Clarification on Income-Tax Clearance Certificate (ITCC) Requirement

It has come to the attention of the Central Board of Direct Taxes (CBDT) that misinformation is circulating regarding the requirement for Indian citizens to obtain an 𝐈𝐧𝐜𝐨𝐦𝐞-𝐓𝐚𝐱 𝐂𝐥𝐞𝐚𝐫𝐚𝐧𝐜𝐞 𝐂𝐞𝐫𝐭𝐢𝐟𝐢𝐜𝐚𝐭𝐞 (𝐈𝐓𝐂𝐂) 𝐛𝐞𝐟𝐨𝐫𝐞 𝐥𝐞𝐚𝐯𝐢𝐧𝐠 𝐭𝐡𝐞 𝐜𝐨𝐮𝐧𝐭𝐫𝐲. This claim is incorrect and misleading.

Clarification on Section 230 (1A) of the Income-Tax Act, 1961:

Section 230 (1A) of the Income-Tax Act, 1961, relates to obtaining a tax clearance certificate in specific circumstances by persons domiciled in India. This provision was introduced through the Finance Act, of 2003, and has been in effect since 1 June 2003. The recent amendment made by the Finance (No.2) Act, 2024, merely adds a reference to the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (the ‘Black Money Act’) to Section 230(1A). This inclusion is intended to cover liabilities under the Black Money Act in the same manner as liabilities under the Income-Tax Act, of 1961, and other direct tax laws.

Current Requirements for ITCC:

Contrary to the erroneous reports, not all Indian citizens are required to obtain an ITCC before leaving the country. The requirement applies only in rare cases where certain conditions are met. These conditions, which have been unchanged since 2003, include:

Involvement in Serious Financial Irregularities:

If a person is involved in serious financial irregularities and their presence is required for the investigation of cases under the Income-Tax Act or the Wealth-Tax Act, it is likely that a tax demand will be raised against them.

Outstanding Direct Tax Arrears:

If a person has direct tax arrears exceeding Rs. 10 lakh, which have not been stayed by any authority.

An ITCC can only be requested after the reasons for such a requirement have been documented, and with the approval of the Principal Chief Commissioner of Income-Tax or the Chief Commissioner of Income-Tax.

Conclusion:

The Government of India reiterates that the ITCC requirement under Section 230(1A) of the Income-Tax Act, 1961, applies only to specific cases as outlined above. The recent amendment does not change the conditions under which an ITCC is required.

𝐅𝐨𝐫 𝐚𝐜𝐜𝐮𝐫𝐚𝐭𝐞 𝐢𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧, 𝐜𝐢𝐭𝐢𝐳𝐞𝐧𝐬 𝐚𝐫𝐞 𝐚𝐝𝐯𝐢𝐬𝐞𝐝 𝐭𝐨 𝐫𝐞𝐟𝐞𝐫 𝐭𝐨 𝐨𝐟𝐟𝐢𝐜𝐢𝐚𝐥 𝐠𝐨𝐯𝐞𝐫𝐧𝐦𝐞𝐧𝐭 𝐧𝐨𝐭𝐢𝐟𝐢𝐜𝐚𝐭𝐢𝐨𝐧𝐬 𝐚𝐧𝐝 𝐧𝐨𝐭 𝐭𝐨 𝐫𝐞𝐥𝐲 𝐨𝐧 𝐮𝐧𝐯𝐞𝐫𝐢𝐟𝐢𝐞𝐝 𝐫𝐞𝐩𝐨𝐫𝐭𝐬.

Contact Information:

For further clarification or inquiries, get in touch with the Central Board of Direct Taxes (CBDT) through the official channels:
Vivek Sharma; Ph.no. 011-23516848, 9910674011; Email- adg5.systems@incometax.gov.in
Income Tax (Ombudsman); Ph. no. 23214434, 23233680

Date: 20 August 2024
Location: New Delhi
Issued By: Press Information Bureau (PIB), Government of India