Rule 227: Prescribed authority for tax clearance certificates under section 420
Section 420 regulates leaving India. It covers persons not domiciled in India who came for business, profession or employment, and the information and certificates required from persons domiciled in India. Rule 227 names the authority under section 420(1) and (3), and says that a tax clearance application under section 420(5) is filed to the Assessing Officer who has jurisdiction to assess the person.
Official notified Income-tax Rules, 2026Need advice on Rule 227?
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Rule 227 - Prescribed authority for tax clearance certificates under section 420
(1) For the purposes of section 420(1), the prescribed authority shall be the Chief Commissioner of Income-tax or the Director-General of Income-tax, as the case may be, who has jurisdiction over the persons not domiciled in India or any other income-tax authority authorised by such Chief Commissioner of Income-tax or Director-General of Income-tax in this behalf.
(2) For the purposes of section 420(3), the prescribed authority shall be the Chief Commissioner of Income-tax having jurisdiction over the persons domiciled in India or any other income-tax authority authorised by him in this behalf.
(3) For the purposes of section 420(5), an application for certificate shall be filed to the Assessing Officer who has jurisdiction to assess such person.
Rule breakdown
Section 420(1) — persons not domiciled in India
The prescribed authority is the Chief Commissioner of Income-tax or the Director-General of Income-tax, as the case may be, having jurisdiction over persons not domiciled in India, or any other income-tax authority authorised by such Chief Commissioner or Director-General.
Under section 420(1), such a person furnishes an undertaking from the employer or from the person through whom the income is received. The prescribed authority then gives a no objection certificate for leaving India.
Section 420(3) — persons domiciled in India
The prescribed authority is the Chief Commissioner of Income-tax having jurisdiction over persons domiciled in India, or any other income-tax authority authorised by him.
Section 420(5) — tax clearance certificate
An application for the certificate under section 420(5) is filed to the Assessing Officer who has jurisdiction to assess the person.
Section 420(6) says no income-tax authority shall make it necessary for a person domiciled in India to obtain such a certificate unless he records reasons and obtains prior approval of the Principal Chief Commissioner or Chief Commissioner.
Key takeaways
Non-domiciled persons
CCIT or DGIT with jurisdiction over non-domiciled persons, or an authority they authorise.
Domiciled persons
CCIT with jurisdiction over domiciled persons, or an authority he authorises.
Clearance applications
Filed to the jurisdictional Assessing Officer.
Practical checklist
- Identify whether you are domiciled in India before working out which authority applies.
- File a section 420(5) application with your jurisdictional Assessing Officer.
Avoid
- Do not assume a tax clearance certificate is required for every departure; check section 420(5) and (6).
FAQs
Does every resident need a tax clearance certificate to travel abroad?
No. Under section 420(5) and (6), a person domiciled in India needs one only where an income-tax authority, for recorded reasons and with prior approval of the Principal Chief Commissioner or Chief Commissioner, considers it necessary.
Where is a section 420(5) application filed?
With the Assessing Officer who has jurisdiction to assess the person (Rule 227(3)).
Does section 420(1) apply to foreign tourists?
Section 420(2) says section 420(1) does not apply to a non-domiciled person visiting as a foreign tourist or for a purpose not connected with business, profession or employment.
Which forms are used?
Rule 228 prescribes Forms No. 154 to 159.
Glossary
- Prescribed authority
- The authority named in Rule 227 for section 420(1) or (3).
- Tax clearance certificate
- The certificate under section 420(5) stating no liability, or that satisfactory arrangements for payment have been made.