Finance Ministry Clarifies Tax Clearance Rule For Indians Migrating Abroad
This rule, effective from 1 October, will look to combat tax evasion related to undisclosed foreign assets, as mandated under the Black Money Act
The Finance Ministry issued a clarification on Sunday regarding the recently introduced rule that requires Indians migrating abroad to obtain a tax clearance certificate before departure. This rule, effective from 1 October, will look to combat tax evasion related to undisclosed foreign assets, as mandated under the Black Money Act.
The ministry addressed concerns and debates about potential harassment by mentioning that this requirement applies only to individuals involved in serious financial irregularities or those with direct tax arrears exceeding Rs 10 lakh, provided these arrears are not stayed by any authority.
According to the ministry’s statement, the tax clearance certificate is not a blanket requirement for all residents. The decision to mandate such a certificate will be made only after recording specific reasons and obtaining approval from the Principal Chief Commissioner of Income Tax or Chief Commissioner of Income Tax. This measure is intended to ensure that only individuals with significant tax issues are subject to this requirement.
The proposed amendment to Section 230 of the Income Tax Act, outlined in the Union Budget, includes the Black Money Act among the Acts under which residents can settle their due tax liabilities.
The income tax authority will issue the certificate to confirm that the individual has no outstanding liabilities under the Income Tax Act, the Wealth Tax Act, the Gift Tax Act, or the Expenditure Tax Act, or has made satisfactory arrangements to settle these dues before leaving India.
