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Synopsis: Starting October 1, 2024, individuals domiciled in India must obtain an income tax clearance certificate to leave the country, as mandated by the Finance Bill, 2024. In a significant policy shift introduced in the Union Budget 2024, the Indian government has mandated that any individual domiciled in India will need to secure an income tax clearance certificate before leaving the country. This requirement, effective from October 1, 2024, aims to ensure compliance with various tax regulations.
Key Changes and Implications:
Amendment to Section 230 of Income-tax Act:
The Finance Bill, 2024, includes Clause 71, which seeks to amend Section 230 of the Income-tax Act. This clause stipulates that no person domiciled in India can leave the country without a certificate from income tax authorities confirming no outstanding liabilities under several tax laws, including the Income-tax Act, Wealth-tax Act, Gift-tax Act, and Expenditure-tax Act.
Certificate Requirements:
The amendment outlines that individuals must either confirm no tax liabilities or make satisfactory arrangements for any payable taxes. Additionally, the amendment incorporates references to the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, ensuring liabilities under this act are also cleared.
Black Money Act Adjustments:
The budget proposes to remove the Rs 10 lakh penalty for failing to report foreign assets if their value is below Rs 20 lakh, offering relief to taxpayers who may have overlooked minor overseas assets.
Exemptions for Renunciation of Citizenship:
Indian citizens renouncing their citizenship for foreign nationality will not be impacted by these new rules. Such individuals are required to relinquish their Indian passport and obtain a renunciation certificate, following a thorough background investigation by the Ministry of Home Affairs and local law enforcement.
Additional Budget Highlights:
Finance Minister Nirmala Sitharaman emphasized tax reforms aimed at benefiting the middle class, including increased standard deductions for salaried individuals and subsidized education and housing loans.
This new mandate reflects the government’s continued effort to strengthen tax compliance and curb tax evasion, especially concerning undisclosed foreign income and assets.
