Circular No. 2/2004 — Abolition of the requirement of obtaining Income-tax Clearance Certificate (ITCC) by perso

What this is

Circular No. 2/2004 was issued by the Central Board of Direct Taxes on 10 February 2004. Its subject is Abolition of the requirement of obtaining Income-tax Clearance Certificate (ITCC) by persons entering into commercial contracts.

This is a clarification. The Board is stating how it reads a provision. That reading binds the department; it does not bind a court, and where the section says otherwise the section wins.

What it does

Confirms that contractors need no Income-tax Clearance Certificate. Acting on the Board's decision of January 2003, which had done away with the certificate for tenders for commercial contracts with effect from 1 January 2003, the circular says plainly that no such certificate is to be obtained or furnished while submitting tenders or taking up commercial contracts, and that none is needed for registration or renewal of registration of contractors or for renewal of import and export licences, post licences and shipping licences either. Instead, all such persons are to quote their Permanent Account Number in the tender or other relevant document. The Department is not to issue clearance certificates for these or similar purposes, and all earlier circulars on the subject stand withdrawn.

Why it was issued

Even after the January 2003 decision and the press release of 20 January 2003, the Board kept receiving references asking whether the certificate was still needed at the bidding stage and in other situations.

Who it reaches

Contractors bidding for government and other commercial contracts
Tender-inviting authorities still asking for a clearance certificate
Importers and exporters renewing licences
Assessing Officers receiving applications for such certificates

The instrument, as the Board published it

The words below are the department’s own, reproduced from its published text. Where the department’s copy carried a publisher’s notes after the instrument, those are not reproduced.

Abolition of the requirement of obtaining Income-tax Clearance Certificate (ITCC) by persons entering into commercial contracts
CIRCULAR NO. 2/2004, DATED 10-2-2004
1. A decision was taken by the Board in January, 2003 regarding the requirement of obtaining Income-tax Clearance Certificates by various persons. It was decided that with effect from the 1st January, 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. A Press Release to this effect was also issued on January 20, 2003.
2. 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.
3. It is hereby clarified that contractors are now not required to obtained 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.
4. 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.
5. However, all such persons shall quote their Permanent Account Number in their tender or other relevant documents.
6. 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.
7. All Circulars issued earlier in this regard shall stand withdrawn.
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What to watch

Quoting the Permanent Account Number is not optional; it replaces the certificate.
The Department will not issue a certificate for these purposes at all, so an authority that insists on one has to be shown this circular.
All earlier circulars in this regard are withdrawn, so an older instruction on clearance certificates for contracts is of no use.
The circular speaks of certificates demanded for tenders, contracts and the licences it lists; it says nothing about any clearance requirement arising under some other provision or law.

Where you meet it

When a tendering authority's bid document asks for an income-tax clearance certificate, or when an application for one is returned by the Assessing Officer.

What it names

It mentions. Circular No. 2/2004

← Circular No. 3/2004 · Circular No. 1/2004 →

A circular binds the department, not you and not a court. The Board issues a circular to its own officers. An assessee may hold the department to a circular that helps him; the department cannot hold an assessee to one that hurts him, and the Tribunal and the courts decide the law for themselves.

Source: the Income Tax Department’s own published text — its page for this instrument.