• Source:JND
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Tax Clearance Certificate:  The Finance Ministry has issued a fresh release to clarify that all Indians are not required to get an Income Tax Clearance Certificate (ITCC) to travel abroad. The Ministry has issued the clearance considering the false narrative being propagated around the new rule introduced in Budget 2024. 

"There appears to be misinformation about the said amendment emanating from incorrect interpretation of the amendment. It is being erroneously reported that all Indian citizens must obtain an income-tax clearance certificate (ITCC) before leaving the country. This position is factually incorrect," said the ministry.

The Finance Ministry stated that all citizens do not have to obtain a tax clearance certificate before they plan to visit a foreign country. 

"As per section 230 of the Act, every person is not required to obtain a tax clearance certificate. Only certain persons, in respect of whom circumstances exist which make it necessary to obtain a tax clearance certificate, are required to obtain the said certificate. This position has been in the statute since 2003 and remains unchanged even with the amendments vide Finance (No. 2) Act, 2024," the ministry added further. 

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Announcements made in the budget

Finance Minister Nirmala Sitharaman introduced a vital amendment in the 2024 Union Budget for those planning to move out of India. According to the Budget 2024 announcement, the new law requires people residing in India to settle all tax dues and obtain a ‘clearing certificate’ before leaving the country.

However, the finance ministry has clarified that the change does not require all people to obtain a tax clearance certificate.

Who should acquire a tax clearance certificate?

In this context, the CBDT has specified that the tax clearance certificate under Section 230(1A) of the Act, shall be acquired by a person resident in India only in the below-mentioned situations:

Financial irregularities:  Where the person is involved in gross financial irregularities and his presence is required in the investigation of cases under the Income-tax Act or the Wealth-Tax Act and a tax claim is likely to be instituted against him.

Direct tax arrears:  Where the direct tax arrears of the person exceeds Rs. 1 million outstanding against him which has not been suspended by any authority.

Further, a person can be requested to acquire a tax clearance certificate only after recording reasons for the same and acquiring approval from the Principal Chief Commissioner of Income Tax or the Chief Commissioner of Income Tax.

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