Tax Certificate Not Mandatory for All Travelling Abroad: Finance Ministry Clarification
By: Admin| July 29, 2024| Categories: Income Tax News | News 4 Min Read
The Union Finance Ministry on Sunday clarified that a tax certificate is mandatory only for Indians involved in serious financial irregularities or having substantial tax dues.
This clarification comes amid concerns over new rules mandating Indians going abroad to obtain a tax-clearance certificate under the Black Money Act before leaving the country. The Finance Bill, 2024, proposed including the Black Money Act in the list of laws under which residents can clear their tax liabilities.
The ministry specified that a tax-clearance certificate is necessary only for individuals with significant direct tax arrears exceeding ₹10 lakh if their case has not been stayed by any authority.
Effective from October 1, this rule aims to combat tax evasion related to undisclosed foreign assets. The ministry stated that a person could be asked to obtain a tax-clearance certificate only after recording the reasons and getting approval from the principal chief commissioner or chief commissioner of income tax. “The proposed amendment (Section 230 of the Income-Tax Act) does not require all residents to obtain the tax clearance certificate,” the ministry said, citing a 2004 notification by the Income Tax Department.
A tax-clearance certificate is required only by those domiciled in India “in certain circumstances,” the ministry emphasized. It was further clarified that the I-T authority must issue such a certificate, stating that the person has no liabilities under the Income Tax Act; the Wealth Tax Act, 1957; the Gift Tax Act, 1958; or the Expenditure Tax Act, 1987.
This certificate will verify that the individual has no tax liabilities or has made arrangements to settle dues before leaving India.
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