Taxation of foreign telecasting companies—Guidelines for computation of income-tax, etc
Circular No. 6 was issued by the Central Board of Direct Taxes on 5 March 2001. Its subject is Taxation of foreign telecasting companies—Guidelines for computation of income-tax, etc.
Withdraws, with effect from 31st March 2001, the presumptive scheme for foreign telecasting companies laid down in Circular No. 742 dated 2nd May 1996 and extended by Circular No. 765 dated 15th April 1998. From assessment year 2002-03 onwards, advertisement income of a foreign telecasting company is to be computed by the Assessing Officer under the ordinary provisions of the Act, with rule 10 of the Income-tax Rules available where accounts of Indian operations are not maintained. Where the company is resident of a treaty country, business income including advertisement receipts is taxable only if it has a permanent establishment in India, to be decided on the facts of each case; where there is no treaty, section 5 read with section 9 governs.
The Board decided to end the presumptive basis it had allowed for computing profits of foreign telecasting companies from Indian advertisement payments.
Taxation of foreign telecasting companies—Guidelines for computation of income-tax, etc.
1. The Central Board of Direct Taxes vide Circular No. 742, dated 2-5-1996 had laid down certain guidelines for the computation of profits of FTCs from advertisement payments received by them from India. These guidelines were extended till further orders by Circular No. 765, dated 15-4-1998. The Central Board of Direct Taxes hereby withdraws the above Circular with effect from 31-3-2001.
2. The total income of FTCs from advertisements, hitherto computed on a presumptive basis shall now be determined by the Assessing officers in accordance with the other provisions of the Income-tax Act, 1961 in relation to the assessment year 2002-2003 and subsequent assessment years. In case, accounts for Indian operations are not available, the provisions of rule 10 of the Income-tax Rules, 1962 may be invoked. Where an FTC is a resident of a country with whom India has a Double Taxation Avoidance Agreement (DTAA), its business income (including receipts from advertisement) can be taxed only if it has a Permanent Establishment in India. Therefore, the taxability of an FTC in this regard shall be determined on the facts and circumstances of each case. Taxation of FTCs who are residents of countries with whom India does not have a DTAA, shall be governed by the provisions of section 5, read with section 9 of the Income-tax Act, 1961.
3. It may be reiterated that the guidelines for computation of profits of FTCs in Circular No. 742 and 765 were applicable only to the income stream from advertising. Other kinds of income like subscription charges receivable from cable operators in respect of pay channels and income from the sale or lease of decoders, etc., shall continue to be taxed in accordance with the paragraph 2 above.
Circular : No. 6/2001, dated 5-3-2001.
In an assessment of a foreign broadcaster or its Indian agent for assessment year 2002-03 onwards, and in section 195 or section 197 applications by advertisers remitting to a foreign channel.
Rules it names. Rule 10 of the Income-tax Rules, 1962. The 1962 Rules were replaced by the Income-tax Rules, 2026, which renumbered nearly everything: a rule number quoted here almost never means the same rule today.
Source: the Income Tax Department’s own published text — its page for this instrument.