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Tax Clearance (NOC) and Exit Formalities for Japanese Expatriates Leaving India Permanently

For Japanese expatriates leaving India permanently after completing an employment or business assignment, departure involves more than simply booking a flight and closing an employment relationship.

Japanese expatriates who have earned income in India may need to complete specific tax, immigration, banking and employment-related formalities before leaving India. One of the most important considerations is obtaining the necessary tax clearance from the Income Tax authorities.

Failure to address these requirements in advance can create complications at the time of departure.

Tax Clearance: A Key Requirement Before Permanent Departure

For a Japanese expatriate permanently leaving India after an employment or business assignment, the relevant tax compliance requirement may involve obtaining a Tax Clearance Certificate (TCC), commonly referred to as a No Objection Certificate (NOC).

The underlying objective is to ensure that the individual's Indian tax obligations have been appropriately addressed before permanent departure.

In particular, a Japanese expatriate who has earned income from Indian sources should ensure that all applicable tax obligations have been reviewed and settled.

What Does the Tax Clearance Process Involve?

The tax clearance process generally involves demonstrating that the a Japanese expatriate has complied with applicable tax requirements and that there are no unresolved tax matters.

Two important aspects highlighted in the source material are:

1. Compliance for Previous Years

The a Japanese expatriate should provide evidence of tax compliance for the relevant previous years and ensure that any pending tax proceedings or cases, if applicable, have been appropriately settled.

This includes ensuring that tax returns have been filed and applicable taxes have been paid.

2. Undertaking for Current-Year Tax Liability

Where tax liability for the current financial year has not yet been finalized, the Japanese expatriate and employer may be required to provide a written undertaking confirming that any outstanding tax liability will be discharged.

Once the Income Tax authorities are satisfied with the compliance position and the undertaking provided, the necessary NOC/TCC may be issued.

What Does the Income Tax Department Check?

Before issuing the tax clearance, the Income Tax Department may reconcile the individual's reported income and tax position with available information and records.

This may include reviewing:

• Form 26AS
• Annual Information Statement (AIS)
• Taxpayer Information Summary (TIS)
• Income-tax returns filed by the individual
• Taxes paid and applicable tax deductions
• Outstanding tax demands or liabilities
• Pending tax proceedings or cases

Therefore, a Japanese expatriate planning a permanent departure should ideally review their tax position well in advance rather than waiting until the date of travel.

Other Important Exit Formalities for Expatriates

Tax clearance is an important part of the departure process, but it is not the only consideration.

A Japanese expatriate should also review other areas of compliance before permanently leaving India.

1. FEMA and Banking Matters

A permanent change in residential status can have implications for the expatriate's Indian bank accounts.

Depending on the individual's circumstances, the following may need to be reviewed:

• NRO/NRE bank account status
• Regularization of bank accounts following a change in residential status
• Repatriation of funds outside India
• Applicable Forms 145/146
• Whether existing resident bank accounts should be closed or redesignated

The appropriate steps will depend on the individual's residential status, nature of funds and future plans.

2. FRRO and Immigration Compliance

Expatriates holding an Employment Visa and registered with the Foreigners Regional Registration Office (FRRO) should also ensure that their immigration records are appropriately updated.

インドから日本への給与送金について

日本人駐在員向け

インドで勤務する日本人駐在員は、インドの銀行口座で受け取った給与を、日本の銀行口座へ送金することができます。

日本人駐在員の給与送金には、一般的な海外送金制度である LRS（Liberalised Remittance Scheme） とは異なる取扱いがあります。

ここでは、インドから日本へ給与を送金する際の基本的なポイントをわかりやすく説明します。

1. インドの銀行口座

インドで勤務する日本人駐在員は、インドの銀行で Resident Bank Account（居住者口座） を開設することができます。

外国為替（FEMA）上は、一定の条件を満たす場合、「Resident but not Permanently Resident」 として扱われます。

この区分に該当する外国人には、海外送金について特別な取扱いがあります。

2. 給与の送金は「LRS」とは別に考える

一般的なインド居住者には、LRS（Liberalised Remittance Scheme） という海外送金制度があります。

LRSでは、一定の条件のもと、年間 USD 250,000 まで海外送金することができます。

しかし、日本人駐在員がインドで得た給与を日本へ送金する場合は、LRSのUSD 250,000枠を使って送金するのではなく、Net Salary Incomeに基づく別の取扱いがあります。

したがって、

「日本人駐在員の給与送金は、年間USD 250,000まで」というLRSの枠だけで判断するものではありません。

という点が重要です。

※給与以外の資金を海外送金する場合には、LRS等の別の規定が適用される可能性があります。

3. 日本へ送金できる給与

日本人駐在員は、インドで受け取った Net Salary Income（手取り給与） を日本へ送金することができます。

ここでいうNet Salary Incomeは、一般的に、給与から以下のような控除を差し引いた後の金額です。

• Income Tax（所得税）
• Provident Fund（PF）
• その他の給与控除

例

この場合、₹430,000がNet Salary Incomeとなります。

したがって、海外送金を行う際には、このNet Salary Incomeを証明できる書類が重要になります。

4. 送金時に必要となる主な書類

実際の送金時には、銀行から以下の書類の提出を求められる場合があります。

① Passport & Employment Visa

• パスポートのSelf-certified Copy
• 有効なEmployment Visa

② Net Salary Incomeの証明

インドで受け取った給与を確認できる書類。

例えば、

• Salary Slip
• Salary Certificate
• Form 16
• Employerが発行する給与証明書

などがあります。

③ Bank Account Statement

インドの銀行口座の明細。

給与がインドの口座に入金されていることや、過去の送金状況を確認するために使用されます。

④ Form A2 & FEMA Declaration

海外送金を行うため、Form A2 および必要な FEMA Declaration を提出します。

給与送金がLRSに基づくものではない場合、Form A2のLRSに関する申告部分については、銀行の指示に従って対応します。

⑤ PAN

インドの銀行口座に本人の PAN（Permanent Account Number） が登録されていることを確認します。

5. Purpose Code

海外送金を行う際には、送金目的を示す Purpose Code が必要です。

駐在員の給与送金については、銀行の取扱いに応じて適切なPurpose Codeを指定します。

S1301 – Expat

が使用される場合があります。

※Purpose Codeについては、実際の送金内容および取引銀行の取扱いを確認してください。

6. Form 145 / Form 146

今回のような駐在員の給与送金については、Form 145およびForm 146は通常不要とされています。

ただし、銀行から追加書類を求められる場合があります。

7. TCSについて

LRSに基づく海外送金については、一定の条件のもとで TCS（Tax Collected at Source） が関係します。

一方、LRSではなく、インドで得た給与を送金する場合は、LRSに基づくTCSの対象とはならないという取扱いになります。

まとめ：日本人駐在員が覚えておきたいこと

給与を日本へ送金する場合

1. インドで受け取ったNet Salary Incomeを基準に送金
2. LRSのUSD 250,000枠による送金とは別の取扱い
3. Salary Slip等でNet Salaryを証明
4. Form A2等の必要書類を提出
5. 日本の銀行口座へ送金

一番重要なポイント

日本人駐在員のインド給与の海外送金は、一般的なLRS（年間USD 250,000）の枠だけで考えるのではなく、Net Salary Incomeに基づく外国人駐在員向けの特別な取扱いがあります。

そのため、「給与を日本へ送金したいが、USD 250,000を超えてしまうのでは？」という場合でも、LRSの上限だけを見て判断する必要はありません。

ただし、給与以外の資金を送金する場合や、送金額・送金方法によっては別のFEMA・税務上のルールが適用される可能性があります。

また、実際の必要書類やPurpose Codeについては銀行によって確認事項が異なる場合があるため、送金前に取引銀行へ確認することをおすすめします。

Key Registrations and Procedures for Japanese Nationals Relocating to India

When a Japanese national relocates to India for work and enters India on an Employment Visa or Business Visa, several registrations and administrative procedures may be required to ensure lawful stay and employment in India.

The following guide explains the key procedures that Japanese expatriates should be aware of before and after arriving in India, including when each procedure is required and what documents may be needed.

1. Procedures Upon Arrival in India

① Immigration Clearance

Upon arrival in India, the Japanese national will undergo immigration clearance.

The following documents should generally be prepared:

• Valid passport
• Valid Indian visa or e-Visa
• Completed Arrival Card, where applicable

Depending on the visa type and circumstances, immigration authorities may request additional documents.

② Biometric Enrolment

Japanese nationals entering India on certain long-term visas may be required to provide biometric information, such as fingerprints, during the immigration process.

2. C Form Registration

What is a C Form?

A C Form is a registration submitted to the Indian immigration authorities to report the stay and address of a foreign national in India.

When a Japanese national stays at a hotel, serviced apartment, company guest house, rented residential property, or other accommodation, the accommodation provider may be required to submit the C Form to the relevant authorities.

Who submits the C Form?

In general, the accommodation provider or person responsible for the premises is responsible for submitting the C Form, rather than the Japanese national personally.

Therefore, the Japanese national normally does not need to submit the C Form themselves.

However, the Japanese national or the employing company should confirm with the accommodation provider that the C Form has been properly submitted.

Why is the C Form important?

A copy of the C Form may be required for subsequent immigration-related procedures, including FRRO registration, as evidence of the foreign national's address or place of stay in India.

It is therefore recommended that the Japanese national or company obtain and retain a copy of the submitted C Form.

3. FRRO Registration

What is FRRO?

FRRO stands for Foreigners Regional Registration Office. It is the government authority responsible for registration and related immigration matters concerning foreign nationals staying in India.

For Japanese expatriates, FRRO registration may be required depending on the type and conditions of the visa, duration of stay, and other applicable requirements.

The requirement may also apply to a spouse or accompanying family member residing in India, depending on the conditions of their visa.

When should FRRO registration be completed?

Where FRRO registration is required, it should generally be completed within 14 days of arrival in India.

However, the applicable requirement and deadline may vary depending on the visa type and the latest regulations. Therefore, the applicable requirements should be confirmed before or immediately after arrival.

Documents generally required

The following documents may be required for FRRO registration:

• Passport
• Indian visa
• C Form
• Proof of address in India
• Employment Contract / Appointment Letter
• Employment Letter issued by the Indian company
• Company-related documents
• Photographs
• Other documents requested by the FRRO

4. PAN – Permanent Account Number

What is PAN?

PAN stands for Permanent Account Number. It is a 10-character alphanumeric tax identification number issued by the Indian Income Tax Department.

For Japanese expatriates receiving salary in India, PAN is an important requirement for tax and financial procedures.

What is PAN used for?

PAN may be required for:

• Income tax compliance relating to salary
• TDS (Tax Deducted at Source)
• Filing of Income Tax Returns
• Opening a bank account
• Certain financial transactions
• Other tax-related procedures

When should PAN be obtained?

Japanese nationals who will work and receive salary in India are advised to start the PAN application process as soon as possible after relocating to India.

5. Aadhaar

What is Aadhaar?

Aadhaar is an identification number issued by the Government of India.

For foreign nationals, including Japanese nationals, Aadhaar is not automatically mandatory simply because they are working in India.

Depending on the individual's length of stay and the government, financial, or other services they intend to use, obtaining Aadhaar may be necessary or beneficial.

Therefore, Japanese expatriates should confirm whether Aadhaar is required based on their individual circumstances and intended use.

6. Opening a Bank Account in India

Japanese expatriates working in India who receive their salary in India will generally need an Indian bank account.

The type of bank account depends on the individual's residential status, visa, duration of stay, salary arrangements, and the bank's own policies.

Depending on the bank and the individual's circumstances, a Resident Savings Account or another appropriate account may be available.

Documents Generally Required

The following documents may be requested when opening a bank account:

Identification

• Passport
• Valid Indian visa
• Recent photograph

Tax-related documents

• PAN Card
• Form 60, where applicable if PAN has not yet been obtained

Proof of address in India

Examples include:

• Rent Agreement / Lease Agreement
• Electricity, water, or other utility bill
• Address confirmation issued by the employer
• Other documents accepted by the bank

Proof of address in Japan

• Documents confirming the residential address in Japan
• Other documents specified by the bank

Employment / Assignment documents

• Employment Letter
• Appointment Letter
• Employer Certificate
• Letter from the Indian company confirming employment or assignment

Other documents

Depending on the bank and the individual's circumstances:

• FRRO Registration Certificate or related documents
• Bank's Account Opening Form
• KYC-related documents
• Additional documents requested by the bank

Important Note

The required documents and account types vary from bank to bank.

Foreign nationals may also be required to present original documents, visit a bank branch in person, and complete additional KYC procedures.

Therefore, it is recommended to confirm the exact requirements with the selected bank before starting the account-opening process.

7. Basic Documents Japanese Expatriates Should Prepare

To make the various procedures in India smoother, Japanese expatriates should keep the following documents readily available.

Documents to Bring from Japan

• Passport
• Indian Visa
• Employment Letter / Appointment Letter
• Documents confirming the residential address in Japan
• Recent photographs
• Other assignment-related documents provided by the employer

Documents to Obtain or Prepare After Arrival in India

• C Form
• Proof of address in India
• FRRO-related documents, where applicable
• PAN
• Bank account-related documents
• Aadhaar, where required

8. Typical Procedure After Arrival in India

The procedures can generally be considered in the following order:

1. ① Arrival in India
2. ② Immigration Clearance / Biometric Enrolment, where applicable
3. ③ Confirm submission of C Form by the accommodation provider
4. ④ FRRO Registration, where required
5. ⑤ Apply for PAN
6. ⑥ Open an Indian Bank Account
7. ⑦ Apply for Aadhaar, where required

9. Key Points for Japanese Expatriates

Obtaining a visa and entering India does not necessarily mean that all immigration, tax, and administrative procedures have been completed.

In particular, Japanese expatriates and their employing companies should confirm the following soon after arrival:

• CHECK 1Has the C Form been submitted?
• CHECK 2Is FRRO registration required, and if so, what is the applicable deadline?
• CHECK 3Has the PAN application been completed?
• CHECK 4Has an appropriate Indian bank account been arranged for salary payments?

Completing these procedures at an early stage can help Japanese expatriates start their work and daily life in India smoothly and avoid unnecessary administrative issues.

Note: This guide provides general information for Japanese expatriates relocating to India. The applicable procedures, deadlines, and required documents may vary depending on the visa type, duration of stay, residential status, family circumstances, and the latest regulations issued by the Indian authorities. The latest requirements should be confirmed with the relevant government authorities, immigration offices, and banks before proceeding.

Provident Fund (EPF) Treatment for Japanese Nationals Working in India

A Japanese national working for an Indian company covered under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (EPF Act) is generally classified as an “International Worker (IW)” under the EPF Scheme.

India and Japan have a Social Security Agreement (SSA), which came into force on 1 October 2016. The agreement allows certain Japanese nationals temporarily posted to India to remain covered under Japan’s social security system instead of contributing to Indian social security, subject to the applicable conditions and a valid Certificate of Coverage (CoC).

1. Employee on Detachment / Secondment from a Japanese Employer

Where a Japanese employee is seconded from a Japan-based entity to India and continues to contribute to the Japanese social security system, the employee may qualify for exemption from Indian social security contributions under the India–Japan SSA.

To obtain this exemption, the employee must have a valid Certificate of Coverage (CoC) issued by the competent Japanese authority.

During the period covered by the CoC, the employee is generally treated as an “excluded employee” for Indian EPF purposes and may be exempt from Indian EPF contributions.

Under the India–Japan SSA, contributions may continue in the home country for a posting period of up to 60 months (5 years), subject to the terms of the SSA and applicable procedures. Any extension beyond the applicable period would require confirmation under the relevant SSA procedures.

2. Japanese Employee Directly Employed by an EPF-Covered Indian Company

Where a Japanese national is directly employed by an EPF-covered Indian company and does not have a valid CoC or other applicable exemption, the employee is generally required to be covered under the Indian EPF framework as an International Worker.

There is no minimum period of employment before EPF becomes applicable to an eligible International Worker. The employee is required to be enrolled from the first day of employment in India. In addition, there is generally no salary ceiling for calculating EPF contributions for International Workers.

For International Workers, the employer and employee contributions are generally calculated on the applicable full salary/pay, without the usual wage ceiling applicable to domestic employees. The treatment of the employer’s contribution between the EPF and EPS components depends on the employee’s applicable pension status and the relevant EPFO provisions.

Employment Visa Salary Requirement

Separately from EPF requirements, a foreign national applying for an Employment Visa in India is generally required to meet the applicable minimum annual salary requirement.

The FRRO registration guidance specifies an annual income of USD 25,000 or above for Employment Visa registration, subject to applicable exemptions and rules. Income or salary paid in kind is not considered for calculating this minimum amount.

Therefore, when a Japanese national is directly employed by an Indian company, the employer should separately check:

• EPF compliance: Whether the employee is required to contribute as an International Worker; and
• Employment Visa compliance: Whether the applicable USD 25,000 annual salary requirement is satisfied.

3. Withdrawal of Provident Fund Accumulation When Permanently Leaving India

If a Japanese national leaves Indian employment permanently and does not intend to take up another employment in India, the employee may apply for settlement or withdrawal of the accumulated Provident Fund, subject to the applicable EPFO rules and documentation.

For an International Worker from an SSA country, the applicable SSA provisions may allow benefits to be received without waiting until the age of 58, depending on the circumstances and the applicable rules.

The treatment of the EPF and EPS components may differ depending on the employee’s service period and the applicable SSA provisions. Therefore, the individual’s eligibility should be confirmed at the time of withdrawal.

4. Where Can the Provident Fund Be Paid?

EPFO’s FAQ specifically provides that the amount due to an International Worker from an SSA country may be paid into:

• an Indian bank account, or
• a bank account in the employee’s home country.

Accordingly, a Japanese national who permanently returns to Japan may potentially receive the Provident Fund settlement in a Japanese bank account, subject to the required documentation and the procedures of the concerned EPFO office.

Key Points for Japanese Companies

For Japanese companies employing or seconding Japanese nationals to India, the key points to consider are:

The applicability of Indian EPF and the India–Japan SSA depends on the employee’s employment arrangement, Japanese social security coverage, CoC status, and Indian employment structure.

Japanese companies should therefore confirm the applicable requirements before assigning or directly employing Japanese nationals in India.

This article is intended for general informational purposes only and does not constitute legal, tax, immigration, or social security advice. The applicable rules and procedures should be confirmed based on the individual circumstances and the latest regulations and requirements of the relevant authorities.

Key Points and Risks of Secondment Arrangements for Japanese Companies

In Light of the Recent Delhi High Court Ruling

Secondment arrangements are commonly used by Japanese companies operating in India. However, recent developments, including a Delhi High Court ruling, highlight several tax risks that Japanese companies should carefully consider, even where employee costs are reimbursed on a cost-to-cost basis without any markup.

1. Secondment Arrangement

A Japanese overseas group company may second an employee to its Indian subsidiary to work on specific projects, provide specialized expertise, or support local operations.

Even where the Indian company reimburses the Japanese company for the employee’s salary and related costs on a cost-to-cost, no-markup basis, such payments may be regarded as consideration for services rather than a mere reimbursement of employee costs.

This risk may arise where the secondee continues to have an employment relationship with the Japanese company and provides specialized technical knowledge, expertise, experience, or technical know-how to the Indian company.

2. Salary Reimbursement and Split-Payroll Risks

Under a split-payroll arrangement, the Japanese group company may pay part of the expatriate’s salary, social security, or pension in Japan, while the Indian company reimburses the corresponding costs to the Japanese company on a cost-to-cost basis.

Depending on the nature of the arrangement and the services provided, such reimbursement may give rise to withholding tax obligations in India.

3. Broad FTS Scope under the India-Japan DTAA

The India-Japan Double Taxation Avoidance Agreement (DTAA) has a broad definition of Fees for Technical Services (FTS), covering managerial, technical, or consultancy services, including the provision of technical or other personnel.

Accordingly, senior advisors, technical managers, or engineers seconded to India may potentially be viewed as providing managerial, technical, or consultancy services.

However, not every secondment arrangement is automatically treated as FTS. The tax treatment depends on the specific facts and circumstances of each arrangement.

4. GST under the Reverse Charge Mechanism (RCM)

If a reimbursement paid to the Japanese group company is recharacterized as consideration for services, it may be treated as an import of services by the Indian company.

In such cases, GST under the Reverse Charge Mechanism (RCM) may also need to be considered.

5. Key Points for Japanese Companies to Review

Japanese companies should carefully review the following:

• Secondment Agreement: Clearly define the direction, control, and supervision of the secondee and the respective employment responsibilities and risks of each entity.
• Actual Working Arrangements: Ensure that the actual working relationship is consistent with the contractual arrangements.
• Expense Reimbursements: Maintain clear documentation showing the basis and nature of salary and other cost reimbursements.
• Tax Treatment: Review potential withholding tax and GST implications before making payments to the Japanese group company.

Key Takeaway

A cost-to-cost reimbursement with no markup does not, by itself, eliminate tax risks. Japanese companies should assess the contractual arrangements, actual working relationship, employment relationship, nature of duties, and intercompany payment flows to determine the appropriate tax treatment.