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Rule 37Published

Rule 37: Agricultural extension project approval

Rule 37 sets the approval procedure for agricultural extension projects under section 47(1)(a). It covers prior ministry approval, a project-expenditure threshold, application documents and notification periods.

Official notified Income-tax Rules, 2026

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Rule 37 - Procedure for approval of agricultural extension project under section 47(1)(a)

(1) The agricultural extension project (herein referred as the project) shall be considered for notification, if it fulfils the following conditions,:— (a) the project shall be undertaken by an assessee for training, education and guidance of farmers; (b) the project shall have prior approval of the Ministry of Agriculture and Farmers Welfare, Government of India; and (c) an expenditure (not being expenditure in the nature of cost of any land or building) exceeding the amount of ₹ 25,00,000 is expected to be incurred for the project.

(2) Before undertaking any project, an assessee shall make an application in Form No. 20 to the Member (IT), CBDT for notification of such project under section 47(1)(a).

(3) The application referred to in sub-rule (2) shall also be accompanied by– (a) a letter approving the project and specifying the amount of expenditure expected to be incurred on the project, from the Ministry of Agriculture and Farmers Welfare, Government of India; (b) a detailed note on the agricultural extension project to be undertaken by the assessee; and (c) details of the expenditure expected to be incurred on the project and expected date of completion of the project.

(4) Where any defect is noticed in the application referred to in sub-rule (2) or a relevant document is not attached thereto, the Board shall, before the expiry of one month from the end of the month in which the application is received in its office, intimate the defect to the applicant for its rectification.

(5) The applicant shall remove the defect within a period of one month form the end of the month in which intimation letter is served on him.

(6) Where the applicant fails to remove the deficiency within the period mentioned in sub-rule (5), the Board shall, within one month from the time period specified in the said sub-rule, pass an order treating the application as invalid.

(7) If the application is complete in all respects, the Board shall, within two months from the end of the quarter in which it receives such application, issue a notification under section 47(1)(a) in Form No. 21 specifying the project, subject to the conditions mentioned in rule 38 or such other conditions, as it may deem fit, to be effective for such period not exceeding three tax years.

(8) The assessee, may, at least three months before the expiry of the effective period of the notification issued under sub-rule (7), make an application to the Board for notification of such project for a further period.

(9) The Board shall, after receiving the application under sub-rule (8), call for a report from the Commissioner of Income-tax, having jurisdiction over the case regarding the activities of the project during the period of notification and fulfilment of conditions specified in rule 38 including any other conditions, if any, subject to which the project was notified under sub-rule (7).

(10) On being satisfied with the report received under sub-rule (9) on the project, the Board may, within two months from the end of the quarter in which it receives application referred to in sub-rule (8), notify the said project for a further period not exceeding three tax years.

(11) The Board may, on being satisfied that–– (a) the assessee has ceased its activities, or that its activities are not genuine; or (b) its activities are not being carried out in accordance with all or any of the relevant provisions of this rule or rule 38; or (c) its activities are not being carried out in accordance with all or any of the conditions subject to which the notification was issued, pass an order for revocation of the notification issued under sub-rule (7) or sub-rule (10) after providing a reasonable opportunity of being heard.

(12) A copy of notification, approval, rejection, or cancellation shall be communicated to– (a) the applicant; (b) the Ministry of Agriculture and Farmers Welfare, Government of India; (c) the Commissioner of Income-tax having jurisdiction over the applicant; (d) the Department of Agriculture of the concerned State; and (e) the Agricultural Technology Management Agency of the concerned district.

Rule breakdown

Check the project purpose and expenditure threshold

The project must be for training, education and guidance of farmers, have prior approval of the Ministry of Agriculture and Farmers Welfare, and expect expenditure exceeding ₹25 lakh after excluding land and building cost.

Exactly ₹25 lakh does not exceed the threshold. Keep the eligible expenditure estimate separate from property acquisition costs.

Apply before undertaking the project

The assessee must apply in Form No. 20 to Member (IT), CBDT before undertaking the project. Attach the ministry approval letter stating expected expenditure, a detailed project note, the expenditure details and expected completion date.

Prior ministry approval and the tax notification are different steps. Retain the approved project scope and the evidence of filing before work begins.

Deficiency notice and correction timetable

The Board must intimate a defect or missing relevant document within one month from the end of the month of application receipt. The applicant must correct it within one month from the end of the month of service.

If the deficiency is not removed, the Board must pass an invalidity order within one month from the end of the allowed correction period. Track receipt and service dates separately.

Notification period and the initial decision clock

For a complete application, the Board must issue the Form No. 21 notification within two months from the end of the quarter in which it receives the application. The specified effective period cannot exceed three tax years.

The notification is subject to Rule 38 and any other imposed conditions. Do not assume the full three-year maximum applies without checking the actual notification.

Apply for a further period in time

The assessee may seek a further notification period at least three months before the existing period expires. The Board calls for a report from the jurisdictional Commissioner on activities and compliance.

If satisfied, the Board may notify a further period not exceeding three tax years within the stated two-month quarter-end application clock. An application alone does not automatically extend the prior notification.

Revocation and the communication record

The Board may revoke for the listed cessation, genuineness or condition failures after a reasonable hearing opportunity. Copies of the relevant notification or decision go to the applicant and specified ministry, tax and agricultural authorities.

Keep the notification, annual compliance records and any notice responses together. The approval file should support both the project’s actual work and the claimed tax treatment.

Key takeaways

Before work begins

File Form 20 before undertaking the project.

More than ₹25 lakh

The expected expenditure test excludes land and building costs.

Limited periods

Initial and further notified periods cannot exceed three tax years each.

Practical checklist

  • Obtain and retain prior ministry approval.
  • Separate land/building cost from the threshold estimate.
  • Record application and deficiency-service dates.
  • Track the notified period and the renewal lead time.

Avoid

  • Do not begin the application process only after undertaking the project.
  • Do not count the three-year maximum as an automatic grant.

FAQs

Does exactly ₹25 lakh meet the threshold?

No. The rule requires expected expenditure exceeding ₹25 lakh, excluding land and building cost.

Which application form is required?

Form No. 20, before undertaking the project.

Is renewal automatic?

No. A timely application, the Commissioner’s report and the Board’s satisfaction are part of the further-period process.

Glossary

Agricultural extension project
The farmer training, education and guidance project within the rule’s prescribed conditions.
Notification period
The effective period specified by the Board, within the rule’s three-tax-year maximum.

Official sources