Rationalisation of provision relating recovery of tax in pursuance of agreements with foreign countries

The existing provisions of section 228A of the Act provide inter alia that where an agreement is entered into by the Central Government with the Government of any foreign country for recovery of income-tax under the Income-tax Act and the corresponding law in force in that country and where such foreign country sends a certificate for the recovery of any tax due under such corresponding law from a person having any property in India, the Board, on receipt of such certificate may, forward it to the Tax Recovery Officer within whose jurisdiction such property is situated for the recovery of tax in pursuance of agreement with such foreign country.

In order to provide assistance in recovery of tax as per treaty obligation with the other country, it is proposed to amend the said section so as to provide for tax recovery where details of property of the persons are not available but the said person is a resident in India.

It is also proposed to amend the said section so as to provide for tax recovery, where details of property of an assessee in default under the Act are not available but the said assessee is a resident in a foreign country.

These amendments will take effect from 1st September, 2019.

[Clause 51]

Extract of Clause 51 of Finance Bill 2019

51. Amendment of section 228A.

In section 228A of the Income-tax Act, with effect from the 1st day of September, 2019,––

(a) in sub-section (1),––

(i) for the words “corresponding law from”, the words “corresponding law from a resident, or” shall be substituted;

(ii) for the words “any Tax Recovery Officer”, the words “any Tax Recovery Officer having jurisdiction over the resident, or” shall be substituted;

(b) in sub-section (2),––

(i) for the words “has property in a country outside India”, the words “ is a resident of a country” shall be substituted; (ii) for the words “forward to the Board”, the words “or has any property in that country, forward to the Board” shall be substituted.

Note on Clause 51 of Finance Bill 2019

Clause 51 of the Bill seeks to amend section 228A of the Income-tax Act relating to recovery of tax in pursuance of agreements with foreign countries.

Sub-section (1) of the said section, inter alia, provides that where an agreement is entered into by the Central Government with the Government of any foreign country for recovery of income-tax under the Income-tax Act and the corresponding law in force in that country and where such foreign country sends a certificate for the recovery of any tax due under such corresponding law from a person having any property in India, the Board, on receipt of such certificate may, forward it to the Tax Recovery Officer within whose jurisdiction such property is situated for the recovery of tax in pursuance of agreement with such foreign country.

It is proposed to amend the said sub-section so as to provide for tax recovery in cases where details of property of such person are not available but the said person is a resident in India.

It is further proposed to amend sub-section (2) of the said section so as to provide for tax recovery where details of property of assessee in default are not available but the said assessee is a resident in a foreign country.

This amendment will take effect from 1st September, 2019.

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