Tax clearance mandatory for defaulters

New Delhi: After social media outrage over a Budget proposal making it mandatory to get tax clearance certificates for going abroad, the government on Sunday clarified that the proposed amendment is not for all, and only those accused of financial irregularities or having substantial tax arrears need such clearance.

The Finance Ministry, in the Finance Bill-2024, has proposed 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.

“The proposed amendment does not require all the residents to obtain the tax clearance certificate,” the ministry said in a statement.

As per section 230 of the Income-tax Act, 1961, every person is not required to obtain a tax clearance certificate. Only in the case of certain persons, in respect of whom circumstances exist, which make it necessary to obtain a tax clearance certificate will be required to obtain such a certificate.

The ministry said that the Income-Tax department through a 2004 notification has specified that the tax clearance certificate may be required to be obtained by persons domiciled in India only in certain circumstances.