The Income Tax Department on Tuesday reiterated that barring rare cases, there is no need for all Indian citizens to obtain income-tax clearance certificate (ITCC) before leaving the country.

Quoting from a 2004 instruction, the Department said that the tax clearance certificate, under Section 230(1A) of the Act, may be required to be obtained by persons domiciled in India only in two circumstances. First, where the person is involved in serious financial irregularities and his presence is necessary in 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, second where the person has direct tax arrears exceeding ₹10 lakh outstanding against him which have not been stayed by any authority.

Further, “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,” the department said,

This statement has come after an amendment in the Income Tax Act 1961 was made through the Finance Bill 2024. Now the bill has become a law and through the amendment, the Black Money Act has been inserted in the section of Income Tax Act which prescribe rare cases for obtaining Income Tax Clearance Certificate.

“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 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,” the Department said.

Published on August 20, 2024