Govt clarifies tax clearance certificate rules after social media outrage

Govt clarifies tax rule: Following public outcry over a Budget proposal requiring tax clearance certificates for international travel, the government clarified on Sunday that the amendment targets only those with significant tax dues or accused of financial irregularities.

The Finance Ministry's proposal in the Finance Bill, 2024, aims to include the Black Money Act, 2015, amongst the laws necessitating tax clearance for individuals with outstanding liabilities.

"The proposed amendment does not require all residents to obtain a tax clearance certificate," the ministry stated.

Selective tax clearance

Under Section 230 of the Income-tax Act, 1961, only specific individuals under certain conditions are mandated to obtain such a certificate.

The Ministry highlighted a 2004 Income Tax department notification that specifies the need for a tax clearance certificate in particular circumstances, such as serious financial irregularities requiring the person's presence for investigation, or direct tax arrears exceeding Rs 10 lakh that are not stayed by any authority.

The I-T department clarified that a tax clearance certificate can only be requested after recording reasons and obtaining approval from the Principal Chief Commissioner or Chief Commissioner of Income-tax. The certificate confirms no outstanding liabilities under the Income-tax Act, Wealth-tax Act, Gift-tax Act, or Expenditure-tax Act.

(With Reuters Inputs)