Section 422: recovery of tax arrears from a non-resident's assets

Introduction

Section 422 addresses tax on the particular non-resident income referred to in section 9(2). Recovery may proceed by deduction under Chapter XIX-B, and arrears may be recovered from assets of the non-resident in India.

It applies whether the tax is charged in the non-resident’s own name or in the name of an agent liable as a representative assessee.

Key takeaways

What Section 422 says

"Irrespective of anything contained in section 304(1) or (5), where the person entitled to the income referred to in section 9(2) is a non-resident, the tax chargeable thereon, whether in his name or in the name of his agent who is liable as a representative assessee-- (a) may be recovered by deduction under the provisions of Chapter XIX-B; and (b) any arrears of tax may also be recovered as per the provisions of this Act from any assets of the non-resident which are, or may at any time come, within India."

When this provision applies

Verify that the person entitled to the income is non-resident and that the income falls within Section 9(2). Its categories include income through or from the stated Indian asset, source, property, business connection or capital-asset transfer circumstances; the relevant conditions must be checked on the facts.

Separate the deduction route under Chapter XIX-B from recovery of an arrear. For the latter, identify assets belonging to the non-resident that are in India or subsequently come within India.

Limits and procedural safeguards

The provision is not a general power to collect every private debt of a non-resident. It concerns the stated tax on Section 9(2) income and operates irrespective of the referenced Section 304 provisions.

The fact that tax is charged in an agent’s name as representative assessee does not limit this section’s asset route to the agent’s assets. Conversely, establish that the assets relied on under clause (b) belong to the non-resident; a commercial connection alone is not proof of ownership.

Step-by-step review

1. Identify the non-resident entitled to the income and analyse the Section 9(2) connection.

2. Record whether the tax is charged in that person’s or a representative assessee’s name.

3. Distinguish any relevant source deduction from the arrear sought to be recovered.

4. Establish ownership and Indian location of the relevant assets and apply the Act’s recovery procedure.

Hypothetical example

Hypothetical illustration: qualifying Section 9(2) income is assessed through a representative assessee, and an asset belonging to the non-resident later comes within India. Subject to the stated tax and recovery conditions, Section 422(b) can apply to that asset. The representative assessment does not itself exclude this route.

Records to prepare

Residence, income-source analysis and relevant assessment or demand records.

Any representative-assessee appointment or assessment documentation.

Asset ownership, location and arrival records, with deduction and arrear reconciliations.

Official amended Act source

• Income-tax Act, 2025 as amended by Finance Act, 2026: Section 422 and related provisions

Step-by-step flow for applying Section 422

1. 1

   Is the income one referred to in Section 9(2), and is the person entitled to it a non-resident?

   Section 9(2) covers income through or from an asset or source of income in India, property in India, a business connection in India, or transfer of a capital asset situated in India.

   • No: Section 422 does not apply.
   • Yes: Go to the next step.
2. 2

   In whose name is the tax charged?

   Either in the non-resident's own name, or in the name of his agent liable as a representative assessee. Section 422 applies in both cases, irrespective of Section 304(1) or (5).

3. 3

   Recover by deduction

   The tax may be recovered by deduction under Chapter XIX-B (Section 422(a)).

4. 4

   Are there arrears after that?

   • No: Nothing more is needed under Section 422.
   • Yes: Any arrears may also be recovered under the Act from any assets of the non-resident that are, or at any time come, within India (Section 422(b)).

Practical checklist

Glossary

Representative assessment

Tax charged in the name of an agent liable as representative assessee, as contemplated by Section 422.

Indian asset recovery

Recovery of the specified arrears from the non-resident’s assets that are or later come within India.

Frequently asked questions