Section 228A of the Income-tax Act: Recovery of Tax under Agreements with Foreign Countries
Section 228A of the Income-tax Act, 1961 provided a mechanism for India and treaty partner countries to assist each other in recovering income-tax arrears. The corresponding provision under the Income-tax Act, 2025 is Section 418, effective from 1 April 2026.
What does Section 228A mean?
The provision permits cross-border assistance in collecting income-tax where India has an agreement with another country covering recovery of taxes. It addresses both recovery in India of a partner country's tax dues and requests from India for recovery assistance abroad.
Section 228A(1): Recovery in India of foreign tax arrears
Where the Central Government has an agreement for mutual tax recovery, the foreign government or its authorised authority may send the Central Board of Direct Taxes (the Board) a recovery certificate for tax due under that country's corresponding law. The provision covers a resident or a person having property in India.
The Board may forward the certificate to the Tax Recovery Officer (TRO) having jurisdiction over the resident or the location of the property. The TRO then recovers the certified amount in the manner applicable to a recovery certificate under Section 222 of the 1961 Act and remits the recovery to the Board after deducting recovery expenses.
Section 228A(2): Recovery abroad of Indian tax arrears
Where an assessee is in default or deemed to be in default and is resident in, or has property in, a country with which India has a tax recovery agreement, the TRO may forward a recovery certificate issued under Section 222 to the Board. The Board may then act in accordance with the applicable agreement with that country.
Corresponding provision under the Income-tax Act, 2025
Section 418 of the Income-tax Act, 2025 preserves the two-way recovery mechanism. Its subsection (1) addresses recovery in India at the request of a treaty partner; subsection (2) concerns Indian requests for assistance abroad. Section 418 refers to a certificate under Section 413 of the 2025 Act, corresponding to the certificate mechanism under Section 222 of the 1961 Act.
| Subject | Income-tax Act, 1961 | Income-tax Act, 2025 |
|---|---|---|
| International tax recovery | Section 228A | Section 418 |
| Recovery certificate | Section 222 | Section 413 |
| Recovery by State Government | Section 227 | Section 417 |
Important definitions and legal terms
Tax Recovery Officer
The income-tax authority empowered under the applicable Act to undertake prescribed recovery proceedings, including action based on a recovery certificate.
Recovery certificate
A statutory certificate specifying recoverable tax arrears, enabling the TRO to initiate recovery in accordance with the relevant legal procedure.
Assessee in default
A taxpayer who has failed to pay an amount when legally due, or who is treated as being in default under the applicable statutory provisions.
International recovery agreement
An agreement between India and another country providing for assistance in recovery of income-tax. The availability and extent of assistance depend on the terms and scope of that agreement.
Practical procedure and safeguards
- Confirm that an operative agreement authorises assistance in recovery for the particular tax and country.
- Identify the taxpayer, the relevant residence or property and the amount certified as due.
- Verify the applicable statutory recovery certificate and the jurisdiction of the TRO.
- Apply the recovery procedure and available statutory remedies, subject to the agreement and governing law.
- Account for recovery expenses and transfer recovered sums through the Board as required.
These provisions do not create a universal right to recover every foreign tax debt in India. The legal basis, covered taxes, treaty conditions and procedural protections require examination in each case.
Legislative history
Section 228A was inserted by the Finance Act, 1972 with effect from 1 April 1972. Amendments effective from 1 April 1989 updated the recovery certificate references and subsection (2). Later amendments extended the provision to cover residents as well as persons holding property in the relevant country. The current wording should therefore not be read solely from older reproductions of the section.
Official statutory references
- Income Tax Department: Section 228A of the Income-tax Act, 1961
- Income Tax Department: Section 418 of the Income-tax Act, 2025
- Income Tax Department: Income-tax Act, 2025 as amended by Finance Act, 2026
Frequently asked questions
Can foreign income-tax be recovered in India?
Yes, where the applicable agreement authorises recovery assistance and the statutory conditions for forwarding and enforcing a recovery certificate are met.
Can India seek recovery of tax from assets abroad?
Yes, where the taxpayer is resident in, or has property in, a country covered by a relevant recovery agreement, subject to the statutory procedure and treaty terms.
Which section applies from 1 April 2026?
Section 418 of the Income-tax Act, 2025 is the corresponding provision for the new regime. Earlier matters require consideration of the repeal and savings rules.
Editorial update: 27 October 2026. This article provides general legal information and does not replace advice based on the relevant agreement and case facts.