All Indian Citizens Aren’t Required to Obtain Income-Tax Clearance Certificate Before Leaving Country | CBDT

Press Release, dated 20-08-2024

Section 230(1A) of the Income Tax Act, 1961, relates to obtaining a tax clearance certificate by persons domiciled in India. The Finance (No. 2) Act 2024 has amended Section 230(1A) to include a reference to the Black Money(Undisclosed Foreign Income and Assets) and the Imposition of Tax Act 2015.

It was noticed that there was a mis-information about the said amendment emanating from incorrect interpretation of the amendment. It was being erroneously reported that all Indian citizens must obtain income-tax clearance certificate (ITCC) before leaving the country.

The Central Board of Direct Taxes (CBDT) has clarified that this position is factually incorrect. As per section 230 of the Act, every person is not required to obtain a tax clearance certificate. Only certain persons, in respect of whom circumstances exist, make it necessary to obtain ITCC.

The CBDT, vide its Instruction No. 1/2004, dated 05.02.2004, has specified that ITCC under Section 230(1A), may be required to be obtained by persons domiciled in India only in the following circumstances 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:

a) where the person is involved in serious financial irregularities and his presence is necessary for the investigation of cases under the Income-tax Act or the Wealth-tax Act, and it is likely that a tax demand will be raised against him, or

b) where the person has direct tax arrears exceeding Rs. 10 lakh outstanding against him, which have not been stayed by any authority.

Accordingly, the CBDT stated that the ITCC, under Section 230(1A) of the Act, is needed by residents domiciled in India only in rare cases, such as

a) where a person is involved in serious financial irregularities or

b) where a tax demand of more than Rs. 10 lakh is pending, which is not stayed by any authority.

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