In response to allegations that stated an obligatory tax clearance was required prior to leaving the country, the Central Board of Direct Taxes (CBDT) has released an explanation about Section 230 of the Income Tax Act, 1961. In response to the revelations that caused a great deal of controversy, the CBDT stated that Section 230 does not require every person who is domiciled in india to get a tax clearance certificate prior to leaving the country.
 
The requirement is only applicable in certain situations. A tax clearance certificate is only required for people involved in serious financial irregularities or those with significant direct tax arrears exceeding Rs. 10 lakh, as per the CBDT's Instruction No. 1/2004, dated february 5, 2004. This is assuming that the arrears haven't been stayed by any authority. In certain situations, a tax demand is expected and the person's presence is considered essential for investigations under the Income-tax Act or the Wealth-tax Act.
 
Furthermore, the procedure of issuing a tax clearance certificate is not random. The Principal Chief Commissioner of Income-tax or Chief Commissioner of Income-tax must provide their prior consent and provide documented justifications. According to the recently proposed Finance (No. 2) Bill, 2024, the certificate attests that the individual is free from outstanding liabilities under a number of tax laws, including the Income-tax Act, Wealth-tax Act, Gift-tax Act, Expenditure-tax Act, and now the Black Money Act, 2015.
 
The purpose of this proposal is to guarantee that Black Money Act responsibilities are satisfied prior to the tax clearance certificate being issued. The Finance (No. 2) Bill, 2024 aims to alter Section 230 by adding references to the Black Money Act, 2015, notably in Clause 71. This change, which will go into effect on october 1, 2024, confirms that only those who fit into the designated categories need to apply for a tax clearance certificate.
 
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SIBY JEYYA

29/07/2024 08:14 AM