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).
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.
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 9 September 2026