T.N. government discontinues issuance of solvency certificate

The Hindu

22-07-2025

The Tamil Nadu government has decided to discontinue the issuance of solvency certificate, a document that indicates the financial stability and the ability of individuals or firms to meet the financial obligations.
As per a Government Order issued recently, solvency certificate is no longer required to indicate the financial stability or strength for executing projects.
Since the individuals or entities invariably file income tax returns or produces bank guarantee, income tax, GST and VAT clearance certificates wherever they are required, it is said that it was unnecessary for the competent authorities to issue solvency certificate.
The decision was taken based on the recommendation of an Empowered Committee, which was constituted to study the problems and challenges faced by the applications in getting solvency certificate and the possibilities of simplifying the process.
As per the existing practice, to obtain a solvency certificate, the applicant submits online via the e-seva indicating the land in acres, present value of the property and percentage of ownership share of the property along with the desired amount for which the solvency certificate is sought.
Upon furnishing all information and documents, the revenue officials, from Revenue Inspector to Tahsildar, would scrutinise them and issue the certificate within a span of 15 days.
However, the Committee observed citizens faced significant challenges in obtaining a solvency certificate due to its one-time validity.
It felt that the current process involves extensive documentation, difficulties in acquiring key certificates such as the liability amount certificate and mortgage certificate, and delays caused by the discretionary authority of officials, making the entire procedure complex and inconsistent.
It further observed that actual financial stability and strength is often determined by other alternatives such as income tax clearance certificate, auditor's certificate, audited accounts certificate, annual turnover report, balance sheets, GST and VAT clearance certificate, capability certificate from banks, ban account statements, bank guarantee, IT returns, credit line certificate, PAN card, collateral documents and others. These documents had made the solvency certificate redundant and all institutions tend not to rely on it for financial strength and stability to execute projects. The documents appeared to be far more reliable and binding on the parties involved.
Hence, the Government had examined the decision of the Empowered Committee considering the challenges faced in obtaining the certificate and decided to accept the decision of the committee. Accordingly, the existing process for issuance of solvency certificate had been discontinued.