What is the difference between a circular and a notification?
What separates a circular, a notification, and a master direction: which one changes the law, which binds officers, which consolidates rules, and how to tell which document you are reading before you act on it.
In this guide
A notification is subordinate legislation issued under an enabling section of an Act and published in the Official Gazette, so it changes the law and binds everyone. A circular is an administrative clarification that binds the officers of the issuing department but cannot override the Act. A master direction is the RBI's consolidated instruction set for a regulated activity, kept updated in one place. Only the notification carries the force of law on its own.
How do these three instruments differ?
A notification, a circular, and a master direction differ by legal force and by who they bind. A notification is subordinate legislation and changes the law. A circular is an administrative clarification that binds the issuing department's officers but not the statute. A master direction is the RBI's consolidated instruction set for a regulated activity, kept current in one place. Reading which type you hold decides whether you must obey it, rely on it, or merely note it.
What is a notification in Indian law?
A notification is subordinate legislation issued under an enabling section of an Act and published in the Official Gazette. It can set or change a rate, an exemption, a threshold, a form, or an effective date, and it binds everyone the Act covers. Because the gazette copy is authoritative, the exact text and the date it takes effect are read from the notification itself, not from a summary of it.
Examples run across regulators. A CBIC central tax notification can amend a GST rule, a CBDT notification can change an income-tax rule or form, and an MCA notification can amend the rules under the Companies Act. In each case the notification cites the section that empowers it.
What is a circular?
A circular is an administrative instruction that binds the officers of the department that issued it, and it cannot override the Act or a notification. Departments such as CBDT and CBIC issue circulars to explain how a provision should be applied, to remove doubt, or to standardise practice across field offices. It guides the department, not the legislature.
The limit matters. A circular that is beneficial to the taxpayer generally binds the department that issued it, but a circular cannot add a burden the statute does not impose. When a circular and the Act disagree on a burden, the Act controls.
Which power lets a department issue circulars?
Each statute names its own circular power. Section 119 of the Income-tax Act, 1961 lets CBDT issue orders, instructions and directions that income-tax authorities are bound to observe. Section 168(1) of the CGST Act, 2017 gives CBIC the equivalent power for GST. A circular issued outside those powers carries no administrative force either.
What is an RBI master direction?
A master direction is the Reserve Bank of India's consolidated set of instructions for a regulated activity, such as know-your-customer norms or a class of non-banking finance company. The RBI keeps each master direction updated in one document as individual circulars amend the underlying instructions, so a reader sees the current position without stitching together years of separate circulars.
The master direction is a compilation for ease of reference. The RBI still issues individual circulars and notifications, and the master direction is revised to fold those changes in. The underlying power traces to the relevant Act, for example the Banking Regulation Act or the Reserve Bank of India Act.
How do I know a master direction is current?
Read the "updated as on" line the RBI prints at the top of each master direction, then check the RBI master directions index for amendments issued after that date. The RBI amends a master direction by a separate circular and then folds the change in, so a direction downloaded six months ago can already be superseded on a specific paragraph.
Which of these documents binds me?
A notification binds everyone the Act reaches, a circular binds the issuing department's officers, and a master direction binds the regulated entities it addresses through the RBI's supervisory powers. The table sets the three against legal force and audience so you can place a document quickly.
| Document | Legal force | Who it binds |
|---|---|---|
| Notification | Subordinate legislation; changes the law. | Everyone the Act covers. |
| Circular | Administrative; cannot override the Act. | Officers of the issuing department. |
| Master direction | Consolidated RBI instruction under its powers. | Regulated entities it addresses. |
How do I identify which instrument this is?
- Read the heading. It usually states the type, such as Notification No., Circular No., or Master Direction.
- Find the enabling clause. A notification cites the section that empowers it; a circular states it is a clarification or instruction.
- Check the source page. Regulators list notifications, circulars, and master directions in separate indexes on their own sites.
- Confirm the effective date from the document itself, because a notification takes effect from the date it states in the Gazette.
- For an RBI master direction, check the last-updated stamp, since it is revised as underlying circulars change.
Why do circulars get treated as law?
- Treating a circular as if it changed the law. A circular explains the law; it does not amend the Act.
- Relying on a summary instead of the gazette text of a notification, and missing the exact effective date.
- Reading an old circular that a later master direction has already folded in and superseded.
- Assuming a circular that adds a burden binds the taxpayer. A burden beyond the statute does not bind.
- Confusing a customs tariff notification with a CGST notification, since both are called notifications but sit under different Acts.
Where do regulators publish each instrument?
Regulators issue circulars, notifications, and master directions on their own sites in separate indexes, which is why a single change can be hard to place. Complied AI keeps updates from CBDT, CBIC, MCA, RBI, and SEBI in one feed so you can open the source document behind a change, see its type, and read the enabling law next to it before you act.
Practical checks
Common questions
Does a circular have the force of law?
A circular does not have the independent force of law. It is an administrative instruction that binds the officers of the department that issued it, such as CBDT or CBIC officers. It cannot override the Act or a notification, and courts have held that a circular cannot impose a burden the statute does not.
Why is a notification published in the Gazette?
A notification is published in the Official Gazette because it is subordinate legislation issued under an enabling section of an Act, and gazette publication is how it takes legal effect. The gazette copy is the authoritative version, which is why the effective date and text are read from the gazette rather than a summary.
Is a master direction the same as a notification?
A master direction is not the same as a notification. It is the RBI's consolidated set of instructions for a regulated activity, updated in one place as individual circulars change. The underlying power still traces to the relevant Act, but the master direction is a compilation for ease of reference rather than a single gazette instrument.
If a circular contradicts the Act, which wins?
The Act wins. A circular cannot override the statute or a notification issued under it. If a circular is more favourable to the taxpayer than the statute allows, the department is generally bound by its own beneficial circular, but a circular that adds a burden beyond the Act does not bind the taxpayer.
How do I know if a document changed the law or just clarified it?
Check the document type and its enabling reference. A notification cites the section of the Act that empowers it, such as section 164 of the CGST Act, 2017, and appears in the Gazette, so it changed the law. A circular cites an administrative power such as section 119 of the Income-tax Act, 1961 or section 168 of the CGST Act, so it explained existing law.
I have a circular and a notification that say different things. Which do I follow?
Follow the notification. A notification is subordinate legislation published in the Official Gazette under an enabling section, while a circular is an administrative instruction under a power such as section 119 of the Income-tax Act, 1961 or section 168 of the CGST Act, 2017. A circular cannot override a notification or the parent Act.
My bank quoted an RBI master direction paragraph. Is that legally enforceable on me?
An RBI master direction binds the regulated entity, so the bank is enforcing its own obligation rather than a duty imposed directly on you. The RBI issues master directions under powers in the Reserve Bank of India Act, 1934 and the Banking Regulation Act, 1949, and supervises compliance. Ask the bank which paragraph and which updated-as-on version it relies on.
The circular I am relying on is five years old. Is it still valid?
A CBDT or CBIC circular stays in force until it is withdrawn, superseded or held contrary to the Act, so age alone does not retire it. Check the department's circular index for a later circular that supersedes it, and for RBI instructions check whether a master direction has folded it in. Note the number and date of whichever version you rely on.
Publication method
How this guide was prepared
This guide is published by the Complied AI research desk. Its source list and stated position were checked against the official records shown below on 2 September 2026.
Automation, including AI, may assist research, drafting and structure. It does not replace the official record or amount to an independent professional review. Read our editorial standards and corrections policy.
Verification path
Official sources used
Keep reading
Related guides
- Law · SectionsWho must appoint KMPs under section 203?Which companies must appoint whole-time key managerial personnel under section 203 of the Companies Act, 2013, the Rs 10 crore paid-up capital test in rule 8, the six-month vacancy clock, and the Rs 5 lakh company penalty.
- How-to · GSTHow do I cancel GST registration in Form REG-16?How a registered person applies to cancel GST registration in Form GST REG-16 under section 29 of the CGST Act, which portal reasons to pick, how stock tax is reversed, and when Form GSTR-10 is due.
- Law · SectionsWhen must a director disclose interest under section 184?How section 184 of the Companies Act, 2013 requires Form MBP-1, the first-meeting and first-meeting-of-the-year clocks, the 2 percent shareholding recusal test, the eight-year retention of notices, and the Rs 1 lakh penalty.