Section 174 of ITA, 1961 : Section 174: Assessment Of Persons Leaving India

Explanation using Example

Imagine an individual named Rohan, who is a resident and citizen of India, has been working in India for several years. In the current assessment year, Rohan receives an employment opportunity abroad and decides to move. It is February, and Rohan plans to leave India in March, which is before the end of the current assessment year. The Income Tax Department becomes aware that Rohan intends to leave India and may not return in the near future.

Under Section 174 of the Income Tax Act, 1961, the Assessing Officer, noting that Rohan may leave India soon and might not come back, decides to tax Rohan's income for the period from the beginning of the current assessment year up to the date of his planned departure in March. This is done to ensure that Rohan's income earned in India during this period is subject to taxation before he leaves the country.

The Assessing Officer calculates the tax based on the income Rohan has earned during the current assessment year and issues a notice to Rohan to file a return within a specified time frame, detailing his income up to the date of departure. This allows the Income Tax Department to levy and collect the appropriate taxes from Rohan before he moves abroad.