- The recent budgetary announcement highlighted simplification of tax processes, emphasizing digital verification and reducing paperwork. This aligns with the minimal requirement for ITCC and the use of PAN for most transactions. However, resident still can be asked to submit the ITCC after department recording the reasons.
- A Tax Clearance Certificate is a statement from tax authorities that the taxpayer has paid all outstanding tax debts or has no tax liabilities. It is typically issued by the Department of Revenue and attests to compliance with tax obligations.
- Previously, an Income-Tax Clearance Certificate was necessary for many transactions such as: Submitting bids for government projects, registering real estate, Renewing import/export, postage, and shipping licenses.
- With liberalization, the need for an Income-Tax Clearance Certificate has been reduced. Now, taxpayers only need to include their Permanent Account Number (PAN) in relevant documents. The Income Tax Act 1961 requires the certificate for a minimal number of transactions.
- Foreign nationals in India on business, employment, or official duty who derive income from India must obtain an ITCC before leaving the country.
- It may also be required for those suspected of financial irregularities or under legal investigation.
Dig Deeper: Read about FEMA,1999 and Net worth Certificate.
