Circular No. 766

1154. Discontinuance of requirement of sending quarterly statements in case of payments by foreign companies and law firms to residents in India

What this is

Circular No. 766 was issued by the Central Board of Direct Taxes on 24 April 1998. Its subject is 1154. Discontinuance of requirement of sending quarterly statements in case of payments by foreign companies and law firms to residents in India.

What it does

Withdraws, with immediate effect, the quarterly reporting duty that Circular No. 726 dated 18th October 1995 had put on foreign companies and foreign law and accountancy firms with no presence in India, under which they were to send the Deputy Secretary, Foreign Tax Division, Central Board of Direct Taxes a quarterly statement of payments made to Indian residents for professional services.

Why it was issued

On reconsideration the Board took the view that details of payments to Indian residents can easily be verified or collected wherever required, so the routine statements were unnecessary.

Who it reaches

Foreign companies with no presence in India paying Indian professionals
Foreign law and accountancy firms engaging Indian residents
Indian professionals receiving fees from such firms
The Foreign Tax Division of the Board

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.

1154. Discontinuance of requirement of sending quarterly statements in case of payments by foreign companies and law firms to residents in India
1. Attention is invited to Board’s Circular No. 726 dated 18-10-95 (F. No. 133/80/95-TPL) wherein, inter alia, it was stated that the foreign companies and the foreign law and accountancy firms that have no presence in India should send a quarterly statement to the Deputy Secretary, Foreign Tax Division, CBDT regarding the payments made to the Indian residents for professional service.
2. The Board has since reconsidered the matter. As the details of payments made to the Indian residents can easily be verified or collected wherever required, it has been decided to discontinue with immediate effect the requirement of sending the above quarterly statements.
Circular : No. 766, dated 24-4-1998.

What to watch

Only the quarterly statement requirement goes; the rest of Circular No. 726 dated 18th October 1995 is not touched.
The Board reserves the ability to call for the same details when required.
The withdrawal is from 24th April 1998, so statements for earlier quarters were still due.
Nothing here bears on the chargeability of the professional's income or on deduction obligations.

Where you meet it

In correspondence with the Foreign Tax Division about compliance by a foreign firm engaging Indian professionals.

← Circular No. 767 · Circular No. 765 →

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.