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CMA Final · Direct Tax Laws and International Taxation · Collection, Recovery and Refund of Tax

Under section 418 of the Income-tax Act, 2025, where India has a recovery agreement with a foreign country and that country's authority sends a certificate for tax due under its law from a person having property in India, what happens?

The Board may forward the foreign certificate to the Tax Recovery Officer with jurisdiction. That officer recovers the amount as if it were a section 413 certificate drawn by him, then remits the recovered sum to the Board after deducting his expenses of the recovery proceedings.

  1. AThe Board forwards the certificate to a Tax Recovery Officer, who recovers as under a section 413 certificate and remits the sum to the Board after deducting his expensesCorrect
  2. BThe Tax Recovery Officer remits the entire sum recovered to the foreign government without any deduction
  3. CThe Assessing Officer must first reassess the person before any recovery can start
  4. DThe certificate is returned because tax of a foreign country cannot be recovered in India

Explanation

Section 418(1) lets the Board forward the foreign certificate to the Tax Recovery Officer having jurisdiction over the resident or the property. The officer recovers as for a certificate drawn up under section 413 and remits the recovered sum to the Board after deducting expenses of the proceedings. The other options contradict this.

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