127. How to get Income tax

clearance to leave India

Q. Dear Sir, We are US citizens with OCI for India. I have worked/stayed in India for last 4.5 years. We are now going back to US. Do I need a Tax clearance certificate? If yes, what is the process? It seems that I need to fill out form 31, but how will they give me tax clearance if I'm working till the last day I leave India? Won't I still owe taxes? Also, what do documentation do I need to file with form 31? Do I need to fill out a form from my employer? If yes, which one? Also, my wife has not worked while in India. Does she need a Tax clearance Certificate also? Again, what is the process? Thanks and Regards, Parmeshta A. Any person who goes to India for the purpose of employment and has income from any source in India is required to provide an undertaking that all taxes have or will be paid. In cases where tax is due, or will be due as you are working till the day you leave. The tax assessing officer is authorized to issue clearance in Form 32 if the tax payer has made satisfactory arrangement for payment of taxes that may be payable by them. One of the acceptable methods for providing guarantee that taxes will be paid is by obtaining guarantee from your employer. The employer acts as a guarantor that if tax is found to be due, it will be paid by the guarantor. Your employer and accounting department should be able to handle this for you. Form 31 is required to be filled. The assessing officer then issues tax clearance certificate in Form 33. Your employer or the local tax office will be able to provide you with the necessary form. For sample purpose you can view Form 31 HERE and Form 33 HERE Foreigners working in India can get one-time tax clearance: There are many foreign employees not domiciled in India. To save them the hassles of obtaining a tax clearance each and every time such employees travel abroad, there is a provision where they can get a one time clearance certificate that covers a period of up-to five years. This type of one-time clearance is given in those cases where their employers give 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. Such a guarantee may also cover the tax liabilities of the spouse and dependents of the foreign employee.