What is a Tax Clearance certificate? How to Apply

Tax Clearance Certificate is issued by the Tax Authorities of India. A Tax Clearance Certificate is a document which states that all the tax dues of the taxpayer have been cleared and he is not liable to pay any more taxes. In this article we will understand about the Tax Clearance Certificate and the need of a Tax Clearance Certificate for various purposes.

People not Residing in India

Those individuals who do not reside in India and have come to the country in order to do a business or perform a profession or employment and have the income that is generated from any source of income in India need to acquire a Tax Clearance Certificate before they leave the country. For someone who does not reside in India, the certificate can be acquired either through the employer or through the person from whom the individual is in receipt of income.

Generally the employer or the person from whom the person is in receipt of income needs to inform the tax authorities that the tax that is liable to be paid by the individual who is not residing in India will be met by them. It should also state the respective authority needs to immediately  issue a certificate of no-objection in Form Number 30B on the receipt of the undertaking.  When the tax department receives the undertaking, then the tax department will have to issue the necessary Tax Clearance Certificate.

People Residing in India

People who reside in India only have to submit their Permanent Account Number (PAN), the purpose of visiting outside of India and the approximate period of staying outside of India in case of travelling abroad. A Tax Clearance Certificate is not needed for most of the Indian Nationals and Residents.

But in case the income tax authorities decide that a person needs to acquire the Income Tax Clearance Certificate for travelling abroad due to some circumstances, then the order will be passed. This order to pass the order will be obtained only when the Chief-Commissioner of Income Tax approves of it.

Lastly, a Tax Clearance Certificate can be required to acquired by individuals who are residing in India under the following situations:

• When an individual is a part of serious financial irregularities and the presence of  the individual is essential for the investigation of cases under the Wealth Tax Act or the Income Tax Act. Also, it is possible that a tax demand  is raised against him.
• When the individual’s direct tax arrears are more than Rs. 10 Lakhs and are outstanding against him and have not been stayed by any of the authorities.

If an individual residing in India who needs a Tax Clearance Certificate has to travel abroad, then the Assessing Officer can issue the relevant certificate once he has satisfied himself that the individual’s departure from India can prejudicially influence the interest of revenue.

Commercial Contractors

Tax Clearance Certificate is not needed any longer to be submitted by any individual who is applying for tenders or who wants to enter into commercial contracts. Moreover, a Tax Clearance Certificate is not needed for registering or renewing the registration of contractors, renewing of import or export licences, renewing post licences and shipping licences. But all the taxpayers have to mention their PAN Card Number in thor tenders and in all the other relevant documents.

Conclusion

In this article, we came to know about the Tax Clearance Certificate, its needs for all the people who are domiciled in India and also for those who are not domiciled in India. We also cae to know about the fact that the Tax Clearance Certificate are no longer needed while trying to apply for commercial contracts or tenders.