Rule 275 of the Draft Income-tax Rules, 2026 provides a mechanism through which an investment fund may optionally seek approval from the Central Board of Direct Taxes (CBDT) to confirm its eligibility for benefits under section 9(12). A fund seeking approval must submit a written application along with relevant documents and evidence to the Member of the CBDT responsible for the Foreign Tax and Tax Research Division. The application must be filed at least three months before the start of the tax year for which approval is sought. The Board will constitute a committee headed by a Principal Chief Commissioner or Chief Commissioner and comprising two other Income-tax authorities not below the rank of Commissioner to examine the application and provide recommendations on whether approval should be granted and under what conditions. The committee may request additional documents or information from the investment fund, Income-tax authorities, or other departments or agencies before making its recommendation. Based on the committee’s recommendations, the Board must issue a written order within two months from the end of the month in which the application was filed, either granting approval with conditions or rejecting the application with recorded reasons. Once granted, the approval will apply to the relevant tax year and continue for subsequent tax years unless it is withdrawn by the Board. An eligible investment fund with valid approval cannot be denied the benefit under section 9(12) while such approval remains in force. However, the Board may withdraw approval if it was obtained through misrepresentation or fraud, if the conditions under section 9(12), Schedule I, or related guidelines are not satisfied, or if conditions attached to the approval are violated. No rejection or withdrawal order can be passed without providing the fund an opportunity of being heard, and such orders must be communicated to the fund, the Assessing Officer, and the jurisdictional Principal Commissioner or Commissioner.
Extract of Rule No. 275 of Draft Income-tax Rules, 2026
Rule 275
Approval of the investment fund at its option for the purposes of section 9(12).
(1) An investment fund may at its option seek approval of the Board regarding its eligibility for the purposes of section 9(12).
(2) The fund seeking approval may make an application, in writing, enclosing relevant documents and evidence, to the Member, Central Board of Direct Taxes, having supervision and control over the work of Foreign Tax and Tax Research Division.
(3) The application shall be made three months before the beginning of the tax year for which the fund seeks the approval.
(4) The Board shall notify a committee headed by a Principal Chief Commissioner or Chief Commissioner and consisting of two other Income-tax authorities not below the rank of Commissioner, to examine the application and submit recommendations regarding grant of approval or otherwise and the conditions thereof, if any subject to which such approval is to be granted.
(5) The committee on behalf of the Board may, before giving its recommendation, call for such documents or information from the investment fund, the Income-tax authorities and other Departments or agencies, as it may deem fit.
(6) The Board, on the basis of the recommendations of the committee, shall, within two months from the end of the month in which the application has been made, —
(a) by an order in writing, grant approval to the fund subject to such conditions as it may deem fit; or
(b) for reasons to be recorded in writing, reject the application.
(7) The approval once granted, subject to any condition specified in this behalf, shall be applicable for the tax year referred to in sub-rule (3) and subsequent tax years unless it is withdrawn by the Board.
(8) 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.
(9) The Board may withdraw the approval granted to any fund, if it is satisfied that, —
(a) the approval has been obtained on the basis of misrepresentation of facts or fraud; or
(b) the conditions mentioned in section 9(12) and Schedule I and the guidelines prescribed under paragraph 5 of the said Schedule are not fulfilled; or
(c) any condition subject to which approval was granted, has been violated.
(10) No order rejecting the application or withdrawing the approval, shall be passed without giving an opportunity of being heard and such order shall be communicated to the –
(a) fund;
(b) the Assessing Officer; and
(c) the Principal Commissioner or the Commissioner having jurisdiction over the fund.
