The Indian Ministry of Finance has dismissed reports claiming that all Indian citizens must obtain an Income-Tax Clearance Certificate (ITCC) before leaving the country. In an official statement issued on August 20, the Central Board of Direct Taxes (CBDT) clarified that this is factually incorrect. The ITCC is only required in rare circumstances, primarily for individuals involved in serious financial irregularities or those with outstanding tax demands exceeding ₹10 lakhs that are not subject to a stay order.
The CBDT further elaborated that the ITCC may be required in cases where an Indian resident is involved in financial irregularities, and their presence is deemed necessary for investigations under the Income-Tax (IT) Act or the Wealth-tax Act. This is particularly relevant when a tax demand is likely to be raised against the individual. The ITCC is also required when an individual has direct tax arrears exceeding ₹10 lakhs that have not been stayed by any authority. It’s important to note that the ITCC can only be requested after recorded reasons for the demand are provided and with approval from the Principal Chief Commissioner of Income-tax or Chief Commissioner of Income-tax.
The Ministry’s clarification stemmed from an amendment made to Section 230 (1A) of the Income-tax Act, 1961, through the Finance (No.2) Act, 2024. This amendment inserted a reference to the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, expanding the scope of Section 230(1A) to include liabilities under the Black Money Act alongside those under the Income-tax Act and other direct tax-related Acts. However, the Ministry emphasized that this amendment does not mandate an ITCC for all Indian citizens leaving the country.
The Ministry further clarified that the requirement for a tax clearance certificate, as outlined in Section 230 of the Income-tax Act, has been in place since 2003 and remains unchanged. It is not a blanket requirement for all citizens; rather, it applies only to those individuals whose circumstances necessitate obtaining such a certificate. The amendment in the Finance (No. 2) Act, 2024, has not altered this established provision.
The Ministry’s clarification aims to address misinformation regarding the ITCC requirements and ensure that Indian citizens are aware of the actual conditions under which the certificate is needed. The statement underscores the importance of accurate information dissemination and prevents unnecessary apprehension among travelers.
