Section 418 — Recovery of tax in pursuance of agreements with foreign countries. Successor to s.228A of the 1961 Act.
Section 418 is in Chapter XIX — Collection and Recovery of Tax, which runs from section 390 to section 430.
Sub-section (1) deals with the inbound case: where the Central Government has an agreement with a foreign government for recovery of income-tax under this Act and under that country's corresponding law, and that government or its specified authority sends the Board a certificate for recovery of tax due under that corresponding law from a resident or from a person having property in India, the Board may forward the certificate to a Tax Recovery Officer having jurisdiction over the resident or over the property, who then recovers the amount as if it were a certificate drawn up by him under section 413 and remits what he recovers to the Board after deducting his expenses of the recovery proceedings. Sub-section (2) is the outbound case: where an assessee in default, or deemed in default, is a resident of such an agreement country or has property there, the Tax Recovery Officer may forward his section 413 certificate to the Board, and the Board may take such action on it as it thinks appropriate having regard to the terms of the agreement.
Tax debts do not stop at the border where an agreement exists: the section lets a foreign country's tax be collected in India through the ordinary Tax Recovery Officer machinery, and lets Indian tax be pursued abroad through the Board. Everything is conditioned on an agreement being in place and on its terms.
If you are resident in India and owe tax in an agreement country, a certificate from that country's authority can be enforced against you here by a Tax Recovery Officer using the same powers he would use for an Indian certificate under section 413, and the same is true if you merely have property in India. Recovery costs are not extra to you in the remittance sense — the officer deducts his expenses before remitting to the Board. Going the other way, an Indian default can be pursued where you are resident abroad or hold property abroad, but only if an agreement covers that country and only on its terms; the Board decides what action to take.
A person resident in India owes tax under the corresponding income-tax law of a country with which the Central Government has an agreement for recovery. That country's specified authority sends the Board a certificate for Rs. 60 lakh; the Board forwards it to the Tax Recovery Officer having jurisdiction over him, who then proceeds exactly as he would on a certificate drawn up by himself under section 413, and remits what he recovers to the Board after deducting his expenses of the recovery proceedings. Residence is not essential to that limb — clause (b) reaches a person who merely has property in India, the Tax Recovery Officer being the one within whose jurisdiction the property lies. Without an agreement covering that country, neither limb operates at all.
In a recovery proceeding before a Tax Recovery Officer that is founded on a foreign certificate forwarded by the Board, and which in method is indistinguishable from recovery on a section 413 certificate. Going the other way, an assessee in default abroad meets it only indirectly: the Tax Recovery Officer forwards the section 413 certificate to the Board, which may take such action as it deems appropriate on the terms of the agreement.
proceed to recover the amount specified in the certificate in the manner in which he would proceed to recover the amount specified in a certificate drawn up by him under section 413
See the full 1961 to 2025 concordance.