Tax clearance certificate mandatory for leaving India : Budget 2024

Are You Departing from India? Where is your Tax clearance certificate ? Yes! If your are planning for leaving India the Tax clearance Certificate are mandatory for leaving India: Anyone living in India who intends to depart the nation after October 1, 2024, will require a clearance certificate attesting to their compliance with the Black Money Act. This certificate guarantees that no taxes or other sums are owed. It includes payments under the previous Wealth Tax, Gift Tax, and Expense Tax Acts in addition to taxes under the Income-tax (I-T) Act.

 The 2024 Budget also suggests eliminating the ₹10 lakh fine for failing to declare foreign assets (apart from real estate) if the total value of those assets is less than ₹20 lakh. Recall that while completing their income tax return, residents are required to disclose any overseas assets and income. 

Amendment to include the reference of Black Money Act, 2015 for the purposes of obtaining a tax clearance certificate (TAX ADMINISTRATION) https://t.co/dybFLJO6T8 #TaxLaws #FAQ #TaxTMI

— Tax Management India (@taxtmi) July 25, 2024

What is the Black Money Act?

Enacted in 2015, the Black Money Act is a comprehensive piece of legislation designed to address the problem of unreported overseas assets and income.

 It offers a structure for declaring, paying taxes on, and upholding laws pertaining to these kinds of earnings and assets kept outside of India. In essence, it targets citizens who conceal overseas income and levies taxes and penalties on such assets.

How can someone obtain Tax clearance certificate before leaving india

If you are a foreign visitor to India for any reason, including business, you must have an Income Tax Clearance Certificate (ITCC). 

This is how you get it:

 Eligibility: The following requirements must be satisfied: not based in India. traveling to India for work or pleasure. earning money from sources in India. 

Procedure for Application: 

Offline: Fill out Form 30A and send it in with the necessary paperwork. 

Undertaking: Your employer may furnish an undertaking on Form 30A if you have revenue from an Indian source. It says that your company will pay any taxes that become owing after you leave the country.

Certificate Issuance: The tax clearance certificate (Form 30B) will be issued if the income tax officer is satisfied. The date of the certificate’s validity is mentioned  on it. 

Recall that a valid PAN card is sufficient for Indian citizens traveling overseas for purposes other than permanent relocation; an ITCC is not required. They must still submit Form 30C to indicate their trip arrangements, though.

Legal provisions of Black Money Act : 

Undisclosed overseas income and assets are a problem that the Black Money (Undisclosed overseas Income and Assets) and Imposition of Tax Act, 2015 seeks to solve. The following are some salient points: 

The Act’s goal is to address “black money,” which is defined as assets and income that are unlawfully obtained and concealed outside of India.

 Its scope is undeclared overseas assets and income. It stipulates that such concealed foreign income and assets retained outside of India will be subject to taxation.

One-time Disclosure Window:

People were given the opportunity to come clean by filing a disclosure during a brief, one-time window that ended on September 30, 2015.

 There was a tax and penalty (60 percent of the value of offshore assets and undeclared income, in effect).

Penalties and Offences:

penalties for failing to provide returns on assets and income from overseas. 

provisions for legal action in the event that violations occur. 

Recall that the Act’s primary goal is to reclaim benefits obtained from “black money.”

What are the penalties for non-compliance 

The following are the consequences for non-compliance with the Black Money Act (BMA): 

Base Tax: If the Assessing Officer (AO) finds any hidden overseas assets or income, they will be subject to a 30% tax. 

Penalty: A 90% penalty, or three times the calculated tax amount, is levied in addition to the tax. 

Prosecution: The Act also allows for prosecution in situations where there has been a deliberate attempt to avoid paying taxes on undeclared overseas income or assets.

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