Rule 5: Application for recognised stock exchange notification
Rule 5 explains how a stock exchange applies for notification under section 2(92). It specifies the recipient, supporting documents, the Central Government’s decision period and the events that end the notification’s effectiveness.
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Bare law
Rule 5 - Procedure for notification of a recognised stock exchange for the purposes of section 2(92)
(1) An application for notification of a stock exchange as a recognised stock exchange for the purposes of section 2(92) may be made to the Member (Income Tax), Central Board of Direct Taxes, New Delhi.
(2) The application referred to in sub-rule (1) shall be accompanied with the following documents,:- (a) approval granted by the Securities and Exchange Board of India for trading in derivatives; (b) up-to-date rules, bye-laws and trading regulations of the stock exchange; (c) confirmation regarding fulfilling the conditions referred to in clause (b) to (f) of rule 4; and (d) such other information as the stock exchange may like to place before the Central Government.
(3) The Central Government may call for such other information from the applicant as it deems necessary for taking a decision on the application.
(4) The Central Government, after examining the information furnished by the stock exchange under sub-rule (2) or sub-rule (3), shall notify the stock exchange as a recognised stock exchange for the purposes of section 2(92) or issue an order rejecting the application before the expiry of six months from the end of the month in which the application is received.
(5) The notification referred to in sub-rule (4) shall be effective until the approval granted by the Securities and Exchange Board of India is withdrawn or expires, or the said notification is rescinded by the Central Government.
Rule breakdown
Build the application file
Include derivatives-trading approval from SEBI, up-to-date rules, bye-laws and trading regulations, and confirmation of compliance with Rule 4(b)–(f). The exchange may also place other information before the Central Government under clause (d).
Respond to additional information requests
The Central Government may call for information it considers necessary to decide the application. Keep submission and receipt records so the original application date and later responses can be identified.
Track the decision and continuing validity
The rule requires notification or a rejection order before the expiry of six months from the end of the month of receipt. It does not state that silence produces automatic recognition. Once issued, the notification remains effective until SEBI approval is withdrawn or expires, or the Central Government rescinds the notification.
Illustrative decision calendar
If an application is received on 10 May, the six-month period is measured from the end of May, not from 10 May. Retain evidence of actual receipt and apply the statutory end-of-month clock when preparing the compliance diary.
Key takeaways
Application recipient
Apply to the Member (Income Tax), Central Board of Direct Taxes, New Delhi.
Evidence of eligibility
The application includes SEBI approval, current exchange rules and confirmation of Rule 4(b)–(f) compliance.
Decision period
Notification or rejection must occur before six months expire from the end of the application-receipt month.
Practical checklist
- Attach the current approval and exchange governance documents.
- Confirm each of Rule 4(b)–(f) rather than making a generic compliance assertion.
- Track SEBI approval expiry and any withdrawal or rescission.
Avoid
- Do not count the six-month period from the exact filing day instead of month end.
- Do not assume non-response is automatic recognition.
FAQs
Who receives the application?
The Member (Income Tax), Central Board of Direct Taxes, New Delhi.
Does the rule prescribe deemed approval if no decision arrives?
No deemed-approval provision is stated in Rule 5. It instead requires notification or a rejection order within the prescribed period.
How long does the notification remain effective?
Until SEBI approval is withdrawn or expires, or the Central Government rescinds the notification.