New CBDT Mechanism for ITCC Compliance by Non‑Domiciled Individuals Leaving India
The Central Board of Direct Taxes (CBDT) has streamlined and updated the framework for issuing Income Tax Clearance Certificates (ITCC) to persons who are not domiciled in India and are departing from India. The earlier regime of Form No. 30A and Form No. 30B has now been substituted with Form No. 154 and Form No. 155 under the Income Tax Rules 2026, read with Rule 227, Rule 228 and Rule 229.
These provisions lay down:
- When a non‑domiciled person must obtain an ITCC
- Which forms are to be filed and by whom
- How and when such forms are to be submitted
- The role of the prescribed income tax authority, Customs and immigration authorities
The prescribed authority has been empowered to issue ITCCs under section 420 of the Income Tax Act 2025, by applying the procedure defined under the revised rules and forms.
Statutory Framework for ITCC for Non‑Domiciled Persons
Legal Basis Under Income Tax Act 2025 and Income Tax Rules 2026
The updated ITCC regime is anchored in the following:
- Income Tax Act 2025 – issuance of tax clearance certificates under
section 420 - Income Tax Rules 2026 – procedural rules for ITCC under:
Rule 227Rule 228(erstwhile Rule 43)Rule 229(erstwhile Rule 44)
- Form No. 154 and Form No. 155 – replacing erstwhile Form No. 30A and Form No. 30B
Note: While the substantive power to issue a tax clearance certificate stems from
section 420of the Income Tax Act 2025, the actual filing and issuance process is fully governed by Income Tax Rules 2026 and the prescribed forms thereunder.
Scope: Who Needs an ITCC and in What Circumstances?
Category of Persons Covered
The obligation applies specifically to persons not domiciled in India who are leaving India and have income arising from India, such as:
- Non‑resident individuals visiting India for business, profession, or other commercial activity
- Foreign employees or consultants of Indian entities working in India on temporary assignments
- Non‑domiciled professionals earning fees, commissions or other income from Indian sources during their stay
The requirement is not linked to the duration of stay alone, but to the combination of:
- Being not domiciled in India, and
- Having India‑sourced income during the period of stay, and
- Leaving India (temporary stay coming to an end / exit from India)
Whenever these conditions are met, the ITCC process must be followed.
Timing of Compliance
The obligation to obtain ITCC is triggered at the time of departure from India. The relevant form must be filed before undertaking the journey, allowing adequate time for the Income Tax Department to process and issue the certificate.
There is no fixed statutory due date. Instead, the timeline is effectively determined by:
- The date of departure from India
- The time needed by the prescribed authority to examine the undertaking and issue the ITCC
Rule 228: Undertaking in Form No. 154 by/for Non‑Domiciled Person
Essence of Rule 228
Rule 228 (erstwhile Rule 43) sets out a two‑step framework:
- Filing of an undertaking in Form No. 154 by or on behalf of the non‑domiciled assessee before the prescribed authority; and
- Issuance of a no‑objection / tax clearance certificate in Form No. 155 by the prescribed authority, based on Form No. 154.
This rule operationalises the tax clearance process for non‑domiciled individuals and ensures that any Indian tax implications are addressed before departure.
Mandatory Filing Requirement – Form No. 154
Form No. 154 is a compulsory filing where a non‑domiciled assessee leaving India satisfies the conditions described above. Key points:
- The form is required to be filed each time such a person, who has been temporarily in India and has Indian‑source income, leaves India.
- It is not a one‑time, permanent clearance; it is event‑based and linked to the departur e instance.
In effect, an assessee from outside India who has been in India for business or professional purposes and has earned income here must ensure that Form No. 154 is in place prior to exit.