Indian residents may need to obtain a clearance certificate from income tax authorities in compliance with the Black Money Act, to leave India, effective from October 1, 2024. This is to ensure the resident has no tax unpaid or has made arrangements to settle any pending taxes before leaving the country.
Union finance minister Nirmala Sitaraman introduced the new rule under the Section of the Income Tax (I-T) Act during her seventh budget speech on Tuesday. The new law extends its reach to the taxes under the I-T Act, Wealth Tax, Gift Tax, and Expenditure Tax Acts. Indian tax experts are waiting for further clarifications through notifications from the finance ministry detailing the new law.
Under the proposed new rule, ordinary residents of India must disclose all foreign assets and investments including shares and securities and any income from them, while filing income tax returns.
Failure to report any of these can lead to a penalty of Rs 10 lakh under sections 42 and 43 of the Black Money Act. While tightening the tax return rules, not reporting foreign assets (excluding real estate) with a total value of under Rs 20 lakh will not be penalised anymore.
Additionally, sections 42 and 43 of the Black Money Act do not apply to one or more bank accounts of a resident, with a total balance not exceeding Rs 5 lakh at any time of the previous year.
The government, which had earlier started its regime promising ‘maximum governance, minimum government’ is now implementing tougher laws regarding taxation among other new laws.
