shall, at the request of any Customs Officer, produce to him for examination the tax clearance certificate or the exemption certificate, as the case may be.