NEW DELHI: In view of growing misinformation regarding the requirement for Indian citizens to obtain an income-tax clearance certificate (ITCC) before leaving the country, the Central Board of Direct Taxes (CBDT) on Tuesday issued a statement clarifying the conditions under which such a certificate is necessary.
According to the tax department, the recent amendment : Section 230(1A) of the Income-tax Act, 1961, introduced through the Finance (No. 2) Act, 2024, does not mandate that all Indian citizens have to secure an ITCC prior to international travel.
"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 Ministry said.
According to the CBDT, an ITCC may be required in the following cases: When a person is involved in serious financial irregularities, and their presence is deemed necessary for investigations under the Income-tax or Wealth-tax Acts, where a tax demand is likely to be raised. When an individual has outstanding direct tax arrears exceeding ₹10 lakh that have not been stayed by any authority. Furthermore, the issuance of an ITCC is not arbitrary; it can only be requested after thorough documentation of the reasons and with prior approval from the Principal Chief Commissioner of Income-tax or the Chief Commissioner of Income-tax.
"In view thereof, it is reiterated that the ITCC under Section 230(1A) 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 lakh is pending which is not stayed by any authority," the Ministry added.