Centre says 'not all residents' need tax clearance for foreign travel

Digital Desk: Amid widespread social media outrage over a Budget proposal mandating tax clearance certificates for foreign travel, the government clarified on Sunday that this requirement is not universal for all Indian residents. The Finance Ministry stated that only individuals accused of financial irregularities or those with significant tax arrears would need to obtain such a clearance.

The proposed amendment in the Finance Bill, 2024, suggests adding the Black Money Act, 2015, to the list of regulations that necessitate tax clearance for international travel. However, the Ministry assured that the amendment does not apply to every resident. According to the Finance Ministry's statement, “The proposed amendment does not require all the residents to obtain the tax clearance certificate.”

Under section 230 of the Income Tax Act, not every person is required to secure a tax clearance certificate. The requirement specifically targets individuals involved in serious financial irregularities or those with direct tax arrears exceeding ₹10 lakh that are not stayed by any authority. This clarification was supported by a 2004 notification, which outlined that tax clearance might be required under specific circumstances, such as involvement in significant financial misconduct or outstanding tax liabilities.

The Income Tax Department emphasized that a tax clearance certificate would only be mandated after recording the reasons and obtaining approval from either the Principal Chief Commissioner or Chief Commissioner of Income Tax. This measure ensures that the certificate is issued only when necessary, confirming that the individual has no pending tax liabilities.

The government’s clarification aims to address public concerns and ensure transparency regarding the implementation of the new tax clearance requirements associated with foreign travel.