Rule 34 of the Draft Income-tax Rules, 2026 lays down the conditions for granting approval to a university, college, or other institution under Section 45(4) read with Section 45(3)(a) of the Act. It mandates that sums received must be used exclusively for scientific research, social science research, or statistical research. The institution must carry out such research through its faculty members or enrolled students. Approved institutions are required to maintain separate books of account for research-related sums, clearly reflecting amounts used for research. These books must be audited by an accountant as defined under section 515(3)(b), and the audit report must be furnished to the jurisdictional Commissioner of Income-tax by the due date for filing the return under section 263(1).
Additionally, institutions must maintain a separate statement of donations received and amounts used for research, certified by the auditor and submitted with the audit report. By the return filing due date, they must also furnish a detailed statement covering research undertaken during the tax year, published research articles, patents or similar rights applied for or registered, and proposed research projects with financial allocation for the forthcoming year.
If the Commissioner finds non-maintenance of separate books, failure to submit audit reports or required statements, cessation or lack of genuineness in research activities, or non-compliance with approval conditions, he may conduct inquiries and report the matter to the Central Government within six months from the return filing date.
Extract of Rule No. 34 of Draft Income-tax Rules, 2026
Rule 34
Conditions subject to which approval is to be granted to a university, college or other institution under section 45(4) read with section 45(3)(a) of the Act.
(1) The sum paid to a university, college or other institution shall be used for scientific research and research in social science or statistical research.
(2) The applicant university, college or other institution shall carry out scientific research, research in social science or statistical research through its faculty members or its enrolled students.
(3) A university or college or other institution approved under section 45(4)(b) of the Act shall–
(a) maintain separate books of account in respect of the sums received by it for scientific research or, as the case may be, for research in social science or statistical research;
(b) reflect therein the amount used for carrying out research;
(c) get such books of account audited by an accountant, as defined in the section 515(3)(b) of the Act; and (d) furnish the report of such audit duly signed and verified by such accountant to the Commissioner of Income-tax having jurisdiction over the case, by the due date of furnishing the return of income under section 263(1) of the Act.
(4) The university or college or other institution shall maintain a separate statement of donations received and the amount used for research and a copy of such statement duly certified by the auditor shall accompany the report of audit referred to in sub-rule (3).
(5) The university, college or other institution shall, by the due date of furnishing the return of income under section 263(1) of the Act, furnish a statement to the Commissioner of Income tax containing—
(a) a detailed note on the research work undertaken by it during the tax year;
(b) a summary of research articles published in national or international journals during the tax year;
(c) any patent or other similar rights applied for or registered during the tax year;
(d) programme of research projects to be undertaken during the forthcoming tax year and the financial allocation for such programme.
(6) If it is found by the Commissioner of Income-tax that the university or college or other institution,—
(a) is not maintaining separate books of account for research activities; or
(b) has failed to furnish its audit report; or
(c) has not furnished its statement of the sums received and the sums used for research or a statement referred to in sub-rule (5); or
(d) has ceased to carry on its research activities, or its activities are not genuine; or
(e) is not fulfilling the conditions subject to which approval was granted to it,
he may after making appropriate enquiries furnish a report on the circumstances referred to in clauses (a) to (e) above to the Central Government within six months from the date of furnishing the return of income under section 263(1) of the Act.
