Eligibility of sec.80-O of Income Tax Act 1961. - Income Tax - 1242/CBDT

INSTRUCTION NO. 1242/CBDT Dated : March 29, 1979 Section(s) Referred: 80O Statute: Income - Tax Act, 1961 One of the conditions for the eligibility of the benefit of sec.80-O is that royalty, commission, fees etc., should be brought into India in convertible foreign exchange which is, for time being, treated by the RBI as convertible foreign exchange. A list of currencies which are so recognised by the RBI was given in Boards instruction No.797 (F.No.473/5/FTD dt.23-11-74). 2. In order to update this list, the RBI were requested to furnish the latest list of currencies recognised by them as convertible currency. The RBI have however clarified that payments from any country included in the External group of countries (i.e. Countries other than Nepal, Bhutan and bilateral group of Countries) are permitted to be received only in convertible foreign currencies or in rupees by debit to the account of a Bank situated in any of the countries in the group. When a dealer authorised to deal in foreign exchange by the RBI u/s.6 of the FERA, 1973, certifies that a payment from a country in the External Group of countries has been received in an approved manner under the exchange control regulations it implies that the payment from abroad has in fact emanated in one of the approved methods. The authorised dealer's certificate is, therefore, adequate evidence to establish that the concerned payment has in fact been received in convertible foreign exchange. 3. Thus all remittances to India from countries other than Nepal and Bhutan may be treated as remittance in a convertible currency to India provided they are supported by certificates issued by authorised dealers in foreign exchange confirming inter alia that the remittances have been received in a manner which is in conformity with the exchange control regulations[So far as payments from the bilateral group of Countries are concerned instructions have already been issued vide Board's Instruction No.1008 (F.No.473/46/75-FTD) dated 18-9-76]. 4. The result this, will be that all remittances made from any country except Nepal and Bhutan should be treated as convertible foreign exchange provided the same has been remitted through normal banking channels.