Tax information: Leaving India
Welcome to the tax guide on leaving India, produced by Deloitte. Looking for tax information about going to India, Click here
This document has been prepared based on the legislation and practices of the country concerned as at 01 April 2009. Tax legislation and administrative practices may change, and this document is a summary of potential issues to consider. This document should not be used as a substitute for professional tax and immigration advice which should be sought for the country of arrival and departure in advance of moving in order to discuss your specific circumstances.
This information is provided by Deloitte in accordance with their terms and conditions. Neither HSBC nor Deloitte accepts any responsibility for the accuracy of any of this information. By using this information you are accepting the terms under which Deloitte is making the content available to you - click below to view these terms and conditions. It is strongly recommended that you read the terms and conditions by clicking below before continuing.
Terms and conditions
Click the 'plus' symbol or text for more information.
Click the 'plus' symbol or text for more information.
Before/once you departQ. Should I complete any documentation prior to leaving India?
A. If you are domiciled in India and departing from India, you should furnish the following documents in the prescribed form to the Indian revenue authorities:
- the permanent account number allotted to you or certificate in prescribed form
- the purpose of visit outside India
- the estimated period of your stay outside India
You should obtain a no objection certificate if the Assessing Officer considers that a tax clearance certificate is necessary.
If you are not domiciled in India and have come to India in connection with business, profession or employment and have income derived from source in India, you should furnish to the Indian revenue authorities an undertaking from the employer or any person who is payer of such income to effect that the tax payable by you shall be paid by the employer or payer of the income (in the prescribed form). The Indian revenue authorities shall on receipt of the undertaking issue a no objection certificate for leaving India.
Q. Is it beneficial to open an offshore bank account when leaving India in comparison with retaining an Indian account?
A. Non residents of India are not liable to tax in respect of interest earned on offshore bank accounts, and it may also be advisable to open such an account from the tax perspective of the country that you are going to.
Q. Will I be regarded as not resident in India during my period overseas?
A. You are resident for a particular year if either of the following conditions is satisfied:
• You are present in India for 182 days or more in the year; or
• You are present in India for 60 days or more, and within the four preceding years has been in India for 365 days or more. The 60 day requirement is relaxed to 182 days for Indian citizens leaving India as crew members of an Indian ship or for the purpose of employment outside India. The 60 day requirement is also relaxed to 182 days for citizens or persons of Indian origin who come from outside India for a visit in a particular year.
Therefore if you leave India and do not satisfy above conditions you will be regarded as non-resident during the period you are overseas.
Q. Will I still need to complete an Indian tax return after my departure?
A. If you have income which is liable to Indian tax in the tax year of your departure, you are required to file a tax return. There are certain other limited circumstances in which you must file a return.
If you are a non-resident with no taxable income for the tax year then you are not required to file a return.
Q. Will I have to pay Indian tax in respect of the employment income I will earn overseas?
A. This will depend upon your residence status. Persons who are resident and ordinarily resident are taxed on worldwide income. Non-residents are subject to Indian tax only on income accruing or arising in or received in (or deemed to accrue or arise in or to be received in) India.
Q. Will I have to pay tax in respect of Indian investment income earned while overseas?
A. Subject to the exemptions and tax relief in respect of certain interest and dividend payments, residents and non-residents are subject to Indian tax on all income arising in India, including interest and dividend income.
Q. I plan to sell my Indian property while overseas. Are there any capital gains tax implications?
A. Yes, you will be liable to capital gains tax if you sell Indian properties while overseas. For tax implications, please see going to India under the heading 'Tax - Other Income'.
Q. I have a number of Indian company shares. Will I remain liable to Indian capital gains tax if I sell any of these while outside India?
A. Yes, you will be liable to capital gains tax if you sell shares of Indian company while overseas. For tax implications, please see going to India under the heading 'Tax - Other Income'.
Q. What Social Security contributions will I pay when abroad?
A. The Ministry of Labour and Employment, Government of India has notified Employees’ Provident Funds (Third Amendment) Scheme 2008 and Employees’ Pension (Third Amendment) Scheme 2008 vides notification dated 1st October, 2008 to extend applicability of these schemes to “International Workers”. The effective date would be the 1 st of October 2008.
An Indian employee who is working or going to work in countries with whom India has not entered into a Social Security Agreement (SSA) will not be considered as an International worker for the purposes of the new scheme. Only if he is working /going to work in a country with which India has entered into a SSA, he will be considered as an international worker.
If the employee was contributing to PF while he was employed in India then he will continue to contribute to PF in India during his assignment outside India if salary is paid in India.
Our views expressed herein are based on the facts and assumptions indicated by you. No assurance is given that the revenue authorities/courts will concur with the views expressed herein. Our views are based on the existing provisions of law and its interpretation, which are subject to change from time to time. We do not assume responsibility to update the views consequent to such changes. The views are exclusively for the use of HSBC and shall not, without our prior written consent, be disclosed to any other person.
