INCOME TAX

Requirement of Tax Clearances Certificate in Exceptional cases of persons domiciled in India

[Section Referred 230]

Instruction No 1, dated 5-2-2004

1. Section 230 of the Income-tax Act, 1961 relating to tax clearance certificates was amended by the Finance Act, 2003. The section was amended, inter alia, by way of insertion of a new sub-section (1A) which provides for the information to be furnished by persons domiciled in India at the time of leaving India. As per the said sub-section, persons who are domiciled in India are only required to furnish permanent account number, purpose of visit outside India and estimated period of stay outside India.

2. However, persons, in respect of whom circumstances exist which, in the opinion of an income-tax authority, make it necessary for such person to obtain a tax clearance certificate, will be required to obtain such certificate. A person can be asked to obtain a tax clearance certificate only after taking approval from the Chief Commissioner of Income-tax.

3. In this regard, the Board hereby directs that tax clearance certificate, as required under the first proviso to sub-section (1A) of section 230, may be required to be obtained by persons domiciled in India in the following circumstances :

(i)  where the person is involved in serious financial irregularities and his presence is necessary in investigation of cases under the Income-tax Act or the Wealth-tax Act and it is likely that a tax demand will be raised against him, or

(ii)  where the person has direct tax arrears exceeding Rs. 10 lakh outstanding against him which have not been stayed by any authority.

4. The Chief Commissioner of Income-tax, after satisfying himself that the departure of such persons from India will prejudicially affect the interest of revenue, may authorise the Assessing Officer to require that such persons obtain a tax clearance certificate. The Assessing Officer, thereafter, shall inform the immigration authorities accordingly.

5. It is requested that the above instructions may be brought to the notice of all concerned with your jurisdiction.