Rule 32 — Procedure, form and manner in respect of approval under section 45(4) read with section 45(3)(a) for deduction for expenditure on scientific research by a research association. Made under s.45, s.265 of the Income-tax Act, 2025.
Rule 32 gives effect to Section 45 and Section 265 of the Income-tax Act, 2025. A rule cannot go beyond the section it serves: where the two seem to differ, the section governs.
Sub-rules (1) and (2) set the filing window. An application for approval under section 45(4)(b) is made in Form No. 17 to the Commissioner of Income-tax having jurisdiction over the applicant, at any time during the financial year immediately preceding the tax year from which approval is sought. Where approval is sought from the tax year 2026-27, or from the tax year in which the applicant is incorporated, the application may instead be made at any time during that tax year. Sub-rule (3) requires Form No. 17 to be verified by the person authorised to verify the return of income under section 265, as applicable to the applicant. Sub-rule (4) requires the Annexure to Form No. 17 to be filled out as well where the research association claims an exemption as per Schedule III [Table: Sl. No. 23]. Sub-rule (5) requires the applicant to send a copy of the application to Member (IT), Central Board of Direct Taxes, with its acknowledgement receipt as evidence of having furnished the application under sub-rule (1).
Sub-rule (6) sets the decision deadline: every notification under section 45(4)(b) is to be issued, or an order rejecting the application passed by the Central Government recording reasons in writing, within twelve months from the end of the quarter in which the application was received in the office of Member (IT), CBDT. Sub-rule (7) limits how long a notification may run: it may have effect for such tax year or years, not exceeding five tax years, as may be specified in the notification.
Sub-rules (8) to (10) handle defective applications. The Commissioner must serve a deficiency letter before the expiry of one month from the end of the month in which the application is received in his office; the applicant must remove the deficiency within a maximum period of one month from the end of the month in which the letter is served; on failure, the Commissioner sends his recommendation for treating the application as invalid to Member (IT), CBDT, and the Central Government, if satisfied, may pass an order for reasons to be recorded in writing treating the application as invalid.
Sub-rules (11) and (12) deal with a complete application: the Commissioner may make such inquiry as he considers necessary regarding the genuineness of the activity of the research association or University or college or other institution and send his recommendation for grant or rejection to Member (IT), CBDT before the expiry of three months from the end of the quarter in which the application was received in his office; and the Central Government may, before granting approval, call for documents or information and get any inquiry made for verification of genuineness.
Sub-rule (13) allows the Central Government to withdraw approval if satisfied that the body has ceased its activities, or its activities are not genuine, or are not being carried out in accordance with all or any of the conditions specified under rule 33 or rule 34. Sub-rule (14) forbids any order treating the application as invalid, rejecting it, or withdrawing approval, without a reasonable opportunity of being heard. Sub-rule (15) requires a copy of such an order to be communicated to the applicant, the Assessing Officer and the jurisdictional Commissioner. Sub-rule (16) lets the applicant apply for a fresh notification to the jurisdictional Commissioner at least three months before the expiry of the effective period of the notification.
Section 45(4) makes approval by the Central Government the gateway to the deduction for sums paid to a research association, but says nothing about when to apply, to whom, in what form, how long an approval lasts, or what happens to a defective application. Rule 32 supplies all of it, and does so as a two-office route: the application goes to the jurisdictional Commissioner, who inquires and recommends, while the notification or rejection is the Central Government's, timed from receipt in the office of Member (IT), CBDT. The hearing requirement in sub-rule (14) and the recorded reasons in sub-rules (6) and (10) are what make a refusal reviewable.
| What | Figure | The condition on it | Where |
|---|---|---|---|
| Ordinary window for making the application | At any time during the financial year immediately preceding the tax year from which the approval is sought | Applications under sub-rule (1) other than the two cases in sub-rule (2) | Rule 32(1) |
| Extended window for making the application | At any time during the tax year itself | Where approval is sought from the tax year 2026-27, or from the tax year in which the applicant is incorporated | Rule 32(2) |
| Time for the Central Government to notify or to reject | Within twelve months from the end of the quarter | Counted from the quarter in which the application was received in the office of Member (IT), CBDT | Rule 32(6) |
| Outer limit on the effective period of a notification | Not exceeding five tax years | A cap on what the notification may specify, not a period every notification carries; the actual period is whatever the notification specifies | Rule 32(7) |
| Time for the Commissioner to serve a deficiency letter | Before the expiry of one month from the end of the month | Counted from the month in which the application is received in the Commissioner's office | Rule 32(8) |
| Time for the applicant to remove a deficiency | A maximum period of one month from the end of the month | Counted from the month in which the deficiency letter is served; failure leads to a recommendation that the application be treated as invalid | Rule 32(9) |
| Time for the Commissioner to send his recommendation on a complete application | Before the expiry of the period of three months from the end of the quarter | Counted from the quarter in which the application was received in his office | Rule 32(11) |
| Lead time for an application for a fresh notification | At least three months before the expiry of the effective period | Of the notification issued under sub-rule (6); made to the jurisdictional Commissioner | Rule 32(16) |
Five tax years in sub-rule (7) is a ceiling, not a term: a notification has effect for such tax year or years as it specifies, and it may specify fewer. Because the notification runs for a stated period and sub-rule (16) requires the renewal application at least three months before that period expires, the approval has to be diaried, not assumed to continue. Two different clocks run from two different offices — the Commissioner's one month for a deficiency letter and three months for his recommendation run from his own receipt, while the Central Government's twelve months runs from receipt in the office of Member (IT), CBDT, which is why sub-rule (5) makes the applicant send a copy there with the acknowledgement. Withdrawal under sub-rule (13) is not confined to fraud: failing all or any of the conditions in rule 33 or rule 34, or ceasing activities, is enough, and every adverse order first needs the hearing in sub-rule (14).
A research association wants approval from the tax year 2028-29. Its Form No. 17 must go to the jurisdictional Commissioner at any time during the financial year immediately preceding that tax year, with a copy and the acknowledgement receipt to Member (IT), CBDT. If the application reaches Member (IT) in the quarter ending 31 December 2027, the Central Government has until twelve months from the end of that quarter to notify it or to pass a rejection order recording reasons. If the notification then specifies three tax years, that is its life — sub-rule (7) permits up to five but does not grant five — and the association must apply afresh at least three months before it expires.
The association meets it as Form No. 17 and the deficiency letter; a donor claiming a deduction meets it only indirectly, through the notification number and effective period the association quotes, which sub-rule (7) makes a limited-life document.
shall, at any time, have effect for such tax year or years, not exceeding five tax years as may be specified in such notification
No order treating the application as invalid, or rejecting the application or withdrawing the approval, shall be passed without giving a reasonable opportunity of being heard.