New Tax Clearance Requirements for Indian Travellers from October 2024

From October 1, 2024, Indian travellers will have to obtain a tax clearance certificate before leaving the country. As per this new rule announced in the Union Budget 2024, all Indian residents will have to obtain clearance under the Black Money Act before travelling abroad.

As per Section 230 of the Income Tax Act, Indian residents will have to obtain a certificate from the tax authorities confirming that they have no outstanding taxes or have made arrangements to pay any dues.

Scope of Taxes Covered

This requirement covers not only the Income Tax Act but also the erstwhile Wealth Tax, Gift Tax and Expenditure Tax Acts. This comprehensive check ensures that all relevant taxes are accounted for while issuing the clearance certificate.

Clarifications expected

Tax experts expect more detailed guidelines or notifications to be issued soon, which will clarify these new requirements. These additional rules will help simplify the process and ensure that everyone complies with the new rules, reports Times of India.

Penalties amendment for undeclared foreign assets

The 2024 budget also brings changes to penalties under the Black Money Act. From October 1, 2024, the ₹10 lakh penalty for non-reporting of foreign assets valued at less than ₹20 lakh (excluding real estate) will be removed. The change is aimed at simplifying compliance for those with small foreign holdings.

Provisions for reporting foreign assets

Indian residents must report all foreign assets, including investments such as shares and securities, as well as income from these assets, when filing their income tax returns (ITR). Non-reporting of foreign income and assets or non-submission of the corresponding ITR may attract a penalty of ₹10 lakh under section 42 or 43 of the Black Money Act. However, these sections do not apply to bank accounts with an aggregate balance of less than ₹5 lakh at any time during the previous year, providing some relief to those with minimal foreign holdings.

Implications for Travellers

These new rules significantly impact Indian citizens planning international travel. Ensuring tax compliance before departure is now a must. As the implementation date nears, travellers must stay informed about the latest guidelines to avoid any last-minute problems.

Conclusion

The new rules introduced in the Union Budget 2024 are aimed at enhancing tax law enforcement and improving compliance. With upcoming clarifications and amendments, Indian residents will have to meet these strict requirements to avoid penalties and ensure smooth international travel.