Finance Ministry Clarifies: No Need for All Indians to Get Tax Clearance Before Traveling
New Delhi, India – The Ministry of Finance has dismissed reports claiming that all Indian citizens must obtain an income-tax clearance certificate (ITCC) before leaving the country. According to an official release from the Ministry of Finance, this information is incorrect.
The confusion stems from an amendment in Section 230(1A) of the Income-tax Act, 1961, introduced by the Finance (No.2) Act, 2024. This amendment includes references to the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, to cover liabilities under the Black Money Act similarly to those under the Income-tax Act, 1961.
The Ministry clarified that not every person needs to obtain a tax clearance certificate. Only individuals involved in serious financial irregularities or those with direct tax arrears exceeding Rs 10 lakh, which have not been stayed by any authority, are required to obtain the certificate. This rule has been in place since 2003 and remains unchanged.
The Central Board of Direct Taxes (CBDT) specified that a tax clearance certificate is required only in rare cases, such as when a person is involved in serious financial irregularities or has significant outstanding tax demands. Approval from the Principal Chief Commissioner of Income-tax or Chief Commissioner of Income-tax is also necessary before asking someone to obtain the certificate.
The Ministry reiterated that the ITCC is needed only in specific circumstances and not for all Indian citizens.
Doubts Revealed
Finance Ministry -: The Finance Ministry is a part of the government that manages the country’s money, including taxes and spending.
income-tax clearance certificate (ITCC) -: An income-tax clearance certificate (ITCC) is a document that shows you have paid all your taxes and have no dues.
Section 230(1A) -: Section 230(1A) is a specific part of the Income-tax Act, 1961, which is a law about taxes in India.
Income-tax Act, 1961 -: The Income-tax Act, 1961, is a law in India that tells people how they should pay their taxes.
Finance (No.2) Act, 2024 -: The Finance (No.2) Act, 2024, is a new set of rules about money and taxes that was introduced in the year 2024.
Black Money Act -: The Black Money Act is a law in India that aims to stop people from hiding money to avoid paying taxes.
tax arrears -: Tax arrears are unpaid taxes that someone still owes to the government.