CHAPTER XVII - COLLECTION AND RECOVERY OF TAX | D.—COLLECTION AND RECOVERY
CHAPTER XVII - COLLECTION AND RECOVERY OF TAX | D.—COLLECTION AND RECOVERY
Section 230 — Tax Clearance Certificate
Case Laws & Commentary — Income-tax Act, 1961 (as amended by the Finance Act, 2026) — bharattax.co Treatise
Status: Live; regulates departure from India by certain persons and the obtaining of a tax clearance / no-objection certificate, with liability cast on carriers who allow departure without it.
Finance Act, 2026: No amendment by the Finance Act, 2026. (Scope last expanded by the Finance (No. 2) Act, 2024 to include liabilities under the Black Money Act, 2015, w.e.f. 1 October 2024.)
Mechanism: Persons not domiciled in India who came for business/profession/employment and have Indian-source income must furnish an undertaking (employer/payer) → prescribed authority issues a no-objection certificate (230(1)) → persons domiciled in India must furnish PAN/purpose/period on departure, and, where an income-tax authority records reasons and obtains PCCIT/CCIT approval, must obtain a certificate of no liabilities under the IT Act / Wealth-tax Act / Gift-tax Act / Expenditure-tax Act / Black Money Act (230(1A)) → carriers allowing departure without the certificate are personally liable (230(2)-(3)).
Litigation profile: Moderately discussed administratively (CBDT clarifications) rather than litigated; intersects the constitutional right to travel abroad.
A. COMMENTARY
Who actually needs a certificate
Despite the breadth of the language, the tax clearance certificate requirement for persons domiciled in India is not universal. Under sub-section (1A) the requirement bites only where an income-tax authority records reasons and obtains the approval of the Principal CCIT/CCIT. The CBDT, by Instruction No. 1 of 2004 and reiterated in its July 2024 clarification, has confined the demand for a certificate to narrow categories — persons involved in serious financial irregularities, or with substantial direct-tax arrears (above the prescribed threshold) not stayed by any authority. Ordinary travellers and the bulk of residents are unaffected.
The 2024 expansion
The Finance (No. 2) Act, 2024 added the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 to the list of statutes whose liabilities must be cleared, with effect from 1 October 2024. The certificate now certifies the absence of (or satisfactory arrangements for) liabilities under the Income-tax Act, the (now-repealed) Wealth-tax, Gift-tax and Expenditure-tax Acts, and the Black Money Act.
Carrier liability and the right to travel
Sub-sections (2)-(3) make the owner/charterer of a ship or aircraft personally liable, as a deemed assessee in default, if a person is allowed to depart without the required certificate. Because the provision restrains exit, it must be operated consistently with the constitutional right to travel abroad recognised in Maneka Gandhi v. Union of India as part of personal liberty under Article 21 — exit may be restricted only by a fair, reasonable and recorded procedure, which is why sub-section (1A) insists on recorded reasons and senior approval.
B. STATUTORY TEXT (verbatim)
Reproduced from the Income-tax Act, 1961 as amended up to the Finance Act, 2025; the Finance Act, 2026 makes no amendment to this section. Editorial '[Omitted...]' notes are those of the Legislature.
Tax clearance certificate.
230. (1) Subject to such exceptions as the Central Government may, by notification in the Official Gazette, specify in this behalf, no person,—
(a) who is not domiciled in India;
(b) who has come to India in connection with business, profession or employment; and
(c) who has income derived from any source in India, shall leave the territory of India by land, sea or air unless he furnishes to such authority as may be prescribed—
(i) an undertaking in the prescribed form from his employer; or
(ii) through whom such person is in receipt of the income, to the effect that tax payable by such person who is not domiciled in India shall be paid by the employer referred to in clause (i) or the person referred to in clause (ii), and the prescribed authority shall, on receipt of the undertaking, immediately give to such person a no objection certificate, for leaving India:
Provided that nothing contained in sub-section (1) shall apply to a person who is not domiciled in India but visits India as a foreign tourist or for any other purpose not connected with business, profession or employment.
(1A) Subject to such exceptions as the Central Government may, by notification in the Official Gazette, specify in this behalf, every person, who is domiciled in India at the time of his departure from India, shall furnish, in the prescribed form to the income-tax authority or such other authority as may be prescribed—
(a) the permanent account number allotted to him under section 139A:
Provided that in case no such permanent account number has been allotted to him, or his total income is not chargeable to income-tax or he is not required to obtain a permanent account number under this Act, such person shall furnish a certificate in the prescribed form;
(b) the purpose of his visit outside India;
(c) the estimated period of his stay outside India:
Provided that no person—
(i) who is domiciled in India at the time of his departure; and
(ii) in respect of whom circumstances exist which, in the opinion of an income-tax authority render it necessary for such person to obtain a certificate under this section, shall leave the territory of India by land, sea or air unless he obtains a certificate from the income-tax authority stating that he has no liabilities under this Act, or the Wealth-tax Act, 1957 (27 of 1957), or the Gift-tax Act, 1958 (18 of 1958), or the Expenditure-tax Act, 1987 (35 of 1987), 48[or the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (22 of 2015),] or that satisfactory arrangements have been made for the payment of all or any of such taxes which are or may become payable by that person :
Provided that no income-tax authority shall make it necessary for any person who is domiciled in India to obtain a certificate under this section unless he records the reasons therefor and obtains the prior approval of the Principal Chief Commissioner or Chief Commissioner of Income-tax.
(2) If the owner or charterer of any ship or aircraft carrying persons from any place in the territory of India to any place outside India allows any person to whom sub-section (1) or the first proviso to sub-section (1A) applies to travel by such ship or aircraft without first satisfying himself that such person is in possession of a certificate as required by that sub-section, he shall be personally liable to pay the whole or any part of the amount of tax, if any, payable by such person as the Assessing Officer may, having regard to the circumstances of the case, determine.
(3) In respect of any sum payable by the owner or charterer of any ship or aircraft under sub-section (2), the owner or charterer, as the case may be, shall be deemed to be an assessee in default for such sum, and such sum shall be recoverable from him in the manner provided in this Chapter as if it were an arrear of tax.
(4) The Board may make rules for regulating any matter necessary for, or incidental to, the purpose of carrying out the provisions of this section.
Explanation.—For the purposes of this section, the expressions "owner" and "charterer" include any representative, agent or employee empowered by the owner or charterer to allow persons to travel by the ship or aircraft.
C. AUTHORITIES
Largely administered through CBDT instructions; the constitutional backdrop is the right to travel abroad. Candour rule applied to direct authority.
1. Constitutional backdrop — right to travel abroad
Maneka Gandhi v. Union of India (1978) AIR 1978 SC 597
Holding The right to travel abroad is part of personal liberty under Article 21; it can be curtailed only by a procedure that is just, fair and reasonable.
Use The constitutional touchstone against which any exit restriction under section 230 must be tested; supports the requirement of recorded reasons and senior approval before a certificate is insisted upon.
2. Administrative position (CBDT) and candour note
CBDT Instruction No. 1/2004 and clarification dated 28 July 2024
Position A tax clearance certificate under section 230(1A) is required only in limited circumstances — persons involved in serious financial irregularities or with substantial unstayed direct-tax arrears; it is not mandatory for every person leaving India. The Finance (No. 2) Act, 2024 added Black Money Act liabilities w.e.f. 1 October 2024.
Use The authoritative administrative statement; cited to rebut the notion that all residents need clearance to travel.
CHAPTER XVII - COLLECTION AND RECOVERY OF TAX | D.—COLLECTION AND RECOVERY
Section 230 — Tax Clearance Certificate
Case Laws & Commentary — Income-tax Act, 1961 (as amended by the Finance Act, 2026) — bharattax.co Treatise
Status: Live; regulates departure from India by certain persons and the obtaining of a tax clearance / no-objection certificate, with liability cast on carriers who allow departure without it.
Finance Act, 2026: No amendment by the Finance Act, 2026. (Scope last expanded by the Finance (No. 2) Act, 2024 to include liabilities under the Black Money Act, 2015, w.e.f. 1 October 2024.)
Mechanism: Persons not domiciled in India who came for business/profession/employment and have Indian-source income must furnish an undertaking (employer/payer) → prescribed authority issues a no-objection certificate (230(1)) → persons domiciled in India must furnish PAN/purpose/period on departure, and, where an income-tax authority records reasons and obtains PCCIT/CCIT approval, must obtain a certificate of no liabilities under the IT Act / Wealth-tax Act / Gift-tax Act / Expenditure-tax Act / Black Money Act (230(1A)) → carriers allowing departure without the certificate are personally liable (230(2)-(3)).
Litigation profile: Moderately discussed administratively (CBDT clarifications) rather than litigated; intersects the constitutional right to travel abroad.
A. COMMENTARY
Who actually needs a certificate
Despite the breadth of the language, the tax clearance certificate requirement for persons domiciled in India is not universal. Under sub-section (1A) the requirement bites only where an income-tax authority records reasons and obtains the approval of the Principal CCIT/CCIT. The CBDT, by Instruction No. 1 of 2004 and reiterated in its July 2024 clarification, has confined the demand for a certificate to narrow categories — persons involved in serious financial irregularities, or with substantial direct-tax arrears (above the prescribed threshold) not stayed by any authority. Ordinary travellers and the bulk of residents are unaffected.
The 2024 expansion
The Finance (No. 2) Act, 2024 added the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 to the list of statutes whose liabilities must be cleared, with effect from 1 October 2024. The certificate now certifies the absence of (or satisfactory arrangements for) liabilities under the Income-tax Act, the (now-repealed) Wealth-tax, Gift-tax and Expenditure-tax Acts, and the Black Money Act.
Carrier liability and the right to travel
Sub-sections (2)-(3) make the owner/charterer of a ship or aircraft personally liable, as a deemed assessee in default, if a person is allowed to depart without the required certificate. Because the provision restrains exit, it must be operated consistently with the constitutional right to travel abroad recognised in Maneka Gandhi v. Union of India as part of personal liberty under Article 21 — exit may be restricted only by a fair, reasonable and recorded procedure, which is why sub-section (1A) insists on recorded reasons and senior approval.
B. STATUTORY TEXT (verbatim)
Reproduced from the Income-tax Act, 1961 as amended up to the Finance Act, 2025; the Finance Act, 2026 makes no amendment to this section. Editorial '[Omitted...]' notes are those of the Legislature.
Tax clearance certificate.
230. (1) Subject to such exceptions as the Central Government may, by notification in the Official Gazette, specify in this behalf, no person,—
(a) who is not domiciled in India;
(b) who has come to India in connection with business, profession or employment; and
(c) who has income derived from any source in India, shall leave the territory of India by land, sea or air unless he furnishes to such authority as may be prescribed—
(i) an undertaking in the prescribed form from his employer; or
(ii) through whom such person is in receipt of the income, to the effect that tax payable by such person who is not domiciled in India shall be paid by the employer referred to in clause (i) or the person referred to in clause (ii), and the prescribed authority shall, on receipt of the undertaking, immediately give to such person a no objection certificate, for leaving India:
Provided that nothing contained in sub-section (1) shall apply to a person who is not domiciled in India but visits India as a foreign tourist or for any other purpose not connected with business, profession or employment.
(1A) Subject to such exceptions as the Central Government may, by notification in the Official Gazette, specify in this behalf, every person, who is domiciled in India at the time of his departure from India, shall furnish, in the prescribed form to the income-tax authority or such other authority as may be prescribed—
(a) the permanent account number allotted to him under section 139A:
Provided that in case no such permanent account number has been allotted to him, or his total income is not chargeable to income-tax or he is not required to obtain a permanent account number under this Act, such person shall furnish a certificate in the prescribed form;
(b) the purpose of his visit outside India;
(c) the estimated period of his stay outside India:
Provided that no person—
(i) who is domiciled in India at the time of his departure; and
(ii) in respect of whom circumstances exist which, in the opinion of an income-tax authority render it necessary for such person to obtain a certificate under this section, shall leave the territory of India by land, sea or air unless he obtains a certificate from the income-tax authority stating that he has no liabilities under this Act, or the Wealth-tax Act, 1957 (27 of 1957), or the Gift-tax Act, 1958 (18 of 1958), or the Expenditure-tax Act, 1987 (35 of 1987), 48[or the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (22 of 2015),] or that satisfactory arrangements have been made for the payment of all or any of such taxes which are or may become payable by that person :
Provided that no income-tax authority shall make it necessary for any person who is domiciled in India to obtain a certificate under this section unless he records the reasons therefor and obtains the prior approval of the Principal Chief Commissioner or Chief Commissioner of Income-tax.
(2) If the owner or charterer of any ship or aircraft carrying persons from any place in the territory of India to any place outside India allows any person to whom sub-section (1) or the first proviso to sub-section (1A) applies to travel by such ship or aircraft without first satisfying himself that such person is in possession of a certificate as required by that sub-section, he shall be personally liable to pay the whole or any part of the amount of tax, if any, payable by such person as the Assessing Officer may, having regard to the circumstances of the case, determine.
(3) In respect of any sum payable by the owner or charterer of any ship or aircraft under sub-section (2), the owner or charterer, as the case may be, shall be deemed to be an assessee in default for such sum, and such sum shall be recoverable from him in the manner provided in this Chapter as if it were an arrear of tax.
(4) The Board may make rules for regulating any matter necessary for, or incidental to, the purpose of carrying out the provisions of this section.
Explanation.—For the purposes of this section, the expressions "owner" and "charterer" include any representative, agent or employee empowered by the owner or charterer to allow persons to travel by the ship or aircraft.
C. AUTHORITIES
Largely administered through CBDT instructions; the constitutional backdrop is the right to travel abroad. Candour rule applied to direct authority.
1. Constitutional backdrop — right to travel abroad
Maneka Gandhi v. Union of India (1978) AIR 1978 SC 597
Holding The right to travel abroad is part of personal liberty under Article 21; it can be curtailed only by a procedure that is just, fair and reasonable.
Use The constitutional touchstone against which any exit restriction under section 230 must be tested; supports the requirement of recorded reasons and senior approval before a certificate is insisted upon.
2. Administrative position (CBDT) and candour note
CBDT Instruction No. 1/2004 and clarification dated 28 July 2024
Position A tax clearance certificate under section 230(1A) is required only in limited circumstances — persons involved in serious financial irregularities or with substantial unstayed direct-tax arrears; it is not mandatory for every person leaving India. The Finance (No. 2) Act, 2024 added Black Money Act liabilities w.e.f. 1 October 2024.
Use The authoritative administrative statement; cited to rebut the notion that all residents need clearance to travel.