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CMA Intermediate · Direct and Indirect Taxation · PAN

Mr. John Carter, not domiciled in India, came to India on an employment assignment with an Indian company and has income derived from sources in India. He intends to leave India by air. Which statement is correct under the Income-tax Act, 2025?

A non-domiciled person who came to India for business, profession or employment and has Indian income must furnish an undertaking from the employer or income-payer to pay his tax. On receipt, the prescribed authority immediately gives a no objection certificate for leaving India.

  1. AHe may leave freely because only persons domiciled in India need clearance
  2. BHe must furnish an undertaking in the prescribed form from his employer or the person through whom he receives income, that the tax payable by him will be paid by that person, subject to notified exceptionsCorrect
  3. CHe must furnish a PAN and his estimated period of stay abroad
  4. DHe must pay all tax in advance before the prescribed authority can issue any certificate

Explanation

Under section 420(1), a non-domiciled person who came to India in connection with business, profession or employment and has Indian-source income must furnish an employer's (or income-payer's) undertaking to pay the tax. The authority then immediately gives a no objection certificate. Option C relates to domiciled persons under sub-section (3).

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