Circular vs. Notification
Notifications and circulars are frequently used documents in many ministries and departments, providing information about rules, methods, or policy changes implemented by the government or a higher authority. Both types of documents are issued by the Central Board of Direct Taxes in India. This article aims to clarify the differences between circulars and notifications for those who may be uncertain about their distinctions.
Key Takeaways
- Circulars are administrative guidelines meant to explain aspects of a law to ministry employees, while notifications are more binding and have a legislative nature.
- Both circulars and notifications are issued by higher authorities in the taxation department (CBDT).
- While circulars are intended for department officers, notifications are binding for all parties involved, including assessees, courts, and officers.
Circular
Circulars are used within a ministry or department to explain certain aspects of a law. Sometimes, another circular may be issued to clarify a point that was not fully addressed in a previous one. Alternatively, a legislative amendment may be made to rectify the situation. Any law or section of a law is explained in this way to ministry employees. Circulars serve as administrative guidelines intended to clarify doubts. They are explanatory and interpretive in nature, typically issued by a higher-level executive in the Income Tax department. Circulars often highlight relaxations provided by the department and are binding only on department officers, not on assessees.
Notification
Notifications have a higher level of importance than circulars, just below an Act, and are more binding. They are binding for all parties, including assessees, courts, and officers. Notifications are issued by the government under the powers of a legislative enactment and usually function as a law to explain procedural aspects of legislation. Some notifications are issued to clarify circumstances worded as “may be prescribed,” which can create confusion.
