The Indian government has issued a clarification to address recent misleading reports about mandatory tax clearance for individuals travelling abroad.
The Central Board of Direct Taxes (CBDT) announced on Sunday that not every individual is required to obtain a tax clearance certificate under section 230 of the Income-tax Act, 1961.
Response to Budget 2024-25 Concerns
This clarification follows concerns that arose after Finance Minister Nirmala Sitharaman presented the Budget 2024-25 on July 23. The budget proposed including the Black Money Act, 2015 in the list of Acts for which liabilities must be cleared to obtain a tax clearance certificate.
The CBDT emphasized that the proposed amendment does not mandate all residents to obtain a tax clearance certificate. It applies only to specific cases where circumstances necessitate such clearance.
Specific Cases Requiring Tax Clearance
The cases requiring a tax clearance certificate include:
- Individuals involved in serious financial irregularities whose presence is necessary for investigation.
- Persons with outstanding direct tax arrears exceeding Rs 10 lakh that have not been stayed by any authority.
The board further stated that obtaining a tax clearance certificate requires approval from high-ranking tax officials, including the Principal Chief Commissioner or Chief Commissioner of Income-tax.
Assurance to General Public
This clarification aims to dispel confusion and reassure the general public that routine international travel will not be impeded by new tax clearance requirements. The government's decision to include the Black Money Act, 2015 in the list is part of its ongoing efforts to combat tax evasion and ensure compliance with tax laws.
In summary, the CBDT's statement seeks to ensure that travelers understand the limited scope of the tax clearance requirement and continue their travel plans without unnecessary concerns.
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