Traveling overseas? Centre says tax clearance certificates are not mandatory
In response to public backlash on social media, the Indian government clarified today that tax clearance certificates are not mandatory for all overseas travelers. The Ministry of Finance stated, "The proposed amendment does not require all the residents to obtain the tax clearance certificate." This clarification comes after a proposal in the Budget 2024 seemed to suggest otherwise. The requirement is only applicable to individuals accused of financial irregularities or those with substantial tax arrears.
Specific circumstances for TCC outlined
The Income Tax Department's 2004 notification specifies the circumstances under which a tax clearance certificate is required. These include involvement in serious financial irregularities, where the individual's presence is crucial for investigations under the Income-tax Act. Another condition is if a person has direct tax arrears exceeding ₹10 lakh, that have not been stayed by any authority. The certificate can only be issued after recording reasons and obtaining approval from relevant IT authorities.
Approval process for TCC explained
The IT Department has outlined the process for obtaining a tax clearance certificate. A person can be urged to obtain this certificate only after the reasons have been recorded, and approval has been obtained from either the Principal Chief Commissioner of Income Tax or Chief Commissioner of Income Tax. The issuing authorities must confirm that the concerned person has no liabilities under various Acts, including the Income-tax Act, Wealth-tax Act (1957), Gift-tax Act (1958), or Expenditure-tax Act (1987).
Finance Bill 2024 proposes addition of Black Money Act
The Ministry of Finance proposed in Finance Bill 2024, to add reference of the Black Money Act (2015) to the list of Acts. This Act requires anyone to clear their financial liabilities and receive a tax clearance certificate. However, according to Section 230 of the Income-tax Act, 1961, not every person is mandated to obtain a tax clearance certificate. The requirement is only for certain individuals under specific circumstances.
