CBDT Clarifies ITCC Requirements for Indian Citizens
By: Admin | August 21, 2024 | Categories: Income Tax, Press Release | 4 Min Read
The Central Board of Direct Taxes (CBDT) has clarified the requirements for obtaining an Income-tax Clearance Certificate (ITCC) under Section 230(1A) of the Income-tax Act, 1961. Contrary to some reports, Indian citizens generally do not need an ITCC before leaving the country.
Section 230(1A) and Recent Amendments
Section 230(1A) mandates that certain individuals in India must obtain a tax clearance certificate. This provision has been in effect since the Finance Act, 2003. Recently, the Finance (No.2) Act, 2024, updated this section to include references to the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. This change aligns the treatment of Black Money Act liabilities with other direct tax laws.
Who Must Obtain an ITCC?
Only individuals involved in significant financial irregularities or those with direct tax arrears exceeding Rs. 10 lakh need to obtain an ITCC. This rule has been consistent since 2003 and remains unchanged by recent amendments. Therefore, those not involved in serious financial issues or without substantial arrears do not need this certificate.
Conditions for ITCC Requirement
CBDT’s Instruction No. 1/2004, dated February 5, 2004, outlines the circumstances requiring an ITCC:
- Serious Financial Irregularities: Authorities require an ITCC if an individual is involved in serious financial irregularities and their presence is crucial for investigations under the Income-tax or Wealth-tax Acts.
- Outstanding Direct Tax Arrears: Additionally, an ITCC is necessary if an individual has direct tax arrears exceeding Rs. 10 lakh, which any authority has not stayed.
Before requesting an ITCC, authorities must document their reasons and secure approval from the Principal Chief Commissioner of Income-tax or Chief Commissioner of Income-tax.
Conclusion
In conclusion, the CBDT’s clarification makes it clear that the ITCC requirement applies only in specific, serious cases. Therefore, most individuals do not need to obtain this certificate. This measure targets significant financial discrepancies and does not affect the general population.
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