Rule 317 of the Income-tax Rules, 2026

Where this rule sits

← Rule 316  ·  Rule 318 →

What this rule does

Sub-rule (1) requires the fund and the trust to be established in India.

Sub-rule (2) requires the trust to have at least two trustees, with a proviso that a company as defined in section 2(20) of the Companies Act, 2013 shall not be appointed as a trustee without the prior approval of the approving authority.

Sub-rule (3) requires the trustees of the fund to be resident in India, and provides that any trustee who leaves India permanently shall vacate his office.

Why it is there

The conditions keep the fund and the people who control it within Indian jurisdiction and in more than one pair of hands. A trust established abroad, or one controlled by a single trustee, or one whose trustee has left the country, would be beyond effective supervision, and each of the three sub-rules closes one of those routes. The proviso on corporate trustees does not bar them but subjects the appointment to the approving authority's prior approval.

Who it applies to

• A fund and the trust under which it is established
• The trustees of the fund
• A company as defined in section 2(20) of the Companies Act, 2013 proposed to be appointed a trustee
• The approving authority whose prior approval is required for such an appointment

The figures, and what each one turns on

What this means in practice

Two is a floor, not a fixed number, and the condition is continuing — a trust that falls to one trustee no longer answers sub-rule (2). Residence is likewise continuing: sub-rule (3) requires the trustees to be resident in India and provides that a trustee who leaves India permanently shall vacate his office, which operates on the fact of permanent departure and does not depend on a resignation being tendered or accepted. The proviso in sub-rule (2) is a restriction on appointment, not a prohibition, so a corporate trustee is possible with the approving authority's prior approval obtained before the appointment.

An example

A fund is established under a trust deed executed in India with three individual trustees resident in India, which satisfies all three sub-rules. If two of them retire and one leaves India permanently, the fund is left without any trustee who answers sub-rule (3) and without the minimum of two under sub-rule (2). Had the trustees wished to appoint a trustee company instead, they would have needed the approving authority's prior approval.

Where you meet this rule

A reader meets it in the trust deed and in the approval proceedings for the fund, and again whenever trustees change — on a retirement, a new appointment, or a trustee's permanent departure from India.

The words themselves

What people get wrong

• Treating the two-trustee requirement as satisfied at formation alone. It is a continuing condition on the trust.
• Appointing a corporate trustee without approval. Sub-rule (2) requires the prior approval of the approving authority for a company as defined in section 2(20) of the Companies Act, 2013.
• Assuming a trustee who has emigrated stays in office until he resigns. Sub-rule (3) provides that a trustee who leaves India permanently shall vacate his office.
• Overlooking that both the fund and the trust must be established in India. Sub-rule (1) covers both.