Income Tax News: The government has clarified that not all Indian residents are subject to the necessity of tax clearance certificates for international travel, in response to social media outcry over the Budget proposal. Such clearance is only required for persons who are alleged to have significant tax arrears or financial irregularities.
Clarification from the Finance Ministry
In the Finance Bill 2024, the finance ministry proposed adding the Black Money Act, 2015, to the list of Acts under which individuals must clear their liabilities to obtain a tax clearance certificate. However, the ministry emphasized, “The proposed amendment does not require all residents to obtain the tax clearance certificate.”
Who Needs the Tax Clearance Certificate?
According to section 230 of the Income Tax Act, not everyone needs a tax clearance document. The finance ministry clarified in a 2004 notification that the certificate may be required for persons domiciled in India only under specific conditions. These include:
- Involvement in serious financial irregularities.
- Necessity of presence in investigations under the Income-tax Act or the Wealth-tax Act.
- Direct tax arrears exceeding ₹10 lakh, which have not been stayed by any authority.
The Procedure for Obtaining the Certificate
The Income Tax department stated that a person could be asked to obtain a tax clearance certificate only after recording the reasons and receiving approval from the Principal Chief Commissioner or Chief Commissioner of Income Tax. Once the reasons are documented and approved, the income tax authorities must grant the certificate, confirming that the individual has no outstanding tax liabilities.
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