Section 230

Abolition of the requirement of obtaining Income-tax Clearance Certificate (ITCC) by persons entering into commercial contracts - With effect from 1-1-2003, no Income Tax Clearance Certificate shall be required to be furnished by any person while filing a tender for the purpose of obtaining commercial contracts.

The Board, however, continued to receive several references from various quarters seeking clarification with respect to furnishing of Income-tax Clearance Certificate at the time of bidding for contracts and in other situations.

It is clarified that contractors are now not required to obtain Income-tax Clearance Certificate from the Income-tax Department and there is no need to furnish such certificate while submitting tenders or obtaining commercial contracts. Further, it is also clarified that Income-tax Clearance Certificate shall also not be required for any other purposes such as registration or renewal of registration of contractors, renewal of import/export licences, renewal of post licences and renewal of shipping licences. However, all such persons shall quote their Permanent Account Number in their tender or other relevant documents. It is reiterated that the Income-tax Department will not issue any Income-tax Clearance Certificates for any of the above mentioned or similar purposes - Circular : No. 2/2004, dated 10-2-2004.

Circumstances in which tax clearance certificate, as required under the first proviso to section 230(1A), may be required to be obtained by persons domiciled in India

1. Section 230 relating to tax clearance certificates was amended by the Finance Act, 2003. The section was amended, inter alia, by way of insertion of a new sub-section (1A) which provides for the information to be furnished by persons domiciled in India at the time of leaving India. As per the said sub-section, persons who are domiciled in India are only required to furnish permanent account number, purpose of visit outside India and estimated period of stay outside India.

2. However, persons, in respect of whom circumstances exist which, in the opinion of an income-tax authority, make it necessary for such person to obtain a tax clearance certificate, will be required to obtain such certificate. A person can be asked to obtain a tax clearance certificate only after taking approval from the Chief Commissioner of Income-tax.

3. In this regard, the Board hereby directs that tax clearance certificate, as required under the first proviso to sub-section (1A) of section 230, may be required to be obtained by persons, domiciled in India in the following circumstances :

   (i)   where the person is involved in serious financial irregularities and his presence is necessary in investigation of cases under the Income-tax Act or the Wealth-tax Act and it is likely that a tax demand will be raised against him, or

  (ii)   where the person has direct tax arrears exceeding Rs. 10 lakh outstanding against him which have not been stayed by any authority.

4. The Chief Commissioner of Income-tax, after satisfying himself that the departure of such persons from India will prejudicially affect the interest of revenue, may authorise the Assessing Officer to require that such persons obtain a tax clearance certificate. The Assessing Officer, thereafter, shall inform the immigration authorities accordingly - Instruction : No. 1/2004 [F.No. 142/34/2003-TPL], dated 5-2-2004 issued by the Central Board of Direct Taxes.