Rule 137 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Rule 137 of the Income-tax Rules, 2026 puts the accountant's book profit report into Form No. 66; rule 138 puts the adjusted total income report for non-companies into Form No. 67.
The two rules
| Rule | 1962 parallel | Report on | Required under | Form |
|---|---|---|---|---|
| 137 | Rule 40B | Computation of book profit of companies | Section 206(1)(s) | Form No. 66 |
| 138 | Rule 40BA | Computation of adjusted total income by certain persons other than a company | Section 206(2)(j) | Form No. 67 |
Each rule is a single sentence, and both use the same signatory: an accountant as defined under section 515(3)(b).
The company and non-company split
The pairing in rule 137 and rule 138 mirrors the structure of section 206 itself. Sub-section (1) deals with companies and works on book profit — an accounting measure, drawn from the profit and loss account and adjusted. Sub-section (2) deals with certain persons other than a company and works on adjusted total income — a tax measure, starting from total income. Same idea, different starting point, and therefore two different forms and two different reports.
| Point | Rule 137 — companies | Rule 138 — others |
|---|---|---|
| Measure | Book profit | Adjusted total income |
| Starting point | The profit and loss account | Total income as computed under the Act |
| Assessee | A company | Certain persons other than a company |
| Form | 66 | 67 |
Choosing the wrong form is not a formal slip. A company filing Form No. 67, or a limited liability partnership filing Form No. 66, is reporting on the wrong measure — and the underlying computation will not match the section it is filed under.
What the rules do not say
Neither rule 137 nor rule 138 prescribes:
- a due date — the timing follows the section under which the report is required;
- a manner of furnishing — unlike, for example, rules 139 and 141, which expressly require electronic filing under digital signature; or
- any contents — those are in the forms themselves.
The brevity of these two rules can mislead. What each does is fix the form — and because the section requires "a report in the prescribed form", a report on any other format does not satisfy the section at all. The accountant's substantive work is governed by the section and the form; rule 137 and rule 138 simply close the loop between them.
Where they sit among the reporting rules
The Income-tax Rules, 2026 use a consistent pattern for accountant's reports — a short rule naming the section and the form, with the substance left to the form. Others in the same family include:
| Rule | Report | Form |
|---|---|---|
| 28 | Audit report for preliminary expenses and mineral prospecting | 6 |
| 43 | Royalty and fees for technical services under section 59(4) | 24 |
| 54 | Slump sale under section 77(4) | 28 |
| 66 | Audit report for the section 46 and 138 to 144 deductions | 32 |
| 68 and 69 | Reports under sections 146(3)(c) and 147(4)(a) | 34 and 35 |
| 137 and 138 | Book profit and adjusted total income | 66 and 67 |
Worked example
| Assessee | Report |
|---|---|
| Company computing book profit under section 206(1) | Form No. 66 under rule 137 |
| Limited liability partnership within section 206(2) | Form No. 67 under rule 138 |
| Report signed by a person outside section 515(3)(b) | Not a valid report under either rule |
| Company files Form No. 67 | Wrong form and wrong measure |
| Report prepared on a firm's own template | Does not satisfy the prescribed-form requirement |
| Timing of the report | Governed by section 206(1)(s) or 206(2)(j), not by the rule |
Compliance checklist
- Identify whether the assessee is a company or one of the certain persons other than a company.
- Use Form No. 66 for book profit and Form No. 67 for adjusted total income.
- Have the report signed by an accountant under section 515(3)(b).
- Take the due date from the section, since the rule states none.
- Prepare the underlying computation on the right measure for the form used.
- Keep the workings supporting each adjustment with the report.
Common mistakes
- Filing Form No. 66 for a non-company assessee.
- Computing adjusted total income where book profit is required.
- Using a firm template instead of the prescribed form.
- Looking for the due date in the rule rather than the section.
- Engaging a signatory outside the section 515(3)(b) definition.
Quick recapKey facts & short answers
Key Facts About Rule 137
- Applies in: All states across India, under the relevant central law.
- Mode: Mostly online via the official government portal.
- Typical timeline: Ranges from a few days to a few weeks depending on the case.
- Non-compliance: May attract penalties, interest or late fees.
- Expert help: TaxClue completes the entire process end to end for you.
What does rule 137 require?
That the report of an accountant as defined under section 515(3)(b), required to be furnished by the assessee under section 206(1)(s), shall be made in Form No. 66.
What does rule 138 require?
That the report of an accountant as defined under section 515(3)(b), required to be furnished by the assessee under section 206(2)(j), shall be made in Form No. 67.
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Rule 137: a key compliance topic in Indian tax and corporate law that businesses and individuals must understand to remain compliant.
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Disclaimer: This article is for general informational purposes only and does not constitute professional tax, legal or financial advice. Laws, rates and due dates change and can vary by individual case — always verify with the relevant government source (e.g. mca.gov.in, incometax.gov.in) or consult a qualified professional before acting. TaxClue accepts no liability for decisions taken based on this content.