Form 30B is one of the basic compliance requirement under Income Tax Law that assists non-residents when departing India. Individuals should obtain an income tax clearance certificate, also known as an ITCC. In this write-up, let us learn as to why the ITCC is useful and how "Form 30B" assists the Income Tax Department in issuing such certificates.

Significance of Form 30B

Indians now have opportunities to work in all parts of the world owing to the globalisation era,. Companies all over the world are more concerned with hiring the right people with the necessary skill sets than with their nationality or place of residence. As a result, an increasing number of Indians are travelling abroad for work-related reasons. Maintaining compliance with labour regulations and tax laws is one of the most significant challenges that businesses face today. Form 30B is one such compliance requirement that assists non-residents when departing India. Individuals should obtain an income tax clearance certificate, also known as an ITCC, which is recommended and in some cases required. Now take into account why the ITCC is useful and how Form 30B assists the Income Tax Department in issuing such certificates.

What is Form 30B for tax purposes?

Individuals can use Form 30A of the Income Tax Department to apply for an income tax clearance certificate or No-objection Certificate, which they will receive via Form 30B. This document, issued by tax authorities, certifies that a specific individual leaving India owes no taxes within the country. It aids in demonstrating that the individual has made all necessary arrangements to discharge any tax liability that they have or may have in the near future.

Tax Clearance Certificate

A tax clearance certificate is a document issued by the tax authorities stating that the taxpayer has paid all of his tax obligations or is not required to pay tax. This article discusses the need for a tax clearance certificate for a variety of reasons.

Individuals who are not Indian citizens

A person who is not a resident of India and has come to India for the purpose of doing business, practicing a profession, or working must obtain a tax clearance certificate before leaving the country. A person who is not a resident of India can obtain the certificate from his or her employer or the person from whom the income is received.

Normally, the employer or the person from whom the person receives income must notify the tax authorities that the tax payable by the person who is not domiciled in India will be met by the employer or the person from whom the income was received. It should also state that upon receipt of the undertaking, the relevant authority will issue a no-objection certificate in Form No. 30B. 

The tax department will issue the necessary certificate upon receipt of this undertaking.

Individuals with a domicile in India

Persons residing in India are only required to provide their Permanent Account Number (PAN), the purpose of their visit outside India, and the estimated length of stay outside India when travelling abroad. Most Indian nationals and residents do not need a tax clearance certificate.

However, if the income tax authorities determine that a person must obtain a tax clearance certificate for travel abroad due to a variety of circumstances, such an order can be issued. Only after receiving approval from the Chief Commissioner of Income-tax can this order for passing an order be obtained.

Finally, persons residing in India may be required to obtain a tax clearance certificate in the following circumstances:

• Where the person is involved in serious financial irregularities and his presence is required in the investigation of cases under the Income-tax Act or the Wealth-tax Act, and a tax demand is likely to be raised against him, or

• Where the person owes more than Rs. 10 lakh in direct tax arrears that have not been stayed by any authority.

If a person residing in India who requires a tax clearance certificate plans to travel abroad, the Assessing Officer, after determining that such persons' departure from India will be detrimental to revenue, can issue the relevant certificate. If you have any concern, our team at Compliance Calendar can make it easy for you to get tax clearance certificate.

Is Form 30B Required for Indian Nationals?

When travelling abroad for deputation or secondment, Indian nationals must present their PAN card and state their purpose and duration of stay. Individuals must submit the above-mentioned information in the prescribed format via Form C prior to departure. As a result, while Indian residents and nationals are not required to obtain an ITCC, they will be required to do so in the following circumstances:

• Participation in financial irregularities.

• The presence of the investigator is required for the investigation of financial irregularities.

• Has tax arrears totaling more than INR 10 lakhs

Non-domiciles may therefore apply for an ITCC by submitting an undertaking on Form 30A. This form must be filed by either their employer or a person from whom they received the aforementioned income, as stated in the undertaking. The person who files the undertaking effectively promises to handle all tax liabilities that arise after the non-domicile leaves India. Following verification, tax officials will issue an ITCC to the applicant in the form of Form 30B.

Eligibility Criteria for Form 30B

Individuals who meet the following requirements must obtain an income tax clearance certificate via Form 30B before leaving the country.

1. Any individuals who is not a citizen of India

2. Furthermore, any person who came to India for business, employment, or professional reasons

3. Any individual who has earned or received money from India

Importance of Form 30B for Income Tax Purposes and Compliance

As previously stated, obtaining an ITCC is required in certain circumstances, and failure to do so may result in fines and penalties. If you do not have a NOC, the tax authorities have the authority to order immigration officers to prevent you from leaving India by land, air, or sea. Non-compliance may also make it difficult for individuals to obtain an Indian visa for future visits. To avoid such blunders, all eligible candidates must obtain Form 30B from the Income-tax Department. Non-residents visiting India for tourism do not need to obtain an ITCC.

Individuals visiting India for business, employment, or professional purposes must complete Form 30B. Similarly, only Indians leaving for work outside of India are required to file Form 30C prior to departure. Section 195 of the Income Tax Act of 1961 addresses the government tax. It applies to all non-residents who have earned income in the country. The ITCC assists in demonstrating that an individual has paid all of their tax obligations. And is free to leave India without legal repercussions.

The certificate establishes that the individual is not liable under the following Acts:

• The Income Tax Act of 1961

• Wealth-tax Act of 1957

• The Gift-Tax Act of 1958

• The Expenditure Tax Act of 1987

How to Obtain for Form 30B?

Here are the various methods for obtaining an income tax clearance certificate:

1. Obtain a pre-defined undertaking from your employer stating that you have no tax dues or liabilities.

2. Collect an undertaking in the prescribed format from the individual running the business that paid you, stating that you have no legal obligations in India.

3. Once you have obtained the undertaking through Form 30A, download a copy of Form 30B and file it with the appropriate tax authorities.

Documents Required for Form 30B

To obtain the ITCC in the form of Form 30B, applicants must submit the following information and documents with Form 30A:

• Income tax returns

• Employer's withholding tax certificate

• Form 30B affidavit of documents stating relevant details such as passport number and bank account information

• Passport photocopy

• Visa photocopy

• Certificate from the employer on their official letterhead detailing the tax deposited

• Employment agreement

• Copies of PAN cards

• A copy of the airline ticket

Compliance Calendar LLP will be happy to help you if you need assistance with an income tax clearance certificate or No-objection Certificate procedure. We provide clarity on the tax filing procedure to ensure that people have reasonable expectations. Our experts will ensure a smooth transaction at the lowest possible cost.

Rather than observing income tax as a burden, citizens should see it as a way to contribute to a country's progress. The general public should make an effort to understand the significance of income tax and the perceived role of their money in the country's growth. As a responsible citizen, you must always pay your income tax on time because it is only through tax payments that our country will be able to keep up with other industrialized nations and progress further. If people begin to view income tax as a burden and avoid having to pay it, our nation's growth will suffer, as will social disintegration, so paying income tax on time is consequential. Feel free to contact us if you have any concern.