The CBDT has tried to clarify the provisions of Section 230 of the Act regarding the tax clearance certificate required before an individual proceeds abroad.
CBDT has clarified that no provision of section 230 requires any ordinary resident of India to produce a tax clearance certificate on exit. The requirement is not mandatory for all employees but is limited to people involved in serious fraudulent transactions and all those whose tax arrears exceeded Rs. 10 lakh.
In addition, the CBDT has said that this shall be preceded by recording the reasons for doing so and with the prior approval of the Principal Chief Commissioner of Income Tax or Chief Commissioner of Income Tax.
The latest Finance (No. 2) Bill, 2024, suggests including the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, in the list of Acts under which a person has to clear his dues to get the tax clearance certificate.
CA Dr. Suresh Surana, a well-known tax advisor and consultant, submitted Section 230(1A) of the Income Tax Act, which demands that any person domiciled in India get a certificate from the income tax authorities before he/she leaves the country. This is a certificate in which the person shows he or she has no other legal outstanding commitment per the tax laws.
Surana, while elaborating on the proposed amendment, clarified that the amendment aims to reform section 230 by adding liabilities under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act 2015 in the tax clearance certificate. This adjustment in taxation is expected to start from 01 October 2024.
The CBDT intended clarification, and the proposed amendment will clarify and ease the procedure for getting the tax clearance certificate for individuals emigrating to other countries. However, the intent is not to let the individuals escape the liability to pay taxes as per the law.
