Do You Really Need An Income-Tax Clearance Certificate For Travel? CBDT Clarifies

Tax Clearance Certificate: According to the CBDT, the requirement for an income-tax clearance certificate applies only in certain defined cases

Tax Clearance Certificate: Current regulations state that only individuals involved in significant financial irregularities or those with outstanding direct tax arrears exceeding Rs 10 lakh are mandated to obtain the ITCC.

Source : ABPLIVE AI

Tax Clearance Certificate: The Central Board of Direct Taxes (CBDT) has issued a clarification to counter recent misinformation regarding the necessity for an income-tax clearance certificate (ITCC) for Indian citizens traveling abroad. Contrary to circulating reports, the CBDT confirmed that not all Indian citizens are required to obtain an ITCC before leaving the country.

This provision, initially introduced through the Finance Act of 2003, outlines specific circumstances under which individuals domiciled in India must secure a tax clearance certificate. The recent amendment to this act includes references to the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, ensuring that liabilities under this legislation are treated similarly to those under the Income-tax Act.

According to the CBDT, the requirement for an ITCC applies only in certain defined cases. Current regulations state that only individuals involved in significant financial irregularities or those with outstanding direct tax arrears exceeding Rs 10 lakh (provided such arrears are not stayed by any authority) are mandated to obtain the ITCC. These provisions have been in place since 2003 and remain unchanged by the recent amendment.

The CBDT reiterated that the requirement for an ITCC is limited to specific instances:

Serious Financial Irregularities: Individuals involved in serious financial misconduct who are required for ongoing investigations.

Significant Tax Arrears: Persons with unpaid tax dues exceeding Rs 10 lakh, unless such dues are stayed by an appropriate authority.

The notification also highlighted that obtaining an ITCC involves a formal process, including the recording of specific reasons and obtaining approval from the Principal Chief Commissioner of Income or Chief Commissioner of Income Tax.

In summary, the CBDT reassured the public that there is no blanket requirement for all Indian citizens traveling abroad to obtain an ITCC, which is reserved for exceptional cases involving substantial financial issues.