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The Budget has made the rules stricter for obtaining clearance certificates, which are needed to leave India. Starting October 1, anyone living in India will need a clearance certificate confirming they are clear under the Black Money Act.
According to section 230 of the Income-tax (I-T) Act, anyone living in India must get a certificate from the tax authorities before leaving the country. This certificate confirms that the person has no unpaid taxes or has arranged to pay any outstanding amounts.
This requirement covers taxes under the Income-tax (I-T) Act, as well as the former Wealth Tax, Gift Tax, and Expenditure Tax Acts.
Tax experts believe that a notification or upcoming rules will clarify the requirements further, the Times of India reported.
The 2024 Budget also proposed removing the ?10 lakh penalty under sections 42 and 43 of the Black Money Act for not reporting foreign assets (other than real estate) if their total value is less than ?20 lakh. This change will be effective from October 1, 2024.
To strengthen the regulation of foreign assets and ensure tax compliance, the 2024 Union Budget has introduced new rules regarding clearance certificates for individuals domiciled in India who are departing the country.
Starting October 1, 2024, these individuals will need to obtain a clearance certificate under the Black Money Act.
This certificate will verify that the individual has no outstanding tax liabilities or has made satisfactory arrangements to settle such dues before leaving India.
The new regulations mark a shift in how India addresses the issue of undisclosed foreign assets.
According to Central Board of Direct Taxes (CBDT) Chairman Ravi Agarwal, the amendments in the Black Money Act are designed to provide relief to taxpayers from penalties in cases where they fail to disclose overseas assets worth ?20 lakh.
Under current regulations, taxpayers face a ?10 lakh penalty for failing to disclose a foreign asset worth as little as ?5 lakh.
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