Starting October 1, new rules will tighten the requirements for obtaining clearance certificates needed to leave India. According to a announcement in the recent Union Budget 2024, all residents of India must secure a clearance certificate under the Black Money Act before departure.
Requirement Under Section 230 of the Income-Tax Act
Under section 230 of the Income-tax (I-T) Act, individuals residing in India are required to obtain a certificate from tax authorities. This certificate confirms that the person has no unpaid taxes or has made arrangements to clear any outstanding amounts.
Scope of Taxes Covered
This requirement is not limited to the Income-tax (I-T) Act but also extends to the former Wealth Tax, Gift Tax, and Expenditure Tax Acts. This comprehensive approach ensures that all relevant taxes are considered when issuing the clearance certificate.
Expected Clarifications
Tax experts anticipate that further notifications or detailed rules will soon provide more clarity on these requirements. As reported by the Times of India, these additional guidelines will help streamline the process and ensure compliance with the new regulations.
Penalty Amendments for Unreported Foreign Assets
The 2024 Budget has also introduced significant changes to penalties under the Black Money Act. Starting October 1, 2024, the ₹10 lakh penalty for not reporting foreign assets (excluding real estate) with a total value of less than ₹20 lakh will be removed. This amendment aims to simplify compliance for individuals with modest foreign holdings.
Provisions for Reporting Foreign Assets
Residents, who are ordinarily residents of India, must disclose all foreign assets, including investments like shares and securities, as well as any income derived from these assets when filing their Income Tax Return (ITR). Failure to report foreign income and assets or submit the related ITR could result in a penalty of ₹10 lakh under sections 42 or 43 of the Black Money Act.
However, these sections do not apply to bank accounts with a total balance not exceeding ₹5 lakh at any time during the previous year, providing some relief for individuals with minimal foreign holdings.
Implications for Travellers
The new regulations have far-reaching implications for Indian citizens planning foreign trips. Ensuring tax compliance before departure is now non-negotiable. As the implementation date approaches, travelers are advised to stay updated on the evolving guidelines to avoid any last-minute hassles.
Conclusion
The new regulations introduced in the 2024 Union Budget aim to strengthen the enforcement of tax laws and improve compliance. With the upcoming clarifications and amendments, residents of India will need to ensure they meet these stricter requirements to avoid penalties and ensure smooth travel abroad.