9.—Persons leaving India

Assessment of persons leaving India.

317(1)

Irrespective of anything contained in section 4, when it appears to the Assessing Officer that any individual may leave India during the current tax year or shortly after its expiry, with no present intention of returning to India, the total income of such individual for the period beginning from the first day of that current tax year up to the probable date of departure from India (referred to as specified period in this section) shall be chargeable to tax in that current tax year.

317(2)

The total income of each completed tax year or part of any tax year included in the specified period shall be chargeable to tax at the rate or rates in force in that tax year, and separate assessments shall be made in respect of each such completed tax year or part of any tax year.

317(3)

The Assessing Officer may estimate the income of such individual for such specified period or any part thereof, where it cannot be readily determined in the manner provided in this Act.

317(4)

For the purposes of making an assessment under sub-section (1), the Assessing Officer may serve a notice upon such individual requiring him to furnish within such time, not being less than seven days, as specified in the notice, a return in the same form and verified in the same manner as a return under section 268(1), setting forth his––

• (a) total income for each completed tax year comprised in such specified period referred to therein; and
• (b) estimated total income for any part of the tax year comprised in such specified period, and the provisions of this Act shall, so far as may be, and subject to the provisions of this section, apply as if the notice were a notice issued under section 268(1).

317(5)

Irrespective of anything contained in section 268(1) or 280, where the provisions of sub-section (1) are applicable, the Assessing Officer may issue any notice under section 268(1) or 280, requiring the furnishing of the return by such individual in respect of any tax chargeable under any other provisions of this Act, within such period, not being less than seven days, as the Assessing Officer may think proper.

317(6)

The tax chargeable under this section shall be in addition to the tax, if any, chargeable under any other provisions of this Act.

Explanation

Section Summary:

Section 317 of the Income Tax Act deals with the assessment of individuals who are leaving India with no intention of returning. The purpose of this section is to ensure that such individuals pay taxes on their income earned in India up to the date of their departure. This provision allows the Assessing Officer to assess and collect taxes on income earned during the specified period (from the start of the current tax year until the probable date of departure) before the individual leaves the country.

Key Changes:

1. Pre-Departure Tax Assessment: Unlike the general tax assessment process, this section allows the Assessing Officer to assess and collect taxes on income earned up to the date of departure, even if the tax year is not yet complete.
2. Separate Assessments: Income for each completed tax year or part of a tax year within the specified period is assessed separately, with taxes calculated at the rates applicable for those years.
3. Estimation of Income: If the income for the specified period cannot be readily determined, the Assessing Officer has the authority to estimate the income.
4. Shorter Notice Period: The Assessing Officer can issue a notice requiring the individual to file a return within a shorter period (not less than seven days), unlike the usual timelines under other sections.

Practical Implications:

1. For Individuals Leaving India: Individuals planning to leave India permanently must be prepared for a pre-departure tax assessment. They may need to file returns and pay taxes on income earned up to the date of departure, even if the tax year is incomplete.
2. For Assessing Officers: This section provides a mechanism to ensure that taxes are collected before an individual leaves the country, reducing the risk of tax evasion.
3. Compliance Burden: Individuals must respond quickly to notices from the Assessing Officer, as the timeline for filing returns is shorter (minimum seven days).

Critical Concepts:

1. Specified Period: This refers to the period from the start of the current tax year until the probable date of departure.
2. Separate Assessments: Income for each completed tax year or part of a tax year within the specified period is assessed separately, with taxes calculated at the rates applicable for those years.
3. Estimated Income: If the actual income cannot be determined, the Assessing Officer can estimate the income based on available information.

Compliance Steps:

1. Monitor Departure Plans: Individuals planning to leave India permanently should inform the Assessing Officer if they anticipate being subject to this provision.
2. Prepare Documentation: Maintain records of income earned during the specified period to facilitate accurate reporting.
3. Respond to Notices: If a notice is issued under this section, file the required return within the specified timeline (minimum seven days).
4. Pay Taxes: Ensure that taxes are paid on income earned up to the date of departure, as assessed by the Assessing Officer.

Examples:

Scenario 1: Mr. A plans to leave India permanently on October 15, 2023. The current tax year runs from April 1, 2023, to March 31, 2024. The Assessing Officer determines that Mr. A has no intention of returning to India and issues a notice under Section 317(1). Mr. A must file a return for the period from April 1, 2023, to October 15, 2023, and pay taxes on the income earned during this period.

Scenario 2: Ms. B left India on August 1, 2023, without informing the tax authorities. The Assessing Officer later discovers that Ms. B had no intention of returning. The officer estimates her income for the period from April 1, 2023, to August 1, 2023, and issues a notice requiring her to file a return and pay taxes within seven days.

This section ensures that individuals leaving India permanently fulfill their tax obligations before departing, preventing potential tax evasion.