Section 418

Section 418: recovery of tax under agreements with foreign countries

Section 418 operationalises international tax-recovery agreements: it lets India's Tax Recovery Officer machinery be used to collect tax owed under a foreign country's corresponding law, and allows India's own recovery certificates to be forwarded abroad where a reciprocal agreement exists.

This explanation is AI-assisted and pending review by our CA/CS team. It is general information, not professional advice - always cross-check against the bare law text above or talk to our tax team for guidance specific to your situation.

Recovering foreign tax dues in India - Section 418(1)

Where the Central Government has an agreement with another country's government for recovery of income-tax under this Act and that country's corresponding law, and that country's government (or an authority specified in the agreement) sends the Board a certificate for recovery of tax due under its law from a resident, or from a person having property in India, the Board may forward the certificate to a Tax Recovery Officer with jurisdiction over that resident or property.

That Tax Recovery Officer then recovers the amount specified in the certificate in the same manner as he would recover an amount specified in a certificate he himself drew up under Section 413, and remits the sum recovered to the Board after deducting his expenses in connection with the recovery proceedings.

Sending India's certificate abroad - Section 418(2)

Where an assessee who is in default or deemed in default is a resident of a country with which the Central Government has such a recovery agreement, or has property in that country, the Tax Recovery Officer may forward to the Board a certificate drawn up under Section 413, and the Board may take such action on it as it deems appropriate, having regard to the terms of the agreement with that country.

Frequently asked questions

Can a foreign country ask India to recover its tax dues from a resident here?

Yes, if the Central Government has a recovery agreement with that country. The foreign government's authority sends a certificate to the Board, which forwards it to the relevant Tax Recovery Officer, who recovers it as if it were a Section 413 certificate.

Can India recover tax from an assessee's property or residence abroad?

Under Section 418(2), the Tax Recovery Officer can forward the Section 413 certificate to the Board, which may take appropriate action having regard to the terms of the recovery agreement with the relevant country.