Rule 312 of the Income-tax Rules, 2026

Where this rule sits

← Rule 311  ·  Rule 313 →

What this rule does

The rule subjects two structural events to prior clearance. Any arrangements for the winding up of the fund, or for its amalgamation with another fund, shall be subject to the prior approval of the approving authority, and subject to such conditions as may be imposed by that authority.

It covers arrangements, so the approval is required for the plan itself, and it lets the approving authority attach conditions rather than only permitting or refusing.

Why it is there

Winding up a fund or merging it into another moves money that was set aside for beneficiaries, and the decision would otherwise rest wholly with those running the fund. The rule places both events before the approving authority in advance, and gives it power to impose conditions, so the terms on which the fund is wound up or amalgamated can be regulated rather than merely allowed or blocked.

Who it applies to

• The fund, and those making arrangements for its winding up or amalgamation
• Another fund with which amalgamation is proposed
• The approving authority, which approves and may impose conditions

What this means in practice

The approval is prior, so it is sought before the arrangements are given effect, and an amalgamation or winding up carried through first is not cured by a later approval. What is put before the authority is the arrangements, which means the plan and its terms, not merely the fact that the fund will close. The power to impose conditions is part of the same provision, so an approval may come qualified, and the conditions attached are as binding as the approval itself.

An example

The trustees of a fund decide to merge it into the fund of the group company that has absorbed their employer. They cannot give effect to that merger on their own resolution: rule 312 requires the prior approval of the approving authority for the arrangements, and that authority may attach conditions to its approval, which the trustees must then observe.

Where you meet this rule

You meet it when a fund is closed or merged: the application to the approving authority for prior approval of the arrangements, and the conditions written into the approval that follows.

The words themselves

What people get wrong

• Completing the winding up or amalgamation and reporting it afterwards. Rule 312 requires prior approval.
• Assuming only a winding up needs approval. The rule covers amalgamation with another fund equally.
• Treating an approval as unconditional. Rule 312 expressly allows the approving authority to impose conditions.
• Reading the rule as applying only to the final act. It applies to any arrangements for the winding up or amalgamation.