The Indian government has issued a clarification regarding recent misleading reports about mandatory tax clearance for individuals traveling abroad.
The Central Board of Direct Taxes (CBDT) said on Sunday that not every person is required to obtain a tax clearance certificate under section 230 of the Income-tax Act, 1961.
This clarification comes in response to concerns raised after the Budget 2024-25, presented by Finance Minister Nirmala Sitharaman on July 23, proposed including the Black Money Act, 2015 in the list of Acts for which liabilities must be cleared to obtain a tax clearance certificate.
The CBDT said that the proposed amendment does not require all residents to obtain a tax clearance certificate. Instead, it only applies to specific cases where circumstances necessitate such clearance.
These cases include individuals involved in serious financial irregularities whose presence is necessary for investigation, and persons with outstanding direct tax arrears exceeding Rs 10 lakh that have not been stayed by any authority.
The board also said that obtaining a tax clearance certificate requires approval from high-ranking tax officials, including the Principal Chief Commissioner or Chief Commissioner of Income-tax.
This clarification aims to dispel confusion and reassure the general public that routine international travel will not be impeded by new tax clearance requirements. The government’s move to include the Black Money Act, 2015 in the list is part of its ongoing efforts to combat tax evasion and ensure compliance with tax laws.
