Circular No. 675

What it does

Decides which people behind a film qualify for the section 80RR deduction. Section 80RR gives a resident individual who is an author, playwright, artist, musician, actor or sportsman, including an athlete, and who derives income in the exercise of his profession from a foreign Government or a non-resident, a deduction of fifty per cent of that income, or seventy-five per cent of so much of it as is brought into India under the Foreign Exchange Regulation Act, 1973 and the rules, whichever is higher. The Board holds that a script writer can be regarded as a playwright and a director can be treated as an artist, so both are within the section, but a producer is not, because he does not fall within any of the categories named. It notes that photographers and television cameramen had earlier been treated as artists for this purpose by Circular No. 31 dated 25 October 1969.

Why it was issued

A question was raised whether a person receiving payment for a film he produced, directed or scripted is entitled to the deduction, and the Board examined it.

Who it reaches

Script writers and directors earning from foreign sources
Film producers, who are outside the section
Photographers and television cameramen, already treated as artists
Assessing Officers testing a section 80RR claim

The provisions it speaks to

Left, the provision of the Income-tax Act, 1961 as the instrument itself names it. Right, the section of the Income-tax Act, 2025 that the department’s own concordance maps it to — which is where the same ground is now covered.

Under the 1961 Act	Now
s.80RR	no counterpart recorded

The instrument, as the Board published it

The words below are the department’s own, reproduced from its published text. Where the department’s copy carried a publisher’s notes after the instrument, those are not reproduced.

610. Whether person, who receives payment for film which has been produced, directed or scripted by him, would be entitled to deduction under section 80RR
1. Section 80RR of the Income-tax Act, 1961 provides that an individual resident in India, being an author, playwright, artist, musician, actor or sportsman (including an athlete) who derives income in exercise of his profession from the Government of a foreign State or any person not resident in India shall be entitled to a deduction from his income of (i) 50% of such income, or (ii) 75% of such income as is brought into India in accordance with the Foreign Exchange Regulation Act, 1973 and rules made thereunder, whichever is higher.
2. By Circular No. 3l, dated 25-10-1969 the Board clarified that photographers and TV cameramen can be regarded as artists for the purposes of section 80RR of the Act. A question has been raised whether a person, who receives payment for a film which has been produced, directed or scripted by him, would be entitled to deduction under section 80RR of the Act. The Board has examined the matter and is of the view that a script writer can be regarded as " playwright" and similarly "director" can be treated as an ‘artist’ for the purposes of section 80RR of the Act. However, a producer would not be entitled to deduction under section 80RR of the Act, because he does not fall under any of the categories mentioned in the said section.
Circular : No. 675, dated 3-1-1994.

What to watch

A producer gets nothing under this section, whatever the size of his foreign receipts, so the capacity in which the money is earned has to be documented.
The income must be derived in the exercise of the profession and must come from a foreign Government or a non-resident.
The higher rate of seventy-five per cent depends on the money being brought into India in accordance with the foreign exchange law.
Section 80RR is no longer in the statute and the foreign exchange statute it refers to has been replaced, so this bears on the years the section applied.

Where you meet it

In an assessment of a writer, director or producer with foreign remittances, where the section 80RR claim is in dispute.

On the same provision

Other instruments in this library that name the same provision of the 1961 Act. They are not necessarily still operative, and a later one may have replaced an earlier one without saying so.

Circular No. 31 — Section 80RR l Professional Income from Foreign Sources in Certain Cases 25 October 1969

← Circular No. 676 · Circular No. 674 →

A circular binds the department, not you and not a court. The Board issues a circular to its own officers. An assessee may hold the department to a circular that helps him; the department cannot hold an assessee to one that hurts him, and the Tribunal and the courts decide the law for themselves.

Source: the Income Tax Department’s own published text — its page for this instrument.

What this is