Going Abroad? Do You Need Income Tax clearance Certificate– Govt Clarifies | Personal Finance News

In the Finance Bill 2024, the finance ministry has proposed adding the Black Money Act, 2015, to the list of laws under which individuals must clear their liabilities to obtain a tax clearance certificate. “The proposed amendment does not require all the residents to obtain the tax clearance certificate,” the ministry clarified in a statement, as reported by PTI.

Understanding Section 230 of the Income-tax Act, 1961

According to Section 230 of the Income-tax Act, 1961, not everyone needs to get a tax clearance certificate. Only specific individuals under certain circumstances will be required to obtain this certificate. The ministry stated that a 2004 notification from the Income Tax department specifies that a tax clearance certificate is only required for people living in India under certain circumstances.

Who Requires a Tax Clearance Certificate?

Person Involved in Serious Financial Irregularities: A tax clearance certificate is needed if a person is involved in serious financial irregularities and their presence is necessary for investigations under the Income-tax Act or the Wealth-tax Act, and it is likely that a tax demand will be raised against them.

Direct Tax Arrears Exceeding Rs 10 Lakh: If a person has direct tax arrears exceeding Rs 10 lakh, which have not been stayed by any authority, they will also need to obtain a tax clearance certificate.

The I-T department explained that a person can be required to obtain a tax clearance certificate only if there are recorded reasons for it and approval has been obtained from the Principal Chief Commissioner of Income-tax or the Chief Commissioner of Income-tax.

The certificate issued by the income-tax authority confirms that the individual has no liabilities under the Income-tax Act, the Wealth-tax Act of 1957, the Gift-tax Act of 1958, or the Expenditure-tax Act of 1987.