Rule 282 of the Draft Income-tax Rules, 2026 lays down the conditions that a pension fund must satisfy for notification under Schedule V in relation to investments in India. The rule requires that the pension fund be regulated under the laws of a foreign country or its political subdivisions such as provinces, states, or local bodies. The fund must be responsible for administering or investing assets intended to meet statutory obligations or defined contributions of funds or plans that provide retirement, social security, employment, disability, death benefits, or similar compensation to participants or beneficiaries. The condition regarding asset administration is deemed satisfied if certain assets do not exceed ten percent of the total assets administered or invested, are wholly owned directly or indirectly by the government of the foreign country, and vest in that government upon dissolution. The rule further requires that the earnings and assets of the pension fund be used solely for fulfilling statutory obligations and defined contributions to beneficiaries, ensuring that no part of the earnings benefits any private person. However, certain exceptions are provided for payments to creditors or depositors in relation to loans or borrowings unrelated to investments in India, and for earnings from government-owned assets credited to the account of the foreign government or a designated account. The pension fund must report details of each investment made in India on a quarterly basis in Form No. 175 within one month from the end of the quarter. It must also file a return of income within the prescribed due date and submit a compliance certificate from an accountant in Form No. 176. For notification purposes, the pension fund must submit an application in Form No. 174 with supporting documents to the Central Board of Direct Taxes.
Extract of Rule No. 282 of Draft Income-tax Rules, 2026
Rule 282
Notification of pension fund and other conditions to be satisfied by the pension fund.
(1) The pension fund mentioned in Schedule V [Table: Sl. No. 7.Note 5(a)(iii)] shall be required to satisfy the following other conditions, namely: —
(a) it is regulated under the law of a foreign country including the laws made by any of its political constituents being a province, State or local body, by whatever name called, under which it is created or established, as the case may be;
(b) it is responsible for administering or investing the assets for meeting the statutory obligations and defined contributions of one or more funds or plans established for providing retirement, social security, employment, disability, death benefits or any similar compensation to the participants or beneficiaries of such funds or plans, as the case may be;
(c) the condition in clause (b) shall be deemed to have been satisfied with respect to assets being administered or invested, if the following conditions are satisfied; namely: —
(i) value of such assets is not more than ten per cent of the total value of the assets administered or invested by such fund;
(ii) such assets are wholly owned directly or indirectly by the Government of a foreign country; and (iii) such assets vests in the Government of such foreign country upon dissolution;
(d) the earnings and assets of the pension fund are used only for meeting statutory obligations and defined contributions for participants or beneficiaries of funds or plans referred to in clause (b) and no portion of the earnings or assets of the pension fund inures any benefit to any other private person;
(e) the provisions of clause (d) shall not apply to any payment made to creditors or depositors for loan taken or borrowing for the purposes other than for making investment in India;
(f) the provisions of clause (d) shall not apply to earning from the assets referred to in clause (c), if the said earning are credited either to the account of the Government of that foreign country or to any other account designated by such Government so that no portion of the earnings inures any benefit to any private person;
(g) it shall intimate the details in respect of each investment made by it in India during the quarter within one month from the end of the quarter in Form No. 175;
(h) it shall file return of income on or before the due date specified under section 263(1)(c) of the Act and furnish a compliance certificate in Form No. 176 from an accountant as defined in section 515(3)(b) of the Act along with such return;
(i) the loans and borrowings mentioned in this sub-rule have same meaning as defined in Schedule V [Table: Sl. No. 7.Note 5(c)]. (2) For the purposes of notification under Schedule V [Table: Sl. No. 7.Note 5(a)(iii)(D)], the pension fund shall make an application in Form No. 174 enclosing therewith relevant documents and evidence, to the Member, Central Board of Direct Taxes, Department of Revenue, Ministry of Finance, New Delhi having supervision and control over the work of Foreign Tax and Tax Research Division.
