According to section 230 of the Income-tax Act, if you’re living in India and planning to leave the country, you must get a certificate from the tax authorities. This certificate proves that you have no unpaid taxes or have made arrangements to settle any outstanding amounts.
This rule covers taxes under the Income-tax Act, as well as past taxes like Wealth Tax, Gift Tax, and Expenditure Tax. Experts expect that new guidelines will clarify these requirements.
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The 2024 Budget also proposed removing the ₹10 lakh penalty for not reporting foreign assets (excluding real estate) if their total value is less than ₹20 lakh, starting October 1, 2024. This exemption also applies to mistakes or failures in reporting these assets.
Residents must report all foreign assets and income from these assets when filing their Income Tax Returns. Failing to do so could result in a ₹10 lakh penalty under the Black Money Act, regardless of the asset’s value.
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However, this rule does not apply to bank accounts with a total balance of ₹5 lakh or less during the previous year.
This requirement is mandatory for those leaving India permanently. For NRIs and those relocating, this rule is important to keep in mind.
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This rule targets only those permanently moving abroad, not everyone traveling. If every Indian needed this clearance before traveling, tax offices might become crowded and airports quieter, which would be quite amusing.
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