Rules 252 and 253 of the Draft Income-tax Rules, 2026 prescribe educational qualifications for authorised income-tax practitioners and clarify the scope of “business relationship” for representation purposes under Section 515 of the Income-tax Act.
Rule 252 states that individuals seeking to act as authorised representatives under Section 515(3)(vi) must possess a degree in Commerce or Law from a university established under Indian law, a deemed university, or an institution empowered to grant degrees under the University Grants Commission Act 1956. Alternatively, a Commerce or Law degree obtained from a foreign university may also qualify if it is recognised as equivalent to an Indian degree by the Association of Indian Universities.
Rule 253 further explains the meaning of “business relationship” for the purpose of Section 515(3)(b)(H). It clarifies that a business relationship generally refers to commercial transactions entered into for business purposes but excludes certain situations. These exclusions include professional services that auditors or audit firms are permitted to provide under the Chartered Accountants Act 1949 and related rules. Additionally, ordinary transactions carried out at fair market value in the normal course of business—such as companies selling goods or services to auditors as customers in industries like telecommunications, airlines, hospitals, or hotels—will not be considered a disqualifying business relationship. Overall, the rules aim to establish clear qualification standards and define permissible commercial interactions to maintain professional independence in tax representation.
Extract of Rule No. 252, 253 of Draft Income-tax Rules, 2026
Rule 252
Educational qualifications prescribed
The following educational qualifications are prescribed for the purpose of Section515 (3)(vi):-
1. A degree in Commerce or Law conferred by any University in India established by law currently in force, or a deemed university, or an institution with the authority to confer degrees under the University Grants Commission Act, 1956.
2. A degree in Commerce or Law conferred by any foreign university or educational institution, which is recognized as equivalent to a degree conferred by an Indian university, as determined by the Association of Indian Universities (AIU).
Rule 253
Nature of business relationship
For the purposes of section 515(3)(b)(H), the term “business relationship” shall be construed as means any transaction entered into for a commercial purpose, other than, –
1. commercial transactions which are in the nature of professional services permitted to be provided by an auditor or audit firm under the Act and the Chartered Accountants Act, 1949 (38 of 1949) and the rules or regulations made under those Acts;
2. commercial transactions that are conducted in the normal course of business of the company at a fair market price, such as the sale of products or services to the auditor as a customer in the regular operation of business, by companies involved in telecommunications, airlines, hospitals, hotels, and other similar industries.
