Taxation of Persons Leaving India: Section 317 of the Income Tax Act 2025

Under section 317 of the Income-tax Act, 2025, if the Assessing Officer (AO) believes an individual may leave India with no present intention of returning, the AO can tax that person's income up to the probable date of departure straight away, instead of waiting for the normal return cycle. The AO can ask for a return on a notice of at least seven days. This guide explains who is affected, how the period is worked out, and what the individual or their CA should do. Every point is taken from section 317 (as amended by the Finance Act, 2026) and the sections it refers to.

What does section 317 of the Income Tax Act 2025 say?

Section 317 sits in the Chapter on assessment and is headed "Assessment of persons leaving India". It applies "irrespective of anything contained in section 4". Section 4 is the charge section: it taxes the total income of a tax year, and income is normally assessed after that year ends. Section 317 breaks that sequence for one narrow case.

The trigger in section 317(1) has three parts, all of which must hold:

• the person is an individual (not a company, firm or HUF);
• it appears to the AO that the individual may leave India during the current tax year or shortly after its expiry; and
• the individual has no present intention of returning to India.

When these are met, the total income from the first day of the current tax year up to the probable date of departure (called the "specified period") becomes chargeable to tax in that current tax year.

What is the "specified period" and how is it taxed?

The specified period starts on 1 April of the current tax year and ends on the probable date of departure. If the departure is expected after the tax year ends, the period runs past 31 March and takes in part of the next year as well.

Two rules follow from section 317(2) and (3):

• Each completed tax year, and each part of a tax year, inside the specified period is taxed at the rates in force for that year, and a separate assessment is made for each.
• If the income for the period or any part of it cannot be readily determined under the Act, the AO may estimate it.

What notice can the AO send, and how long do you get?

Section 317(4) lets the AO serve a notice requiring a return in the same form and verified the same way as a return under section 268(1). The notice must give not less than seven days. The return must set out:

• total income for each completed tax year in the specified period; and
• estimated total income for any part of a tax year in the specified period.

The rest of the Act applies, as far as it can, as if this were a section 268(1) notice. Section 317(5) adds that, irrespective of sections 268(1) and 280, the AO may also issue a notice under either section requiring a return for tax chargeable under any other provision of the Act, again giving not less than seven days. Section 280 deals with notices where income has escaped assessment, so a person who is leaving can face both kinds of notice together.

Is this tax in addition to normal tax?

Section 317(6) says the tax chargeable under this section is in addition to tax chargeable under any other provision of the Act. It is a way of collecting tax earlier on the period before departure, and it does not remove tax that arises under other provisions.

Is section 317 the same as the tax clearance certificate?

No. They are separate provisions with different triggers. Section 317 is an assessment power: the AO taxes your income up to the probable departure date. Section 420 is an exit formality: a person not domiciled in India who came here for business, profession or employment and has Indian-source income must furnish an employer's undertaking (section 420(1)), and a person domiciled in India must furnish their PAN, purpose of visit and estimated stay (section 420(3)). Section 420(5) lets an income-tax authority require a certificate of no liability, or of satisfactory payment arrangements, before a domiciled person leaves, but only after recording reasons and getting prior approval of the Principal Chief Commissioner or Chief Commissioner (section 420(6)). Both can apply to the same person. The forms and steps are in our guide to the tax clearance certificate for leaving India.

Worked examples with figures

The Act does not prescribe how the AO estimates income, so the figures below are illustrations of the period and the split, not of tax rates. All amounts are assumed.

Example 1: leaving within the current tax year (tax year 2026-27)

Assumptions: Ravi, an individual, earns Rs 1,20,000 a month as salary. The AO has reason to believe he will leave India permanently on 31 August 2026.

Step	Working	Result
1. Specified period	1 April 2026 to 31 August 2026	5 months (153 days)
2. Days check	30 + 31 + 30 + 31 + 31	153 days
3. Salary for the period	5 x Rs 1,20,000	Rs 6,00,000
4. Assessment	One part of tax year 2026-27, taxed at the rates in force for 2026-27	Tax on Rs 6,00,000 plus any other income of the period

Example 2: leaving shortly after the tax year ends

Assumptions: Meena runs a small consultancy with business income of Rs 18,00,000 for tax year 2026-27. The AO believes she will leave for good on 20 April 2027, and estimates the 20 days in April at the same daily rate.

Step	Working	Result
1. Specified period	1 April 2026 to 20 April 2027	One completed year plus 20 days
2. Completed tax year 2026-27	Total income for the year, taxed at 2026-27 rates	Rs 18,00,000 (before deductions)
3. Part of tax year 2027-28	Rs 18,00,000 x 20 / 365	Rs 98,630 (estimated, rounded)
4. Assessments	Two separate assessments, each at the rates in force for that year	2026-27 and 2027-28 (part)

Real-life example: the doctor moving abroad

Dr. Kavita tells her landlord and bank that she is moving abroad permanently in October and will sell her flat before going. The AO, seeing the sale and her plans, forms the view that she may leave with no intention to return. A notice arrives asking for a return covering 1 April to her probable departure date, with at least seven days to respond. She files it with her income for that part of the year and the tax is assessed before she leaves.

Real-life example: the short assignment

Arjun is sent to Dubai for two years by his employer and keeps his house and family in Pune. He plans to return. Section 317 needs "no present intention of returning", so a posting with a clear return is not the case this section targets. Whether the AO accepts that is a matter of facts, and Arjun should keep his posting letter and return plans on file.

How should a CA handle a section 317 notice?

1. Check the notice is addressed to an individual and states the specified period.
2. Note the response date. It cannot be less than seven days from service.
3. Compute income for each completed tax year in the period and an estimate for any part year.
4. File the return in the form and manner of a section 268(1) return.
5. Check whether a separate notice under section 268(1) or 280 has also been issued for other tax.
6. If the client's plans are temporary, put the evidence on record early.

Quick reference

Point	Rule	Provision
Who	Individual who may leave India with no present intention of returning	Section 317(1)
Period taxed	1 April of the current tax year to probable departure date	Section 317(1)
Rates	Rates in force for each tax year or part year; separate assessments	Section 317(2)
Estimation	AO may estimate where income cannot be readily determined	Section 317(3)
Return notice	Same form and verification as section 268(1); not less than 7 days	Section 317(4)
Notice for other tax	Under section 268(1) or 280; not less than 7 days	Section 317(5)
Relation to other tax	In addition to tax under other provisions	Section 317(6)

Common mistakes

• Treating it as an exit tax. Section 317 taxes income already earned in the specified period. It is not a separate tax on leaving.
• Waiting for the normal return date. Once a notice is served, the response date is set by the AO and cannot be under seven days.
• Ignoring the part year. A departure after 31 March means a separate assessment for a part of the next tax year, with estimated income.
• Missing the second notice. The AO can also issue a notice under section 268(1) or 280 for other tax at the same time.
• Assuming it covers every traveller. It is for individuals who may leave with no present intention of returning.

Where this is in the Act

• Section 317: Assessment of persons leaving India (sub-sections (1) to (6))
• Section 4: Charge of income-tax (overridden by section 317(1))
• Section 268(1): Inquiry before assessment (notice), whose form and verification apply
• Section 280: Notice where income has escaped assessment
• Section 420: Tax clearance certificate (separate exit requirement)

Residential status decides how a person is taxed once they are abroad. See residential status in India for that, and TDS on rent if the person is leaving a rented property behind.

For a CA firm, the practical work is tracking clients who are relocating, keeping notice response dates in view, and holding the income workings ready. Finexo's practice management software helps track client notices and deadlines. It does not compute tax or file returns for you.

This article is general information based on the Act as amended by the Finance Act, 2026, and is not tax advice. Check your facts with a chartered accountant.