Rule 275 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 275 of the Income-tax Rules, 2026 lets an investment fund seek the Board's approval of its eligibility three months before the tax year, decided within two months and effective for later years unless withdrawn; rule 276 puts the annual statement in Form No. 173.
An optional certainty mechanism
Sub-rule (1) of rule 275: an investment fund may, at its option, seek approval of the Board regarding its eligibility for the purposes of section 9(12). The 1962 parallel is rule 10VA.
Nothing compels a fund to apply under rule 275. Eligibility under section 9(12) and Schedule I can simply be claimed and defended in assessment. What the approval buys is certainty, and sub-rule (8) states it plainly: the benefit of section 9(12) shall not be denied to an eligible investment fund which has been granted approval, for any tax year for which the approval is in force and has not been withdrawn. For a fund whose Indian tax position turns on not being treated as resident here, removing that exposure in advance is usually worth the three-month lead time.
Where and when to apply
| Sub-rule | Provision |
|---|---|
| (2) | Application in writing, enclosing relevant documents and evidence, to the Member, Central Board of Direct Taxes having supervision and control over the work of the Foreign Tax and Tax Research Division |
| (3) | Made three months before the beginning of the tax year for which approval is sought |
The three months in rule 275(3) is a lead time, not a deadline within a window — an application made two months before the year begins is not late in the ordinary sense; it is simply not an application for that year. Note also that this is the same Member and the same machinery a fund uses under rule 274(5) to seek approval of a below-floor fund manager remuneration.
The committee and the decision
Sub-rule (4): the Board shall notify a committee to examine the application and submit recommendations on grant of approval or otherwise and the conditions, if any, subject to which it should be granted. The committee is:
- headed by a Principal Chief Commissioner or Chief Commissioner of Income-tax; and
- consists of two other income-tax authorities, not below the rank of Commissioner.
Sub-rule (5): the committee may, before recommending, call for documents or information from the investment fund, the income-tax authorities and other Departments or agencies, as it deems fit.
Sub-rule (6): the Board, on the basis of the committee's recommendations, shall within two months from the end of the month in which the application was made:
- (a) by an order in writing, grant approval subject to such conditions as it may deem fit; or
- (b) for reasons to be recorded in writing, reject the application.
The arithmetic in rule 275 works out so that a fund applying at the earliest permitted point normally has its answer before the tax year begins. Application three months ahead, decision within two months from the end of the application month — so a fund can structure its affairs on a known footing. A fund that applies at the last moment permitted may still be waiting when the year starts, which defeats much of the point of applying at all.
Duration and withdrawal
Sub-rule (7): approval once granted, subject to any condition specified, is applicable for the tax year applied for and subsequent tax years, unless it is withdrawn by the Board.
Sub-rule (9): the Board may withdraw approval if satisfied that:
| Clause | Ground for withdrawal |
|---|---|
| (a) | The approval was obtained on the basis of misrepresentation of facts or fraud |
| (b) | The conditions in section 9(12) and Schedule I and the guidelines specified under paragraph 5 of that Schedule are not fulfilled |
| (c) | Any condition subject to which approval was granted has been violated |
Sub-rule (10): no order rejecting the application or withdrawing approval shall be passed without giving a reasonable opportunity of being heard, and such order shall be communicated to:
- the fund;
- the Assessing Officer; and
- the Principal Commissioner or Commissioner of Income-tax having jurisdiction over the fund.
Sub-rule (7) of rule 275 makes an approval run into subsequent tax years without renewal. That is a real administrative saving, but it puts the burden the other way: the fund must keep satisfying the Schedule I conditions continuously, because ground (b) of sub-rule (9) allows withdrawal for any failure, in any year, and the withdrawal order goes straight to the Assessing Officer and the jurisdictional Commissioner. Treat the approval as a standing representation that has to remain true, not as a certificate obtained once.
Rule 276 — the annual statement
Sub-rule (1): the statement required under paragraph 1(4) of Schedule I shall be furnished to the Assessing Officer, electronically under digital signature, for every financial year, by the eligible investment fund, in Form No. 173, duly verified in the manner indicated in it. The 1962 parallel is rule 10VB.
Sub-rule (2) answers the question that would otherwise have no answer for a non-resident fund: the Assessing Officer is the one who has jurisdiction over the fund, or who would have had jurisdiction had the fund been assessable to tax in India but for section 9(12).
An eligible fund is by definition not assessable in India, so no officer ordinarily holds jurisdiction over it. Sub-rule (2) of rule 276 solves this by asking who would have had jurisdiction but for section 9(12) — a counterfactual that has to be worked out before the first filing, and which does not change from year to year once settled. Note also that the Form No. 173 filing is the statement whose delay rule 274(2)(b) forgives up to ninety days. Beyond ninety days there is no tolerance, and eligibility itself is at risk.
Note the period: every financial year, not tax year. The obligation is annual and unconditional for an eligible fund, and it exists whether or not the fund has taken the optional rule 275 approval.
Worked example
| Facts | Position under rule 275 and rule 276 |
|---|---|
| Fund wants certainty for the year beginning 1 April | Apply three months before — by 31 December |
| Application sent to the jurisdictional Commissioner | Wrong recipient — it goes to the Member, CBDT for the Foreign Tax division |
| Application made in December | Decision due within two months from 31 December |
| Committee asks another Department for information | Permitted by sub-rule (5) |
| Approval granted with conditions | Runs for that year and subsequent years unless withdrawn |
| Fund fails a Schedule I condition in year three | Withdrawal available under ground (b) |
| Withdrawal ordered without a hearing | Contrary to sub-rule (10) |
| Fund never applies for approval | Eligibility can still be claimed — approval is optional |
| Form No. 173 filed on paper | Defective — electronic filing under digital signature is required |
| Form No. 173 filed 100 days late | Beyond the ninety-day tolerance in rule 274(2)(b) |
| Fund has no Indian Assessing Officer | The one who would have had jurisdiction but for section 9(12) |
Compliance checklist
- Decide early whether the certainty of a rule 275 approval is worth seeking.
- Diarise the application three months before the tax year begins, and apply at the earliest permitted point.
- Address it to the Member, CBDT supervising the Foreign Tax and Tax Research Division.
- Enclose the documents and evidence up front — the committee can call for more, which costs time.
- Read every condition attached to an approval and monitor continuing compliance.
- Treat any Schedule I failure as a withdrawal risk in every later year.
- Identify the counterfactual Assessing Officer under rule 276(2) before the first filing.
- File Form No. 173 electronically under digital signature every financial year, and never more than ninety days late.
Common mistakes
- Applying less than three months before the tax year begins.
- Sending the application to a field officer rather than the Member, CBDT.
- Treating approval as a one-off certificate rather than a continuing representation.
- Assuming approval must be renewed annually, when sub-rule (7) carries it forward.
- Filing Form No. 173 for the tax year rather than the financial year.
- Letting the statement run past ninety days late.
Which year this governs
The Income-tax Rules, 2026 are made under the Income-tax Act, 2025. The 1962 parallels are rule 10VA for rule 275 and rule 10VB for rule 276, given for tracing only. Verify the current text and Schedule I before applying.