Contrary to recent reports, it is not mandatory for all citizens to obtain Income Tax Clearance Certificate before travelling abroad. In fact, a provision in this regard was made through the Finance Act, 2003 and it mentions the circumstances when it becomes necessary for a person residing in India to obtain a Tax Clearance Certificate.

The recent amendment only adds a reference to the Black Money (Undisclosed Foreign Income and Assets) and Tax Act, 2015 to ensure that liabilities under this Act will be treated like liabilities under the Income Tax Act. The CBDT has clarified that the ITCC rule applies only under specific circumstances.

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According to the current provisions and instructions, income tax clearance certificate will be required only for those people against whom serious cases of financial irregularities are going on or who have a dues of Rs 10 lakh under direct tax and no ban has been imposed on it. This regulation has been in place since 2003 and the recent amendment has not brought any change in it.

It has also been said in the CBDT notification that reasons have to be given for obtaining the Income Tax Clearance Certificate and its approval will be given by the Principal Chief Commissioner of Income Tax or Chief Commissioner of Income Tax. Broadly, CBDT has clearly stated that the Income Tax Clearance Certificate is not necessary for all Indians going abroad, but only those people who are caught in big financial irregularities may need it.

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The post Tax clearance certificate not required for all Indian citizens travelling abroad: Check govt’s latest clarification first appeared on Rightsofemployees.com.

Now the Central Board of Direct Taxes (CBDT) has issued a clarification regarding section 230 of the Income Tax Act, 1961, which states that it is mandatory for all taxpayers to take approval from the department before leaving the country. Tax clearance certificate will be applicable only in special circumstances.

CBDT has said that as per Instruction No. 1/2004, dated February 5, 2004, tax clearance certificate is required only for those persons who are involved in serious financial irregularities or who have direct tax dues of more than Rs 10 lakh, provided that these dues have not been stopped by any authority.

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The proposal was placed in the Finance Bill.

Finance Minister Nirmala Sitharaman had proposed to obtain a Tax Clearance Certificate in the Finance Bill citing the Black Money Act, 2015. After this, a rumour spread that it would be mandatory for everyone to obtain TCC before going abroad. But CBDT has clarified that this proposal is only for cases related to the Black Money Act, not for everyone.

Issuance of TCC not an arbitrary process

The CBDT has said that issuance of tax clearance certificate is not an arbitrary process. It requires prior approval from the Chief Commissioner of Income Tax or Commissioner of Income Tax and documentary justification. The certificate confirms that the person does not owe any tax under various tax laws including Income Tax Act, Property Tax, Gift Tax Act, Expenditure Tax Act and Black Money Act, 2015.

The post Is tax clearance certificate necessary to go abroad? CBDT issues clarification first appeared on Rightsofemployees.com.