Govt. clarifies on tax clearance certificate for international travel | Fusion - WeRIndia

The Union government clarified on Sunday that not everyone needs a tax clearance certificate under section 230 of the Income-tax Act, 1961.

This clarification has come amid reports suggesting that individuals must obtain this clearance certificate before flying abroad.

The Union Budget 2024 proposed including a reference to the Black Money Act, 2015, in the requirements for obtaining a tax clearance certificate. This certificate, issued by the income-tax authority, states that a person has no liabilities under various tax acts.

The Central Board of Direct Taxes (CBDT) clarified that the amendment does not require all residents to obtain a tax clearance certificate. Only specific individuals, under certain circumstances, will need to obtain this certificate.

These circumstances include serious financial irregularities where the individual’s presence is necessary for investigation under the Income-tax Act or the Wealth-tax Act.

Additionally, individuals with direct tax arrears exceeding ₹10 lakh, not stayed by any authority, will need this certificate.

The proposed amendment aims to include the Black Money Act, of 2015, in the list of acts under which individuals must clear their liabilities to obtain a tax clearance certificate. Since the CBDT administers the Black Money Act, it was logical to add it to the existing list of tax acts.

The CBDT emphasized that only specific individuals with serious financial irregularities or substantial tax arrears would be required to obtain a tax clearance certificate.

This measure ensures that individuals involved in significant financial misconduct cannot evade their liabilities by travelling abroad.

Furthermore, the CBDT explained that a tax clearance certificate would be necessary where an individual is involved in serious financial irregularities, and their presence is required for investigations.

This ensures that individuals likely to face tax demands cannot escape their obligations by leaving the country.

The CBDT also assured that a person would only be asked to obtain a tax clearance certificate after recording the reasons and getting approval from the concerned authority.

The proposed changes to the tax clearance certificate requirements aim to include the Black Money Act. At the same time, it ensures that only specific individuals with significant tax liabilities or financial irregularities need to obtain the certificate.

This clarification from the CBDT reassures the general public that not everyone needs to obtain a tax clearance certificate for international travel.

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