Income Tax Clearance Certificate: The Central Board of Direct Taxes (CBDT) has clarified recent confusion about the need for an Income Tax Clearance Certificate for Indian citizens traveling abroad. The CBDT said it is incorrect to claim that all citizens must get this certificate before leaving the country.
Not Required for Everyone: According to CBDT, not all citizens need to get an Income Tax Clearance Certificate before traveling abroad. The requirement applies only in certain cases. This rule has been in place since 2003 and remains unchanged despite amendments in the Finance (No. 2) Act 2024.
Applies to Those Involved in Financial Fraud: The CBDT stated that under Section 230(1A) of the Income Tax Act, certain individuals need to get a clearance certificate if they are involved in serious financial irregularities. If a person is needed in the country for investigations under the Income Tax or Wealth Tax Act and has tax demands issued against them, they must obtain the certificate before leaving.
For Tax Arrears Over ₹10 Lakhs: Additionally, if a person has direct tax arrears exceeding ₹10 lakhs and no authority has imposed restrictions, they must also get the certificate before traveling. Before asking for the certificate, reasons must be recorded, and approval must be obtained from the Principal Chief Commissioner or Chief Commissioner of Income Tax.
CBDT emphasized that the requirement for an Income Tax Clearance Certificate before traveling abroad applies only in specific cases, such as serious financial fraud or substantial tax arrears.
