Rule 283 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 283 of the Income-tax Rules, 2026 computes the Schedule V minimum investment percentages on balance sheet aggregates from FY 2021-22, deems the test met from 2031-32 if satisfied for 2030-31, sets out the exempt income formulae, and requires an annual Form No. 177.
What rule 283 computes
Sub-rule (1) of rule 283: for Schedule V , the percentages referred to in Notes 5(e), (f) and (g) of that entry, and the exempt income referred to in clauses (e), (f) and (g) of column D, are calculated in accordance with the rule. The 1962 parallel is rule 2DCA.
Schedule V Sl. No. 7 is the sovereign wealth fund and pension fund infrastructure exemption. It works only if the money reaches eligible infrastructure entities, and it can reach them through three intermediate layers — an eligible Alternative Investment Fund, an eligible domestic company or an eligible Non-Banking Financial Company. Rule 283 measures how much of each layer's portfolio is genuinely infrastructure, and then apportions the exemption accordingly.
The three rule 283 percentages
| Sub-rule | Entity | Formula |
|---|---|---|
| (2) | Eligible Alternative Investment Fund — Note 5(e) | (A + B + C) ÷ D × 100 |
| (3) | Eligible domestic company — Note 5(f) | E ÷ F × 100 |
| (4) | Eligible Non-Banking Financial Company — Note 5(g) | G ÷ H × 100 |
In sub-rule (2), each term is an aggregate of eligible investments appearing in the balance sheet as on the last date of all the financial years starting from FY 2021-22 and ending with the financial year immediately preceding the relevant tax year:
- A — investments in one or more eligible infrastructure entities or an eligible InvIT;
- B — investments in one or more eligible domestic companies, multiplied by the percentage for those companies determined under sub-rule (3);
- C — investments in one or more eligible Non-Banking Financial Companies, multiplied by the percentage for those companies determined under sub-rule (4);
- D — the aggregate of all eligible investments.
The design of sub-rule (2) of rule 283 is what makes the whole structure work. A fund's investment into an eligible domestic company does not count in full towards its infrastructure percentage — it counts multiplied by that company's own sub-rule (3) percentage. The same applies to an NBFC under sub-rule (4). So a fund holding Rs 100 crore in a domestic company that is itself only 60% invested in infrastructure gets Rs 60 crore of credit, not Rs 100 crore. The computation therefore cannot be done at fund level alone: the fund must obtain each investee's own percentage before it can compute its own, and that dependency should be built into the investment agreements.
Sub-rule (3) for an eligible domestic company is simpler — E is its eligible investments in eligible infrastructure entities, F is its total eligible investments. Sub-rule (4) for an NBFC works on lending rather than investment: G is eligible lending to eligible infrastructure entities, H is total eligible lending.
Two timing concessions
| Concession | Effect |
|---|---|
| First year — sub-rules (2)(b), (3)(b), (4)(b) | Where the relevant tax year is the year of the first investment (or the first debt or loan for an NBFC), the amounts are computed on the relevant tax year's own balance sheet as on its last date, rather than on a multi-year aggregate |
| Three-month look-forward — sub-rules (2)(c), (3)(c) | A, B, C and E also include eligible investments which are not includible as on the date of calculation but would have been included had the calculation been carried out any time within three months after the date of receipt of those investments |
Without sub-rule (2)(c), a fund that received a large subscription shortly before a balance sheet date would be penalised: the cash sits undeployed on the last day of the year, dragging the infrastructure percentage down through a larger denominator. The look-forward lets that money be counted as though deployed within three months of receipt. Note two limits. It attaches to the date of receipt of the investment, not the balance sheet date, so a subscription received four months before year end gets no help. And it appears in sub-rules (2) and (3) but not in sub-rule (4) — an NBFC has no equivalent concession for lending in transit.
The 2030-31 freeze
Sub-rule (5): for the relevant tax year 2031-32 and subsequent relevant tax years, the percentages in sub-rules (2), (3) and (4) shall be deemed to have been satisfied if they are satisfied for the relevant tax year 2030-31.
Sub-rule (12)(f) supports this by defining "relevant tax year" to include the tax year 2030-31 for the purposes of sub-rule (5), even if exempt income is not required to be calculated for that year. So the 2030-31 computation must be done whether or not it is otherwise needed — it is the gateway to every later year.
Sub-rule (5) is the most consequential provision in rule 283 for long-horizon planning. The percentages are tested year by year up to 2030-31, and if satisfied in that year they are deemed satisfied for ever after. That aligns with sub-rule (12)(c) and (d), which close the definition of eligible investment and eligible lending at 31 March 2030 — after that date no new eligible investment can be made, so a rolling test would have no work to do. The practical instruction is unambiguous: protect the 2030-31 position, and compute it even in a year when no exemption is being claimed, because a failure there is not curable later.
The rule 283 exempt income formulae
Sub-rule (6) begins with a look-through principle for a specified person who is a unit holder of an eligible Alternative Investment Fund: the income is chargeable as if the investment made by the fund had been made directly by him. His exempt income for the year is then I + J + K + L:
| Term | Income from | Weighting |
|---|---|---|
| I | The fund's eligible investments in an eligible infrastructure entity, out of investment made by the specified person on or after the date of his notification | None |
| J | The fund's investments in eligible domestic companies | Multiplied by N, divided by O, from sub-rule (7), for each such company |
| K | The fund's investments in eligible NBFCs | Multiplied by Q, divided by R, from sub-rule (8), for each such company |
| L | The fund's eligible investments in an eligible InvIT, out of investment made on or after notification | None |
Sub-rule (7) computes the Schedule V column D(f) exempt income for a direct investment in eligible domestic companies as M multiplied by N and divided by O — where M is the income from that investment, N is the company's eligible investments in eligible infrastructure entities and O its total, both taken as on the last date of the tax year immediately preceding the relevant tax year (or of the relevant tax year itself where the eligible investment was first made in it). Sub-rule (8) does the same for an NBFC using Q (eligible lending to eligible infrastructure entities) over R (total lending).
Sub-rules (2), (3) and (4) of rule 283 are unambiguous — an aggregate over a denominator, multiplied by 100. Sub-rules (7) and (8) are printed as stacked expressions that do not carry over into plain text, and are given here as "multiplied by N and divided by O" because that is exactly how sub-rule (6)(b) states the same relationship in words when defining J and K. The wording of sub-rule (6)(b) is the reliable guide to the arithmetic. Check the printed rule before finalising a computation.
Note the recurring qualifier in I, L, Q and the sub-rule (7) terms: income counts only out of investment made by the specified person on or after the date of his notification. Money put in before notification does not generate exempt income under this rule.
The Form No. 177 return
| Sub-rule | Requirement |
|---|---|
| (9) | Every eligible Alternative Investment Fund, eligible domestic company and eligible NBFC which has received funds from a specified person, directly or through an eligible Alternative Investment Fund, shall furnish the details in Form No. 177 for each tax year during which such funds or any part remain invested |
| (10) | Furnished electronically under a digital signature or through an electronic verification code, verified by the person authorised to verify that entity's return under section 265 |
| (11) | Furnished on or before the section 263(1)(c) due date for the tax year in which the eligible investments were first received, and all subsequent tax years until the investment is returned |
Sub-rule (12) supplies the definitions. "Specified person", "eligible infrastructure entity", "eligible Alternative Investment Fund", "eligible domestic company", "eligible Non-Banking Financial Company" and "eligible InvIT" take their meanings from Schedule V . "Balance sheet" means one drawn up as on 31 March of the relevant tax year that gives a true and fair view, complies with applicable accounting standards, and has been audited — by the fund's auditor under regulation 20(5) of the SEBI (Alternative Investment Fund) Regulations, 2012, or by a domestic company's auditor under section 139 of the Companies Act, 2013. "Investment" means movable and immovable assets, including current and non-current investments, loans and advances and cash and cash equivalents.
Worked example
| Facts | Position under rule 283 |
|---|---|
| Fund holds Rs 100 crore in a domestic company that is 60% infrastructure | B includes Rs 60 crore, not Rs 100 crore |
| Fund cannot obtain an investee's percentage | Its own sub-rule (2) percentage cannot be computed |
| Aggregates taken from FY 2019-20 onwards | Wrong start — the series begins with FY 2021-22 |
| Relevant tax year is the year of the first investment | Use that year's balance sheet alone |
| Subscription received two months before year end, undeployed | Included under the three-month look-forward |
| NBFC receives funds shortly before year end, unlent | No look-forward in sub-rule (4) |
| Percentages satisfied for 2030-31 | Deemed satisfied for 2031-32 onwards |
| No exemption claimed for 2030-31, so no computation done | Sub-rule (12)(f) requires the 2030-31 computation anyway |
| AIF investment made on 1 May 2030 | Not an eligible investment — the window closed 31 March 2030 |
| Specified person's income on money invested before notification | Not within I or L |
| Unaudited management accounts used | Balance sheet must be audited and give a true and fair view |
| Form No. 177 filed only in the first year | Required every year until the investment is returned |
Compliance checklist
- Build the aggregates from the last date of every financial year from FY 2021-22 to the year before the relevant tax year.
- Obtain each investee's own percentage under sub-rules (3) and (4) before computing the fund's.
- Use the first-year single balance sheet where the relevant tax year is the year of first investment.
- Apply the three-month look-forward from the date of receipt — and note it does not exist for an NBFC.
- Compute and document the 2030-31 position even if no exemption is claimed that year.
- Track the 31 March 2030 close of the eligible investment and lending windows.
- Count exempt income only on money invested on or after notification of the specified person.
- File Form No. 177 every tax year until the investment is returned, by the section 263(1)(c) due date.
Common mistakes
- Giving full credit to investments in domestic companies and NBFCs.
- Starting the aggregate series from the wrong financial year.
- Applying the look-forward from the balance sheet date rather than the date of receipt.
- Assuming an NBFC has the same three-month concession.
- Skipping the 2030-31 computation and losing the deeming for every later year.
- Filing Form No. 177 once instead of annually.
Which year this governs
The Income-tax Rules, 2026 are made under the Income-tax Act, 2025. The 1962 parallel to rule 283 is rule 2DCA, given for tracing only. The formulae are printed as stacked fractions — verify the printed rule and Schedule V before finalising a computation.
Key Facts About Rule 283
- 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 283 compute?
The percentages referred to in Notes 5(e), (f) and (g) of Schedule V [Table: Sl. No. 7], and the exempt income referred to in clauses (e), (f) and (g) of column D of that entry.
How is the Alternative Investment Fund percentage computed?
(A + B + C) divided by D, multiplied by 100 — where A is eligible investments in eligible infrastructure entities or an eligible InvIT, B is investments in eligible domestic companies weighted by the sub-rule (3) percentage, C is investments in eligible NBFCs weighted by the sub-rule (4) percentage, and D is total eligible investments.
Over 90% of compliance penalties in India arise from missed due dates — timely handling can save businesses thousands of rupees each year.
Rule 283: a key compliance topic in Indian tax and corporate law that businesses and individuals must understand to remain compliant.