Budget 2024: Mandatory tax clearance certificate to be obtained before leaving the country, rule will be applicable from October 1

Budget 2024: Finance Minister has made an important announcement in the budget. Now the rules have been tightened to get the clearance certificate required to leave India. Anyone residing in India from October 1 will need a clearance certificate confirming that they are cleared under the Black Money Act.

As per Section 230 of the Income Tax Act any person resident in India must obtain a certificate from the tax authorities before leaving the country. This certificate confirms that the person does not owe any tax or arrange to pay any dues. This requirement covers taxes under the Income Tax Act as well as the earlier Wealth Tax, Gift Tax and Expenditure Tax Act.

This change will be effective from 1 October 2024

According to a media report, tax experts believe that the notification or upcoming rules will further clarify the requirements. Under Sections 42 and 43 of the Black Money Act in Budget 2024, non-declaration of foreign assets other than real estate if their total value is less than Rs 20 lakh. It was also proposed to waive the fine of Rs 10 lakh instead. This change will be effective from 1 October 2024. This exemption from penalty provisions also applies to false or non-reporting of these foreign assets.

Foreign assets and their income have to be declared

The provision means that every person who is ordinarily resident in India must declare all foreign assets, including investments such as shares and securities, and any income from these assets while filing their income tax return. If they do not report foreign income and assets or fail to submit ITRs related to them they can face a penalty of ₹10 lakh under Section 42 or 43 of the Black Money Act irrespective of the value of the assets.

However, these sections do not apply to one or more bank accounts having an aggregate balance not exceeding ₹ 5 lakh at any time during the previous year.