Sections 420 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 420 puts a tax condition on leaving India in two situations: for a person not domiciled in India who is here for business, profession or employment, and for a person domiciled in India in respect of whom a tax authority finds it necessary to ask for a certificate. Section 421 keeps other legal routes of recovery open. Section 422 lets tax on certain non-resident income be recovered by deduction or from the non-resident's assets in India. This article follows the text as per the Income-tax Act, 2025 as amended by the Finance Act, 2026. For non-resident matters, see our NRI tax filing service.
A person not domiciled in India, here in connection with business, profession or employment and with Indian income, must not leave India unless an undertaking from his employer or the person paying his income is furnished and a no objection certificate is given (section 420(1)). A person domiciled in India must furnish his PAN, purpose of visit and estimated stay, and may be required to obtain a certificate only if the authority records reasons and has prior approval (section 420(3) to (6)). Owners and charterers of ships and aircraft carry liability for carrying a person without the required certificate (section 420(7)).
Section 420(1) and (2): person not domiciled in India
Subject to exceptions the Central Government may specify by notification, no person who:
- is not domiciled in India;
- has come to India in connection with business, profession or employment; and
- has income derived from any source in India,
shall leave the territory of India by land, sea or air unless he furnishes to the prescribed authority an undertaking in the prescribed form from (i) his employer, or (ii) the person through whom he is in receipt of the income, to the effect that the tax payable by him shall be paid by that employer or person. On receipt, the prescribed authority "shall ... immediately give" him a no objection certificate for leaving India.
Sub-section (2): the sub-section (1) rule does not apply to a person not domiciled in India who visits India as a foreign tourist or for any other purpose not connected with business, profession or employment.
The exceptions notified under sub-section (1) are not in the text consulted. The authority and the form are left to the Income-tax Rules, 2026.
Example (facts assumed). Mr. Lee, domiciled abroad, works in India on a contract and earns income here. Before leaving he must furnish an undertaking from his employer that the employer will pay the tax payable by him. On receipt, the authority gives him a no objection certificate straight away. His colleague who came only as a tourist is outside the rule under sub-section (2).
Section 420(3) and (4): persons domiciled in India
Subject to exceptions notified by the Central Government, every person domiciled in India at the time of departure must furnish to the income-tax authority or other authority, in the prescribed form:
- (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.
Where no PAN has been allotted to such a person, or his total income is not chargeable to income-tax, or he is not required to obtain a PAN under the Act, he must furnish a certificate in the prescribed form (sub-section (4)).
Section 420(5) and (6): when a certificate is demanded
No person who (a) is domiciled in India at the time of departure and (b) in respect of whom circumstances exist which, in the opinion of an income-tax authority, make it necessary to obtain a certificate, shall leave India by land, sea or air unless he obtains from the income-tax authority a certificate that either:
- he has no liability under this Act or under the Wealth-tax Act, 1957 (27 of 1957), the Gift-tax Act, 1958 (18 of 1958), the Income-tax Act, 1961 (43 of 1961), the Expenditure-tax Act, 1987 (35 of 1987) or the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (22 of 2015); or
- satisfactory arrangements have been made for the payment of all or any of such taxes which are or may become payable.
The other Acts are named as printed; check them for their own provisions. Sub-section (6) is the safeguard: no income-tax authority shall make it necessary for a person domiciled in India to obtain such a certificate unless he (a) records the reasons, and (b) obtains the prior approval of the Principal Chief Commissioner or Chief Commissioner.
| Person | Duty before leaving | Condition |
|---|---|---|
| Not domiciled in India, in India for business, profession or employment, with Indian income | Furnish undertaking from employer or payer; receive no objection certificate | Subject to notified exceptions; tourists and non-business visitors excluded |
| Domiciled in India | Furnish PAN (or certificate), purpose of visit, estimated stay | Subject to notified exceptions |
| Domiciled in India, where an authority considers a certificate necessary | Obtain a certificate of no liability or of satisfactory arrangements | Reasons recorded and prior approval of the Principal Chief Commissioner or Chief Commissioner |
Example (facts assumed). Anand, domiciled in India, flies abroad for a month. He furnishes his PAN, the purpose and the estimated stay. An income-tax authority has reason to think he has unpaid tax and wants a certificate. Under sub-section (6) it must record its reasons and obtain the prior approval of the Principal Chief Commissioner or Chief Commissioner first. Anand then obtains a certificate of no liability, or shows satisfactory arrangements for payment.
Section 420(7) and (8): ships and aircraft
If the owner or charterer of a ship or aircraft carrying persons from India to a place outside India allows any person to whom sub-section (1) or (5) applies to travel without first satisfying himself that the person holds the required certificate, he is personally liable to pay the whole or part of the tax payable by that person, as the Assessing Officer determines having regard to the circumstances. For that sum:
- the owner or charterer is deemed an assessee in default; and
- the sum is recoverable from him in the manner provided in this Part as if it were an arrear of tax (sub-section (8)).
Section 420(9) and (10): rules and meanings
The Board may make rules for regulating any matter necessary for, or incidental to, carrying out the section. "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.
Section 421: other laws and suits not affected
The several modes of recovery in this Part do not affect in any way:
- any other law for the time being in force relating to the recovery of debts due to Government; or
- the right of the Government to institute a suit for the recovery of the arrears due from the assessee.
It is lawful for the Assessing Officer or the Government, as the case may be, to have recourse to any such law or suit, irrespective of the fact that the tax due is being recovered by any mode in this Part. The text does not name the other laws; they should be checked. For the modes in this Part see our article on section 416.
Section 422: tax on non-residents' income
Irrespective of anything 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 on it, whether in his name or in the name of his agent who is liable as a representative assessee:
| Clause | Result |
|---|---|
| (a) | May be recovered by deduction under the provisions of Chapter XIX-B (the copy prints "Chapter XIX-B"; in this Act the deduction provisions sit in Part B of Chapter XIX, so the reference is flagged, not corrected) |
| (b) | Any arrears of tax may also be recovered as per the Act from any assets of the non-resident which are, or may at any time come, within India |
Clause (b) is the practical point: arrears can be recovered from the non-resident's assets at any time within India, not only those present on a given date. Example (facts assumed). A foreign company with income covered by section 9(2) leaves arrears. A bank deposit it opens in India next year is within "may at any time come within India" and can be reached under clause (b).
Need help with a departure certificate or non-resident recovery?
A certificate under section 420 can decide whether an international trip goes ahead. Our NRI tax filing team helps non-residents and people leaving for long stays to check their position, prepare the undertaking or certificate request and respond to a recovery step.
Key takeaways
- A person not domiciled in India, here for business, profession or employment with Indian income, needs an employer's or payer's undertaking before leaving, and then a no objection certificate.
- Tourists and visitors for purposes unconnected with business, profession or employment are outside sub-section (1).
- A person domiciled in India furnishes PAN, purpose of visit and estimated stay; a certificate is required only where reasons are recorded and prior approval is obtained.
- Ship and aircraft owners and charterers can be made liable and treated as assessees in default.
- Section 421 keeps other recovery laws and suits available.
- Section 422 reaches a non-resident's assets that are, or may at any time come, within India.
Read next
- Sections 417 to 419: recovery through State Government, foreign agreements and other sums
- Section 423: interest for default in furnishing return of income
- Section 416: other modes of recovery of tax
- Chapter XIX: collection and recovery of tax
Disclaimer: Based on the Income-tax Act, 2025 (30 of 2025) as amended by the Finance Act, 2026, as consulted on 2 October 2026. It explains the words of the Act only; the Income-tax Rules, 2026, notifications, circulars, later amendments and the way the tax authorities and courts apply these provisions should be checked. This article is general information, not legal advice; check the official text before acting.