CBDT Clarifies: Income-Tax Clearance Certificate Not Required for All Indian Travelers

The Central Board of Direct Taxes (CBDT) has clarified recent confusion about the need for an income-tax clearance certificate (ITCC) for Indians traveling abroad. Contrary to some reports, not all Indian citizens are required to obtain an ITCC before leaving the country.

This clarification stems from the Finance Act of 2003, which outlines the circumstances under which individuals domiciled in India must obtain a tax clearance certificate. The recent amendment simply adds references to the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, ensuring that liabilities under this Act are treated similarly to those under the Income-tax Act.

CBDT emphasized that the ITCC requirement applies only in specific situations. According to existing provisions, only individuals involved in serious financial irregularities or those with direct tax arrears exceeding Rs. 10 lakh (that have not been stayed by any authority) need to secure an ITCC. This regulation, in place since 2003, remains unchanged by the recent amendment.

Specifically, the CBDT noted that an ITCC is required in the following cases:

1. Serious Financial Issues: When an individual is involved in significant financial irregularities and their presence is necessary for ongoing investigations.
2. Large Unpaid Taxes: If a person owes more than Rs. 10 lakh in taxes that are not stayed by any authority.

The process for obtaining an ITCC involves documenting specific reasons and securing approval from the Principal Chief Commissioner of Income or Chief Commissioner of Income Tax.

In summary, the CBDT clarified that an ITCC is not a general requirement for all Indian citizens traveling abroad. It is only mandated in exceptional cases involving significant financial issues.