Income Tax Clearance certificate for Foreign National

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Raghuveer Singh Bhati (Querist)
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20 January 2009 I want to know whether a Foreign National employed as an Employee in an Indian Concern is requried to obtain Tax Clearnce Certificate before he / she leaves India?

Proper tax is deducted from monthly salary as per section 192.

Thanks,
regards,
Raghu

Raghuveer Singh Bhati

Raghuveer Singh Bhati (Querist)
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29 January 2009 Can any one share light on this???

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
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31 July 2024 In India, a Foreign National employed by an Indian concern does not typically require a Tax Clearance Certificate (TCC) before leaving India if the following conditions are met:

### **1. Tax Deducted at Source (TDS):**

- **Proper TDS Compliance:** If the employer has deducted tax at source as per Section 192 of the Income Tax Act and deposited it with the government, the foreign national is generally considered compliant with their tax obligations in India.

### **2. Tax Return Filing:**

- **Filing of Income Tax Return:** If the foreign national has a taxable income in India (even if the employer has deducted TDS), they must file an income tax return in India. The return should be filed for the relevant financial year(s) to declare all income earned and taxes paid.

### **3. Tax Clearance Certificate (TCC):**

- **Requirement for TCC:** Typically, a Tax Clearance Certificate is not required if the tax has been correctly deducted and paid. TCC is more commonly required for purposes like repatriation of funds or for specific clearance processes.

### **4. Repatriation of Funds:**

- **Repatriation:** If the foreign national plans to repatriate funds (such as salary) from India, they might need to obtain a TCC or a certificate of tax compliance from the Income Tax Department. This is usually handled by the employer, but it’s advisable for the individual to confirm with their employer or tax advisor.

### **5. Certificate of Tax Residency:**

- **Tax Residency Certificate:** Foreign nationals may also need a Certificate of Tax Residency to claim benefits under Double Taxation Avoidance Agreements (DTAA) if they are taxed in another country as well. This is different from a TCC but is related to tax matters.

### **Steps to Follow:**

1. **Ensure TDS Compliance:** Verify that the employer has deducted and deposited the correct amount of tax with the government.

2. **File Income Tax Return:** File the income tax return for the financial year in which the income was earned. This is mandatory and should be completed by the due date.

3. **Consult with Employer/Tax Advisor:** If unsure about the need for any specific certificates or compliance related to repatriation or other tax matters, consult with the employer’s HR department or a tax advisor.

### **Conclusion:**

A Tax Clearance Certificate is generally not required if the foreign national’s tax obligations have been properly fulfilled through TDS and return filing. However, for repatriation of funds or specific circumstances, it is always best to confirm with the employer or a tax advisor to ensure all requirements are met and avoid any issues.

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