Rules 2026

Rule 311 of the Income-tax Rules, 2026

Rule 311 — Arrangements on winding up, etc., of business.

Where this rule sits

What this rule does

The rule deals with the closure or discontinuance of the employer's business. When the business of the employer is to be closed or discontinued, the trustees shall, with the prior approval of and subject to the conditions imposed by the approving authority, make suitable arrangements for providing annuities to current employees, or to their widows, children or dependents in the event of their death.

Why it is there

A superannuation fund exists to pay annuities, and the end of the employer's business is the point at which that promise is most at risk. The rule requires the trustees to make arrangements for those annuities rather than simply wind the fund up, and puts the arrangements under the approving authority's prior approval so they cannot be settled between employer and trustees alone.

Who it applies to

Trustees of an approved superannuation fund where the employer's business is to be closed or discontinued
Current employees of that employer, and their widows, children or dependents
The approving authority, whose prior approval and conditions govern the arrangements

What this means in practice

Approval must come first. The rule requires the prior approval of the approving authority and makes the arrangements subject to the conditions it imposes, so an arrangement put in place and then submitted has not followed the rule. The duty is on the trustees, not the employer, and it extends beyond the employees themselves to their widows, children or dependents in the event of death. The trigger is the business being closed or discontinued, not the fund being wound up.

An example

Illustrative only, and invented for this page. The figures are chosen to show the requirement biting, not taken from any real matter.

An employer decides to close its business and its superannuation fund has current employees with accrued rights. Before anything is settled, the trustees must place their proposed arrangements for providing annuities to those employees, and to their widows, children or dependents on death, before the approving authority and obtain its prior approval, and must then work within whatever conditions that authority imposes.

Where you meet this rule

You meet it when an employer with an approved superannuation fund closes or discontinues its business and the trustees approach the approving authority before settling how the annuities will be provided.

The words themselves

the trustees shall, with the prior approval of and subject to the conditions imposed by the approving authority, make suitable arrangements for providing annuities to current employees, or to their widows, children, or dependents in the event of their death

Rule 311, Income-tax Rules, 2026.

What people get wrong

Settling the arrangements and seeking approval afterwards. The rule requires the prior approval of the approving authority.
Treating the duty as the employer's. The rule places it on the trustees.
Providing only for the employees. The arrangements must cover their widows, children or dependents in the event of their death.

What this page does not tell you. It does not reproduce the rule. Everything above was written from the rule’s own text as the Income Tax Department publishes it — the text is here. A rule is subordinate legislation: it prescribes the method, the form or the period, and it cannot enlarge the charge the section imposes. Where a figure matters, read the sub-rule it comes from.