Chapter XIX - Collection and Recovery of Tax
Section 420
Section 420: tax clearance certificate before leaving India
Section 420 restricts certain people from leaving India without first squaring away their tax position - either through an employer's undertaking (for non-domiciled persons earning Indian income) or, in specified cases, an actual no-objection certificate from the income-tax authority (for persons domiciled in India).
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This article is for general information. Refer to the Income-tax Act, 2025 as amended by the Finance Act, 2026 and the Taxation and Other Laws (Amendment) Act, 2026 for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
(1) Subject to such exceptions as the Central Government may, by notification, 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.
(2) 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.
(3) Subject to such exceptions as the Central Government may, by notification, specify in this behalf, every person, who is domiciled in India at the time of his departure from India, shall furnish— (a) the Permanent Account Number allotted to him under section 262; (b) the purpose of his visit outside India; and (c) the estimated period of his stay outside India, to the income-tax authority or such other authority in such form, as may be prescribed.
(4) Where no such Permanent Account Number has been allotted to any person referred to in sub-section (3), 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 such form, as may be prescribed.
(5) No person— (a) who is domiciled in India at the time of his departure; and (b) 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 liability under this Act or the Wealth-tax Act, 1957 or the Gift-tax Act, 1958 or the Income-tax Act, 1961 or the Expenditure-tax Act, 1987 or the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 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.
(6) No income-tax authority shall make it necessary for any person who is domiciled in India to obtain a certificate under this section unless— (a) he records the reasons therefor; and (b) obtains the prior approval of Principal Chief Commissioner or Chief Commissioner.
(7) 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 (5) 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.
(8) In respect of any sum payable by the owner or charterer of any ship or aircraft under sub-section (7),— (a) the owner or charterer, shall be deemed to be an assessee in default for such sum; and (b) such sum shall be recoverable from him in the manner provided in this Part as if it were an arrear of tax.
(9) The Board may make rules for regulating any matter necessary for, or incidental to, the purpose of carrying out the provisions of this section.
(10) 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.
Introduction
Section 420 has separate departure rules for a person not domiciled in India who came for business, profession or employment and has Indian-source income, and for a person domiciled in India. The non-domiciled rule does not apply to a foreign tourist or a visit unrelated to those activities.
For a domiciled person, the ordinary requirement is to furnish PAN, purpose and estimated stay, or a prescribed certificate where the statutory alternatives apply. A further tax-clearance certificate is required only when the authority considers it necessary and follows the stated reasons and approval safeguards.
Key takeaways
Non-domiciled worker
A non-domiciled person who came for business, profession or employment and has Indian-source income may need the prescribed undertaking and no-objection certificate before departure.
Tourist exception
The subsection (1) requirement does not apply to a foreign tourist or other visit unconnected with those activities.
Domiciled person
Separate departure-information duties apply to a person domiciled in India, subject to the section’s conditions.
Non-domiciled persons earning income in India - Section 420(1) and (2)
Subject to exceptions the Central Government may notify, a person who is not domiciled in India, who has come to India in connection with business, profession or employment, and who has income from a source in India, cannot leave India's territory by land, sea or air unless he furnishes a prescribed authority an undertaking - from his employer, or from the person through whom he receives the income - that the tax payable by him will be paid by that employer or person. The prescribed authority must then immediately give him a no-objection certificate for leaving India.
This requirement does not apply to a person not domiciled in India who visits merely as a foreign tourist or for a purpose unconnected with business, profession or employment.
Persons domiciled in India - Section 420(3) to (6)
Subject to notified exceptions, every person domiciled in India, at the time of departure, must furnish his Permanent Account Number under Section 262, the purpose of his visit outside India, and the estimated period of his stay outside India, to the income-tax authority (or other prescribed authority) in the prescribed form.
Where no PAN has been allotted, or the person's total income is not chargeable to tax, or he is not required to obtain a PAN, he must instead furnish a prescribed certificate.
A person domiciled in India cannot leave India's territory without obtaining a certificate from the income-tax authority stating he has no liability under this Act (or certain other named Acts, including the Income-tax Act, 1961), or that satisfactory payment arrangements have been made, if circumstances exist which, in the opinion of an income-tax authority, make it necessary for him to obtain such a certificate.
No income-tax authority can make it necessary for an India-domiciled person to obtain such a certificate unless he records reasons for doing so and obtains prior approval of the Principal Chief Commissioner or Chief Commissioner.
Liability of the ship or aircraft owner/charterer
If the owner or charterer of a ship or aircraft carrying persons from India allows a person covered by Section 420(1) or (5) to travel without first confirming that person holds the required certificate, the owner or charterer becomes personally liable to pay the whole or part of the tax payable by that person, as the Assessing Officer may determine.
Any such sum payable by the owner or charterer is treated as an arrear of tax, recoverable in the manner provided in this Part, and the owner or charterer is deemed to be an assessee in default for that sum.
The Board may make rules regulating any matter necessary or incidental to carrying out this section. For this section, "owner" and "charterer" include any representative, agent or employee empowered to allow persons to travel by the ship or aircraft.
Step-by-step flow for leaving India under Section 420
- 1
Is the person domiciled in India at the time of departure?
Check first whether the person falls within an exception notified by the Central Government under Section 420(1) or (3).
- No: Go to the next step.
- Yes: Go to step 4.
- 2
Has the non-domiciled person come to India in connection with business, profession or employment, and does he have income from a source in India?
- No (for example, a foreign tourist): Section 420(1) does not apply (Section 420(2)).
- Yes: Go to the next step.
- 3
Furnish the undertaking
Before leaving by land, sea or air, he must furnish to the prescribed authority an undertaking in the prescribed form from his employer, or from the person through whom he receives the income, that his tax will be paid by that employer or person.
- Undertaking furnished: The prescribed authority gives him a no objection certificate immediately.
- 4
Domiciled person: furnish the departure details
He furnishes his Permanent Account Number under Section 262, the purpose of the visit and the estimated stay abroad, in the prescribed form (Section 420(3)). If he has no PAN, his total income is not chargeable, or he need not obtain a PAN, he furnishes a certificate in the prescribed form instead (Section 420(4)).
- 5
Has an income-tax authority required a clearance certificate?
It may do so only after recording reasons and obtaining prior approval of the Principal Chief Commissioner or Chief Commissioner (Section 420(6)). The person then cannot leave without a certificate that he has no liability under the Acts listed in Section 420(5), or that satisfactory arrangements for payment have been made.
- 6
Carrier check
An owner or charterer of a ship or aircraft (including an empowered representative, agent or employee) who lets a person covered by Section 420(1) or (5) travel without checking the certificate is personally liable for the tax the Assessing Officer determines, and is deemed an assessee in default for it (Section 420(7), (8) and (10)).
Practical checklist
Do
- First establish domicile and the purpose of the India visit or departure; apply the correct subsection rather than a single rule for all travellers.
- For a covered non-domiciled worker, obtain the prescribed employer or income-provider undertaking and the resulting no-objection certificate.
- For a domiciled traveller, prepare the prescribed PAN, purpose and expected stay information or the alternative certificate where applicable.
- If a specific tax-clearance certificate is demanded from a domiciled traveller, check recorded reasons and prior senior-officer approval under subsection (6).
Avoid
- Do not describe section 420 as a blanket tax-clearance-certificate requirement for every Indian resident leaving the country.
- Do not apply the non-domiciled business/work route to a foreign tourist or unrelated visit excluded by subsection (2).
Illustrative example
Worked example: a foreign engineer leaving after a project
Hypothetical facts (illustration only, not a real taxpayer): Mr. Klein is not domiciled in India. He came to India to work on a project for an Indian company that employs him, and he received salary from that employment. He is due to fly out at the end of the project. It is assumed that no notified exception applies to him.
Domicile
He is not domiciled in India, so the Section 420(1) route applies, not the Section 420(3) route for domiciled persons.
Purpose and income
He came in connection with employment and has income from a source in India, so Section 420(2) does not exempt him.
Undertaking
His employer gives an undertaking in the prescribed form that his tax will be paid by the employer, and it is furnished to the prescribed authority.
Certificate
On receiving the undertaking, the prescribed authority gives him a no objection certificate immediately.
Airline
The airline should check the certificate before letting him board. If it does not, it can be made personally liable for his tax under Section 420(7).
Outcome
- Mr. Klein can leave India once he holds the no objection certificate.
- The authority, the forms and any exceptions are left to rules and notifications; Section 420 itself does not name them.
Glossary
- No-objection certificate
- The certificate issued by the prescribed authority after receiving the prescribed undertaking in the covered non-domiciled case.
- Domiciled in India
- The status used by subsections (3)–(6) to determine a different set of departure obligations.
Frequently asked questions
Do all foreigners leaving India need a tax clearance certificate?
No. Section 420(1) applies only to persons not domiciled in India who came here in connection with business, profession or employment and have Indian-source income; it requires an employer's or payer's undertaking, not a full clearance certificate. Foreign tourists visiting for unrelated purposes are excluded under Section 420(2).
Do Indian residents need a certificate to leave the country?
Generally they only need to furnish PAN, travel purpose and expected duration of stay under Section 420(3). A full no-objection certificate under Section 420(5) is required only where an income-tax authority forms an opinion that circumstances make it necessary, and even then only with recorded reasons and prior approval of the Principal Chief Commissioner or Chief Commissioner.
What happens if an airline lets someone travel without checking their tax clearance certificate?
The owner or charterer of the ship or aircraft becomes personally liable for the whole or part of the tax payable by that passenger, as determined by the Assessing Officer, and is deemed to be an assessee in default for that sum.
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Get help with tax clearance before travelling abroadLast updated 10 October 2026