The 2024 Budget has introduced stricter rules for obtaining these clearance certificates, particularly focusing on compliance with the Black Money Act.
Starting October 1, a new mandate requires anyone living in India to obtain a tax clearance certificate before leaving the country. This certificate confirms that the individual has no unpaid taxes or has made arrangements to settle any outstanding amounts. The requirement applies to taxes under the Income-tax (I-T) Act, as well as the former Wealth Tax, Gift Tax, and Expenditure Tax Acts.
Stricter Rules Under the 2024 Budget
The 2024 Budget has introduced stricter rules for obtaining these clearance certificates, particularly focusing on compliance with the Black Money Act. According to section 230 of the I-T Act, every resident of India must secure this certificate from the tax authorities to ensure they are clear of any tax liabilities.
Clarification and Future Notifications
Tax experts anticipate that upcoming notifications or rules will provide further clarification on these requirements. The Times of India has reported that additional details will soon be made available to the public.
Changes to Penalty Provisions Under the Black Money Act
In addition to the new clearance certificate requirement, the 2024 Budget proposes the removal of the ₹10 lakh penalty under sections 42 and 43 of the Black Money Act for failing to report foreign assets, other than real estate, if their total value is less than ₹20 lakh. This change is set to take effect from October 1, 2024.
Disclosure of Foreign Assets and Income
Every resident who is ordinarily a resident of India must disclose all foreign assets, including investments like shares and securities, and any income derived from these assets when filing their Income Tax Return (ITR). Failure to report foreign income and assets or to submit the relevant ITR can result in a penalty of ₹10 lakh under sections 42 or 43 of the Black Money Act, regardless of the asset’s value. However, these sections do not apply to bank accounts with a total balance not exceeding ₹5 lakh at any time during the previous year.
Summary
In summary, from October 1, anyone living in India must obtain a tax clearance certificate before leaving the country, confirming they have no unpaid taxes. The 2024 Budget has introduced changes to the penalty provisions under the Black Money Act, providing some exemptions for minor foreign assets. Residents must ensure compliance with these new rules to avoid significant penalties.
Stay informed and compliant to ensure a hassle-free departure from India.
Also Read: FAQs on Capital Gain Tax Provisions Proposed in Budget 2024
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Exempted Allowances under Section 10(14)(i) of the Income Tax Act