Draft Income Tax Rule 331: Guidelines for approval under Schedule XV (1)(z)(i) and (1)(z)(ii) of the Act
Rule 331 of the Draft Income-tax Rules, 2026 prescribes detailed guidelines for granting approval to public companies and mutual funds under Schedule XV of the Income-tax Act. Before granting approval, the Central Board of Direct Taxes (CBDT) must ensure that the applicant submits the prescribed application forms along with the required documents within the specified timelines. Public companies must apply in Form No. 189 with documents including the certificate of incorporation under the Companies Act, 2013 and audited financial statements for the three immediately preceding tax years or for the period of existence, whichever is shorter. The application must be filed three months before the eligible issue of capital. Mutual funds must apply in Form No. 190 along with a copy of their registration certificate issued by the Securities and Exchange Board of India and audited financial statements for the preceding three tax years or for their period of existence. Such applications must be filed three months prior to the public issue. The CBDT may approve or reject the application, but rejection can only occur after providing the applicant an opportunity of being heard. Once approval is granted, the applicant must invest the capital raised through equity issues or debentures according to specified conditions. At least 25% of the capital must be invested within one year of approval in infrastructure facilities in the case of public companies, or in eligible capital issues of companies in the case of mutual funds, with the remaining amount required to be invested within three years. Applicants must also submit an accountant’s certificate specifying the amount invested each tax year. The CBDT may withdraw approval if the applicant fails to comply with investment conditions or fails to submit the required certificate.
Extract of Rule No. 331 of Draft Income-tax Rules, 2026
Rule 331
Guidelines for approval under Schedule XV (1)(z)(i) and (1)(z)(ii) of the Act.
(1) The Central Board of Direct Taxes, before granting approval to a public company under Schedule XV: paragraph 1(z)(i) or to a Mutual Fund under Schedule XV: paragraph 1(z)(ii), shall satisfy itself that for the entity mentioned in column(B) in the table below, the application is made in the Form specified in column (C) with documents as mentioned in column (D) attached alongwith, and the application is filed within the time limit prescribed in column (E) thereof: —
| SI.No | Entity | Application Form | Documents to be attached with the application | Time limit for
filing application |
| (A) | (B) | (C) | (D) | (E) |
| 1 | Public Company | Form No. 189 | (a) Copy of certificate of incorporation under the Companies Act, 2013;
(a) Audited balance sheet, and profit and loss account, for three tax years immediately preceding the tax year in which the application is made, or for the period of its existence, whichever is lesser. |
Three months before “the eligible issue of capital,” as referred to in Schedule XV: paragraph 6(i) |
| 2 | Mutual Fund | Form No. 190 | (a) Copy of certificate of registration issued by the Securities and Exchange Board of India;
(b) Audited balance sheet, and profit and loss account, for three tax years immediately preceding the tax year in which the application is made, or for the period of its existence, whichever is lesser. |
Three months before the public issue. |
(2) The Board shall pass an order approving or denying the application, so however, that any decision denying approval will not be made without providing the applicant an opportunity of being heard.
(3) Every applicant shall invest all its total paid-up capital, raised through equity issue or debentures, in the following manner: –
(a) at least 25% of the capital raised shall be invested:-
(i) in the infrastructure facility, in the case of a public company, and
(ii) in the “eligible issue of capital of any company” referred to in Schedule XV: paragraph (6)(i), in the case of a Mutual Fund;
(b) such investment shall be made before the end of one year from the date of approval of the Board; and
(c) the rest of the capital shall be invested in like manner within three years from the date of approval.
(4) Every applicant shall submit a certificate from an accountant, as defined in section 515(3)(b), specifying the amount invested in each tax year, from the date of approval of the Board.
(5) The Board shall have the power to withdraw the approval granted under sub-rule (2), if such applicant, –
(a) fails to make investments as per conditions mentioned in sub-rule (3); or
(b) fails to file the certificate referred to in sub-rule (4).
