Tax Clearance Certificate Required to Leave India Under New Budget Rules
Tax Clearance Certificate Required to Leave India Under New Budget Rules
The recent budget has introduced stricter regulations for obtaining tax clearance certificates, a mandatory requirement for Indians planning to leave the country. Starting October 1, anyone residing in India must obtain a clearance certificate confirming they are compliant under the Black Money Act.
As per section 230 of the Income-tax (I-T) Act, this certificate, issued by the tax authorities, verifies that the individual has no outstanding taxes or has made arrangements to settle any dues. This requirement extends to taxes under the Income-tax Act and the former Wealth Tax, Gift Tax, and Expenditure Tax Acts.
Tax experts anticipate further clarification on these requirements through notifications or upcoming rules, as reported by news agency.
The 2024 Budget also proposes significant changes to the Black Money Act. Specifically, the ₹10 lakh penalty under sections 42 and 43 for not reporting foreign assets (other than real estate) valued at less than ₹20 lakh will be removed, effective from October 1, 2024. This exemption also applies to incorrect or non-reporting of these foreign assets, as noted by news agency.
Under this provision, every resident ordinarily residing in India must disclose all foreign assets, including investments like shares and securities, and any income derived from these assets in their Income Tax Return. Failure to report foreign income and assets or to submit the related ITR may result in a penalty of ₹10 lakh under sections 42 or 43 of the Black Money Act, irrespective of the asset’s value. However, these sections do not apply to one or more bank accounts with a total balance not exceeding ₹5 lakh at any time during the previous year.
