CBDT issues clarification in respect of income-tax clearance certificate

The Ministry of Finance has dismissed the reports which said that all Indian citizens must obtain incometax clearance certificate ITCC before leaving the country said an official release from the Ministry of Finance on TuesdayIt is being erroneously reported that all Indian citizens must obtain incometax clearance certificate ITCC before leaving the country a position that is factually incorrect the press release saidSection 230 1A of the Incometax Act 1961 the Act relates to obtaining a incometax clearance certificate in certain circumstances by persons domiciled in India The said provision as it stands came on the statute through the Finance Act The Finance No2 Act 2024 has made only an amendment in Section 2301A of the Act vide which reference of the Black Money Undisclosed Foreign Income and Assets and Imposition of Tax Act 2015 the Black Money Act has been inserted in the said Section it addedThis insertion has been made to also cover the liabilities under the Black Money Act in the same manner as the liabilities under the Incometax Act 1961 and other Acts dealing with direct taxes for the purpose of Section 2301A of the Incometax Act 1961 it saidThere appears to be misinformation about the said amendment emanating from an incorrect interpretation of the amendment It is being erroneously reported that all Indian citizens must obtain an incometax clearance certificate ITCC before leaving the country This position is factually incorrect the press release saidAs 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 release notedIn this context the Central Board of Direct Taxes CBDT has specified that the tax clearance certificate under Section 2301A of the Act may be required to be obtained by persons domiciled in India only where the person is involved in serious financial irregularities and his presence is necessary in investigation of cases under the Incometax Act or the Wealthtax Act and it is likely that a tax demand will be raised against the person the release further notedIt is required when the person has direct tax arrears exceeding Rs 10 lakh outstanding against him which have not been stayed by any authorityFurther 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 Incometax or Chief Commissioner of IncometaxIn view thereof it is reiterated that the ITCC under Section 2301A 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 lakhs is pending which is not stayed by any authority it added