CBDT said a tax clearance certificate is necessary in a situation where an individual is involved in serious financial irregularities.
Central Board of Direct Taxes (CBDT) Sunday issued a clarification about whether a tax clearance certificate is mandatory for every citizens who wants to travel to another country, stating that under section 230 of the Income-tax Act 1961, not every person is required to obtain a tax clearance certificate.
A proposal to include the reference to the Black Money Act, 2015 to obtain a tax clearance certificate was made in this year’s Budget by Finance Minister Nirmala Sitharaman, sparking rumors that every citizen who wished to fly abroad, must now obtain the said certificate which would be issued by income tax authorities, certifying that the individual has no pending liabilities under the Income-tax Act, the Wealth-tax Act, 1957, the Gift-tax Act, 1958, or the Expenditure-tax Act, 1987.
“Since, the Black Money Act, 2015 is also administered by CBDT, it has been proposed in the Budget to add the reference of the Black Money Act, 2015 to the list of Acts under which any person should clear his liabilities to obtain the tax clearance certificate. Hence, the proposed amendment does not require all the residents to obtain the tax clearance certificate,” the CBDT clarified.
Citing section 230 of the Income-tax Act, 1961, the CBDT said not every person is required to obtain a tax clearance certificate, which is mandatory only in case of certain individuals, in respect of whom circumstances exist which make it necessary.
The CBDT said a tax clearance certificate is necessary in a situation where an individual is involved in serious financial irregularities and his presence is necessary in the investigation of cases under the Income-tax Act or the Wealth-tax Act and it is likely that a tax demand will be raised against him.
“Also, such a tax clearance certificate would be needed where the individual has direct tax arrears exceeding Rs 10 lakh outstanding against him which have not been stayed by any authority,” it said.
CBDT also noted that a person can be asked to obtain a tax clearance certificate only after recording the reasons for the same and after getting approval from the Principal Chief Commissioner of Income-tax or Chief Commissioner of Income-tax.
(With inputs from agencies)