CBDT Circular No. 759, dated November 18, 1997, on the Subject remittance to a non-resident—Deduction of tax at source—Submission of no objection certificate--Dispensing with--Clarification reg - Income Tax - 767/1998

CBDT Circular No. 759, dated November 18, 1997, on the Subject remittance to a non-resident—Deduction of tax at source—Submission of no objection certificate--Dispensing with--Clarification reg Circular No. 767 Dated 22/5/1998 To All the Chief Commissioners of Income-tax, Directors-General of Income-tax. Sir, Subject : CBDT Circular No. 759, dated November 18, 1997, on the Subject remittance to a non-resident—Deduction of tax at source—Submission of no objection certificate--Dispensing with--Clarification reg. Circular No. 759, dated November 18, 1997, [1997] 228 ITR (St.) 146, was issued by the Board to dispense with the requirement of submission of a no objection certificate from income-tax authorities for remittance to a non-resident as required by the Reserve Bank of India (RBI). In paragraph 2 of the said circular, it was stated that henceforth remittances may be allowed by the Reserve Bank of India without insisting upon a no objection certificate from the Income-tax Department provided the person making the remittance furnished an undertaking in duplicate addressed to the Assessing Officer which was accompanied by a certificate from an accountant (other than an employee) as defined in the Explanation below to section 288 of the Income-tax Act, 1961, in the form annexed to the said circular. The person making the remittance had to submit the undertaking along with the said certificate of the accountant to the Reserve Bank of India, who would, in turn, forward a copy thereof to the Assessing Officer. 2. A number of references have been received by the Board stating that the Reserve Bank of India had delegated powers to authorised dealers to allow certain types of remittances to non-residents without obtaining approval of the Reserve Bank of India. In such cases, the Reserve Bank of India cannot forward the undertaking and certificate of the accountant to the Assessing Officer as prescribed in Circular No. 759, [1997] 228 ITR (St.) 146. The Reserve Bank of India has already issued a Circular AD(MA series), Circular No. 48, dated 29th November, 1997, to all authorised dealers in foreign exchange directing them to forward a copy of the certificate together with a copy of the undertaking to the office of the Assessing Officer of the Income-tax Department as indicated in the undertaking. In view of the foregoing, it is clarified that Circular No. 759, [1997] 228 ITR (St.) 146, would also be applicable to remittances made through authorised dealers in foreign exchange. 3. In accordance with Circular No. 759, [1997] 228 ITR (St.) 146, the undertaking to be submitted by the person making the remittance to a non-resident is required to be signed by the person authorised to sign the return of income of the person making the payment. The person authorised to sign a return of income in the case of a company, in accordance with section 140 of the Income-tax Act, 1961, is the managing director and each undertaking for each remittance has, therefore, to be signed by the managing director. Representations pointing out administrative difficulties experienced by companies have been received. It has, therefore, been decided that the undertaking to be submitted at the time of making a remittance to a non-resident shall be signed by the person authorised to sign a return or a person so authorised by him in writing. 4. It is also clarified that Circular No. 759, [1997] 228 ITR (St.) 146 will cover those remittances for which the Reserve Bank of India has prescribed the production of a no objection certificate from the income-tax authorities under its Exchange Control Manual. Further, if an order under section 195(2) has been obtained by a person responsible for deducting tax, the new procedure of filing an undertaking along with a certificate prescribed in Circular No. 759 would not be applicable. 5. The contents of this circular may be brought to the notice of all the officers working in your charge. Yours faithfully, (Sd.) Rajat Bansal, Under Secretary (FTD). [F. No. 500/152/96-FTD]