Income-tax (23rd Amendment) Rules, 2005
Notification No. 220 was published on 3 November 2005. Its subject is Income-tax (23rd Amendment) Rules, 2005.
This amends the Income-tax Rules. What it changes is the Rules, not the Act — and a rule can never take away what the section gives.
The Income-tax (23rd Amendment) Rules, 2005 substitute sub-rule (2) of rule 67 of the Income-tax Rules, 1962, laying down a fresh investment pattern in the form of a table with minimum percentages of investible moneys. Twenty-five per cent must go into Central Government securities as defined in section 2 of the Public Debt Act, 1944 and units of mutual funds set up as dedicated funds for investment in Government securities regulated by the Securities and Exchange Board of India; fifteen per cent into State Government securities and such dedicated fund units, or into other negotiable securities whose principal and interest are fully and unconditionally guaranteed by the Central or a State Government, other than those covered by clause (iii)(a); thirty per cent into bonds or securities of a public financial institution, public sector company or public sector bank carrying an investment grade rating from at least two credit rating agencies, term deposit receipts up to three years issued by public sector banks, or Collateral Borrowing and Lending Obligations issued by the Clearing Corporation of India Limited and approved by the Reserve Bank of India; and the remaining thirty per cent into any of the above three categories as the trustees decide. The substituted sub-rule carries a series of provisos: maturity proceeds of pre-1 April 2005 investments, reduced by obligatory outgoings, must be reinvested in this manner; up to ten per cent of the clause (i) and clause (ii)(a) portfolio at the end of the preceding financial year may be treated as tradable and actively managed, with that tradable portfolio marked to market and dedicated Government securities funds valued at net asset value at the year end; exposure to any individual dedicated Government securities mutual fund must not exceed five per cent of the total portfolio at any point of time; up to five per cent of the clause (iii) amount may go into shares of a company having an investment grade debt rating from at least two credit rating agencies registered under sub-section (1A) of section 12 of the Securities and Exchange Board of India Act, 1992; up to one-third of the clause (iv) amount may go into debt instruments of a company other than a public sector company having such a rating, or into equity linked schemes of mutual funds regulated by the Securities and Exchange Board of India; and where the rating of an instrument falls below investment grade, as certified by at least two such agencies, the option of exit may be exercised and the released funds reinvested in the manner provided.
Income-tax (23rd Amendment) Rules, 2005
Notification No. 220/2005, dated 3-11-2005
In exercise of the powers conferred by sub-section (1) of section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely: -
1. (1) These Rules may be called the Income-tax (23rd Amendment) Rules, 2005.
(2) They shall be deemed to have come into force with effect from the first day of April, 2005.
2. In the income-tax Rules, 1962, in rule 67, for sub-rule (2) the following shall be substituted, namely: -
"(2) The manner of investment referred to in sub-rule (1) shall be in accordance with the following table,
TABLE INVESTMENT PATTERN
S.No.
Investment
Minimum Percentage of Investible moneys to be invested in items referred to in column (2)
(1)
(2)
(3)
(i)
In Central Government securities as defined in section 2 of the Public Debt Act, 1944 (18 of 1944); and/or units of such Mutual Funds which have been set up as dedicated funds for investment in Government securities and which are regulated by the securities and Exchange Board of India;
Twenty five Percent.
(ii)
(a) in Government securities as defined in section 2 of the Public Debt Act, 1944 (18 of 1944), created and issued by any state Government, and/or units of such mutual funds which have been set up as dedicated funds for investment in Government securities and which are regulated by the securities and Exchange Board of India: and/or (b) in any other negotiable securities the principle whereof the interest whereon is fully and unconditionally guaranteed by the Central Government or any State Government except those covered under (iii)(a) below;
Fifteen per cent.
(iii)
(a) in bonds/securities of a public financial institution or of a public sector company or of a public sector bank, which have an investment grade rating from at least two credit rating agencies; and/or
(b) Term Deposit Receipts (TDR) up to three years issued by public sector banks; and/ or
(c) in Collateral Borrowing and Lending Obligation (CBLO) issued by Clearing Corporation of India Limited and approved by the Reserve Bank of India
Thirty per cent.
(iv)
to be investment in any of the above three categories, as decide by their Trustees.
Thirty per cent.
Provided that any moneys received on the maturity of investments made prior to the 1st day of April, 2005, reduced by obligatory outgoings, shall be invested in accordance with the manner of investment specified in this sub rule:
Provided further that the trustees, subject to their assessment of the risk-return prospects, may, if they so decide, divide the total portfolio referred to in clause (i) and sub-clause (a) of clause (ii) of the said table into tradable and non-tradable categories and sup to ten per cent. of the said portfolio at the end of the preceding financial year can be treated as tradable and may be used for active management:
Provide also that the tradable portfolio of Government securities mentioned in the second proviso shall be marked to the marked and the mutual funds, which have been set up as dedicated funds for investment in Government securities, shall be valued at Net Asset Value at the end of the financial year:
Provided also that irrespective of the proportion of investments stated in clause (i) and (ii) of the said Table, exposure of a trust to any individual mutual fund which has been set up as a dedicated fund for investment in Government securities, shall not exceed five per cent. Of its total portfolio at any point of time:
Provided also that the trustees may invest an amount not exceeding five per cent. Out of the amount referred to in clause (iii) of the said Table in the shares of any company which has an investment grade debt rating from at least two credit rating agencies registered under sub-section (1A) of section 12 of the Securities and Exchange Board of India Act, 1992 (15 of 1992) :
Provided also that the trustees may invest an amount not exceeding one-third out of the amount referred to in clause (iv) of the said Table in the debt instruments of any company, other than a public sector company, which has an investment grade rating from at least two credit rating agencies registered under sub-section (1A) of section 12 of the Securities and Exchange Board of India Act, 1992 (15 of 1992) and / or in equity linked scheme of mutual funds regulated by Securities and Exchange Board of India:
Provided also that in the event of the rating of any instruments mentioned in this sub-rule for being rated and their rating falling below the investment grade, as certified by at least two credit rating agencies registered under sub-section (1A) of section 12 of the securities and Exchange Board of India Act, 1992 (15 of 1992), then the option of exit from such instruments can be exercised and the released funds shall be invested in accordance with the manner provided in the Table of this sub-rule:
Provided also that any amount invested after 31st March, 2005, but on or before the date of issue of this notification in accordance with the manner of investment in force in this behalf from the 1st day of April, 1997 to 31st March, 2005, shall be deemed to have been invested in the manner specified in this sub-rule.
Explanation 1.-The manner of investment specified in this sub-rule shall apply to the aggregate amount of investible moneys with the fund in the previous year.
Explanation 2.- For the purposes of this sub-rule,-
(i) the expression "public financial institutions" shall have the meaning assigned to it in section 4A of the Companies Act, 1956 (1 of 1956);
(ii) the expression "public sector company" shall have the meaning assigned to it in clause (36A) of section 2 of the income-tax Act; and
(iii) the expression "public sector bank" shall have the meaning assigned to it in clause (23D) of section 10 of the Income-tax Act."
F. No. 142/25/2005-TPL
| Rule of the 1962 Rules | Now, in the 2026 Rules |
|---|---|
| Rule 67 | rule 292 |
1 April 2005, retrospectively.
A reader meets this where the investments of a recognised provident fund are tested for conformity with rule 67, whether by the trustees, the auditor or the Commissioner examining recognition.
Suppose a fund has Rs. 100 crore of investible moneys. At least Rs. 25 crore must go into Central Government securities or dedicated Government securities fund units, at least Rs. 15 crore into State Government or guaranteed securities of the kind in clause (ii), and at least Rs. 30 crore into the clause (iii) instruments; the trustees may place the remaining Rs. 30 crore in any of those three categories. Of the Rs. 30 crore in clause (iii), not more than Rs. 1.5 crore may go into shares of a company with an investment grade debt rating from two registered agencies; and of the Rs. 30 crore in clause (iv), not more than Rs. 10 crore may go into qualifying non-public-sector debt instruments or equity linked schemes.
Rules it names. Rule 67 of the Income-tax Rules, 1962. The 1962 Rules were replaced by the Income-tax Rules, 2026, which renumbered nearly everything: a rule number quoted here almost never means the same rule today.
Source: the Income Tax Department’s own published text — its page for this instrument.
