Following a social media uproar over a Budget proposal mandating tax clearance certificates for international travel, the government clarified on Sunday that this requirement would apply only to those accused of financial irregularities or with significant tax arrears. The Finance Ministry, in the Finance Bill, 2024, proposed adding the Black Money Act, 2015, to the list of Acts under which individuals must clear their liabilities to obtain such a certificate.
The ministry emphasized that the proposed amendment does not apply to all residents. According to section 230 of the Income-tax Act, 1961, not everyone is required to obtain a tax clearance certificate. Only certain individuals under specific circumstances, such as involvement in serious financial irregularities or having direct tax arrears exceeding Rs 10 lakh, need to obtain this certificate. The requirement comes into effect after reasons are recorded and approval is obtained from the Principal Chief Commissioner of Income-tax or Chief Commissioner of Income-tax.
A 2004 notification by the Income Tax department specifies that the tax clearance certificate is required only under certain conditions. This includes cases where an individual is necessary for the investigation of financial irregularities or has significant direct tax arrears. The certificate, issued by the income-tax authority, confirms that the individual has no liabilities under various tax Acts, including the Income-tax Act, Wealth-tax Act, Gift-tax Act, or Expenditure-tax Act.
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