Rule 39 — Procedure for approval of skill development projects under section 47(1)(b). Made under s.47 of the Income-tax Act, 2025.
Rule 39 gives effect to Section 47 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-rule (1) sets the gate: a skill development project is considered for notification only if it is undertaken by an eligible company and is undertaken in a separate facility in a training institute.
Sub-rules (2) to (4) start the process. Before undertaking any project, the eligible company applies in Form No. 22 to the National Council for Vocational Education and Training for notification under section 47(1)(b). A copy goes to the Commissioner of Income-tax having jurisdiction over the applicant, with an acknowledgement receipt as evidence that the application reached the National Council. The application must carry a letter of concurrence from the training institute where the project is to be undertaken, a detailed note on the project, and details of the expenditure expected to be incurred and the expected date of completion.
Sub-rules (5) to (8) handle a defective application. The National Council must intimate any defect or missing document before the expiry of one month from the end of the month in which the application is received; the applicant must remove the defect within one month from the end of the month in which the intimation letter is served; and on failure the National Council sends the Board a recommendation to treat the application as invalid, on which the Board, if satisfied, may pass an order treating it as invalid.
Sub-rules (9) to (12) handle a complete application. The National Council may make inquiries or call for documents from the company or the training institute to satisfy itself about the genuineness of the applicant's current and proposed skill development activity, and must send its recommendation for grant or rejection to the Board before the expiry of two months from the end of the month in which the complete application was received. Separately, the jurisdictional Commissioner sends his own recommendation to the National Council, after considering the applicant's compliance with the Act, before the expiry of one month from the end of the month in which the copy of the application reached him. On a recommendation to grant, the Board issues a notification in Form No. 23 under section 47(1)(b) within two months from the end of the quarter in which it receives the National Council's report, specifying the project and subject to the conditions in rule 40 or such other conditions as it deems fit, effective for a period not exceeding three tax years. On a recommendation to reject, the Board passes an order rejecting the application.
Sub-rules (13) and (14) deal with life after notification. If satisfied with the activities of the project during the period of notification, the Board may notify it for a further period in consultation with the National Council. If satisfied that the eligible company or the training institute has ceased its activities or that its activities are not genuine, or that its activities are not being carried out in accordance with the Act, this rule or rule 40, or with the conditions subject to which the notification was issued, the Board may revoke the notification after providing a reasonable opportunity of being heard.
Sub-rule (15) requires a copy of any notification, approval, rejection or cancellation to be communicated to the applicant, the National Council, the training institute and the jurisdictional Commissioner.
Section 47(1)(b) gives its benefit to a notified skill development project, but leaves who notifies, on what material and for how long entirely open. The rule builds that machinery, and builds it around a body that can judge vocational training on its merits while the jurisdictional Commissioner reports separately on the applicant's tax compliance. The finite notification period and the revocation power in sub-rule (14) keep the benefit tied to a project that is actually running.
| What | Figure | The condition on it | Where |
|---|---|---|---|
| Time for the National Council to intimate a defect in the application | Before the expiry of one month | From the end of the month in which the application is received in its office | Sub-rule (5) |
| Time for the applicant to remove the defect | One month | From the end of the month in which the intimation letter for removal of the deficiency is served | Sub-rule (6) |
| Time for the National Council to send its recommendation to the Board | Before the expiry of two months | From the end of the month in which the application, complete in all respects, was received in its office | Sub-rule (9)(ii) |
| Time for the jurisdictional Commissioner to send his recommendation to the National Council | Before the expiry of one month | From the end of the month in which the copy of the application was received in his office | Sub-rule (10) |
| Time for the Board to issue the notification in Form No. 23 | Within two months | From the end of the quarter in which the Board receives the report from the National Council recommending grant | Sub-rule (11) |
| Maximum period for which a notification is effective | Not exceeding three tax years | The Board may specify a shorter period; a further period may be notified under sub-rule (13) | Sub-rule (11) |
Timing decides eligibility here. Sub-rule (2) requires the application to be made before undertaking any project, so a company that trains first and applies afterwards is outside the rule however good the project. The three tax years in sub-rule (11) is an outer limit on the notification, not a guaranteed term — the Board specifies the period, and renewal under sub-rule (13) is a fresh exercise of satisfaction in consultation with the National Council, not automatic. Two recommendation streams run in parallel and only one of them is about training: the National Council reports on genuineness of the skill development activity, the Commissioner on compliance with the Act. Note also that the defect clock in sub-rule (6) is triggered by service of the intimation letter, while every other clock in the rule runs from the end of a month or quarter of receipt. Revocation under sub-rule (14) reaches the training institute's conduct too, not only the company's.
An eligible company files Form No. 22 with the National Council on 8 May, with a letter of concurrence from the training institute, and copies the jurisdictional Commissioner. The Council finds a document missing and must intimate the defect by 30 June, being one month from the end of May; the company then has one month from the end of the month in which the intimation is served to cure it. Once the application is complete, say in July, the Council must send its recommendation to the Board before the end of September, and the Commissioner must send his to the Council by the end of August. If the Board receives a favourable report in the quarter ending 30 September, it must issue the Form No. 23 notification by 30 November, and may specify a period of, say, two tax years — nothing entitles the company to the full three.
An eligible company meets it at the Form No. 22 stage and again on the Form No. 23 notification that fixes the project's period and conditions. It reappears in any revocation proceeding under sub-rule (14), where the Board must give a hearing before cancelling.
A skill development project (herein referred as the project) shall be considered for notification, if it is undertaken by an eligible company and the project is undertaken in a separate facility in a training institute.
issue a notification in Form No. 23 under section 47(1)(b), specifying the project, subject to conditions mentioned in rule 40 or such other conditions, as it may deem fit, to be effective for such period not exceeding three tax years