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The recent amendment to Section 230(1A) of the Income-tax Act, 1961, does not require all Indian citizens to obtain an income-tax clearance certificate (ITCC) before travelling to other countries, the Central Board of Direct Taxes (CBDT) has said in clarification issues in response to widespread misinformation.
According to CBDT, the amendment, introduced through the Finance (No. 2) Act, 2024, only incorporates references to the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (the 'Black Money Act').
"This insertion has been made to also cover the liabilities under the Black Money Act in the same manner as the liabilities under the Income-tax Act,1961 and other Acts dealing with direct taxes for the purpose of Section 230(1A) of the Income-tax Act,1961," said CBDT in the statement.
Requirement to obtain an ITCC is not universal: CBDT
According to CBDT, since its introduction in 2003, the provision has only applied to individuals in specific circumstances. "Only certain persons, in respect of whom circumstances exist which make it necessary to obtain a tax clearance certificate, are required to obtain the said certificate. This position has been in the statute since 2003 and remains unchanged even with the amendments vide Finance (No. 2) Act, 2024," said CBDT.
The tax clearance certificate under Section 230(1A) of the Act, may be required to be obtained by persons domiciled in India only in the following circumstances:
- Persons involved in serious financial irregularities.
- Those persons who have direct tax arrears exceeding Rs 10 lakh that has not been stayed by any authority.
- A person can be asked to obtain a tax clearance certificate only after recording the reasons for the same and after taking approval from the Principal Chief Commissioner of Income-tax or Chief Commissioner of Income-tax
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