Rule 2C: Approval Guidelines Under Section 10(23C)(iv) and (v)
Rule 2C concerns approval of funds, trusts and institutions under Section 10(23C)(iv) and (v) of the Income-tax Act, 1961. Its original provisions specified the approving authority and Form No. 56. The approval framework has subsequently changed, so historical requirements must be distinguished from procedures applicable to newer applications.
What Does Section 10(23C)(iv) and (v) Cover?
Section 10(23C)(iv) addresses eligible funds or institutions established for charitable purposes and approved under the applicable law. Section 10(23C)(v) addresses eligible trusts (including other legal obligations) or institutions established wholly for public religious purposes or wholly for public religious and charitable purposes, subject to statutory approval and conditions.
Approval does not by itself make every receipt automatically exempt. Conditions concerning the nature of activities, application of income, investments, accounts, audit and prescribed reporting may apply. The correct position depends on the relevant assessment year and the institution's circumstances.
Original Text and Requirements of Rule 2C
The following summarises the substantive provisions contained in the original version of the uploaded page. They are important for understanding older applications and approvals.
Rule 2C(1): Prescribed authority
The prescribed authority for approvals under Section 10(23C)(iv) and (v) was the Chief Commissioner or Director General, to whom the application was required to be made in accordance with sub-rule (2).
Rule 2C(2): Application form
A fund, trust or institution seeking approval under the specified clauses was required to furnish its application in Form No. 56.
Explanation: Authorisation by CBDT
For the purposes of the rule, the expression "Chief Commissioner or Director General" meant the Chief Commissioner or Director General authorised by the Central Board of Direct Taxes (CBDT) to act as the prescribed authority in relation to the relevant fund, trust or institution.
Approval Procedure Under the Updated Legal Framework
Legislative and procedural amendments have changed the approval process for institutions covered by Section 10(23C). In particular, the post-2021 framework introduced electronic applications and differentiated treatment of existing approvals, fresh applications, renewal and other prescribed cases. The provisions of Section 10(23C), the relevant rules and official notifications must be read together.
| Issue | Historical Rule 2C position | Updated compliance approach |
|---|---|---|
| Approval authority | Authorised Chief Commissioner or Director General | Follow the authority and electronic processing procedure prescribed for the applicable application category. |
| Application | Form No. 56 | Check the applicable electronic Form 10A or Form 10AB procedure under the amended rules, particularly Rule 2CA. |
| Validity | Governed by the approval and statutory provisions then in force | Approval or provisional approval periods depend on the application category and applicable amendments. |
| Ongoing compliance | Subject to statutory exemption conditions | Continue to satisfy the applicable charitable or religious purpose, income application, record-keeping and reporting requirements. |
For the latest notified text and application instructions, consult the Income Tax Department e-Filing portal and the Income-tax Act. These are reference links within the article, not website navigation items.
Practical Compliance Considerations
- Identify whether the applicant falls within Section 10(23C)(iv), Section 10(23C)(v), or another exemption or registration provision.
- Determine whether the application is for first-time approval, provisional approval, conversion, renewal or another prescribed event.
- Use the prescribed form and electronic procedure for the relevant date rather than an outdated paper-form reference.
- Maintain governing documents, activity records, financial statements and evidence supporting the stated charitable or religious purposes.
- Review applicable conditions on income application, accumulation, investments, audit and filing of returns.
- Check subsequent Finance Acts and CBDT notifications before acting on any historical rule text.
Frequently Asked Questions
What was Form No. 56 used for?
Under the historical Rule 2C, Form No. 56 was the prescribed application for approval of eligible funds, trusts and institutions under Section 10(23C)(iv) and (v).
Is the old Rule 2C application process sufficient for a new application?
No. Applicants should follow the approval and electronic filing provisions applicable on the date of application, including the amended statutory and rule-based procedures.
Are educational institutions and hospitals covered by Rule 2C?
Rule 2C historically addressed clauses (iv) and (v). Specific provisions for educational and medical institutions under clauses (vi) and (via) are discussed in Rule 2CA.
Updated: 10 October 2026. This article is general information and should be read with the law and notifications applicable to the relevant assessment year.