CBDT Dispels Myths: Tax clearance not required for Indians travelling abroad

Srinagar, Aug 24: The Central Board of Direct Taxes (CBDT) has issued a clarification to address widespread misinformation regarding the Income-tax Clearance Certificate (ITCC) requirement for Indian citizens travelling abroad. Contrary to recent reports, the CBDT emphasizes that obtaining an ITCC before leaving the country is not mandatory for all Indian citizens.

The confusion stems from a recent amendment to Section 230(1A) of the Income-tax Act, 1961, introduced by the Finance (No.2) Act, 2024. This amendment merely includes a reference to the Black Money Act and does not introduce any new restrictions on international travel for Indian citizens.

CBDT's Instruction No. 1/2004, dated 05.02.2004, remains in effect, specifying that the ITCC is required only in rare circumstances. These include cases where an individual is involved in serious financial irregularities and their presence is necessary for investigation, or when a person has direct tax arrears exceeding Rs. 10 lakh that have not been stayed by any authority.

The board emphasizes that obtaining an ITCC is necessary only in exceptional cases and requires approval from high-ranking tax officials. This process involves recording specific reasons for the requirement and obtaining approval from the Principal Chief Commissioner or Chief Commissioner of Income-tax.

The CBDT's clarification aims to reassure the public that there have been no sweeping changes to travel requirements for Indian citizens regarding tax clearances. The vast majority of Indian travelers will not need to obtain an ITCC before departing the country.

This statement from the CBDT serves to dispel misconceptions and provide accurate information about the limited circumstances under which an ITCC might be required. It underscores the importance of relying on official sources for information about tax-related travel requirements and reinforces that the recent amendment does not significantly alter existing procedures for most Indian citizens planning to travel internationally.