Skip to content

CA Final · Direct Tax Laws & International Taxation · Miscellaneous Provisions

Bharat Steel Ltd. maintains a recognised provident fund for its employees. The approving authority finds that the fund has failed to meet certain conditions required for recognition, and the exemption granted to the establishment under section 17 of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 has been withdrawn under its sub-section (4). Which statement is correct under Rule 298 of the Income-tax Rules, 2026?

The authority may withdraw recognition, but only after giving both the employer and the trustees an opportunity to show cause. Rule 298 confers the right to revoke for non-compliance with conditions or withdrawal of the section 17 exemption, and sub-rule (2) makes the prior show-cause opportunity mandatory.

  1. AThe approving authority may withdraw recognition, but only after giving the employer and the trustees an opportunity to show causeCorrect
  2. BThe approving authority must withdraw recognition automatically without any hearing
  3. CRecognition can be withdrawn only if the employees' consent is obtained
  4. DThe approving authority may withdraw recognition and must give a show-cause opportunity only to the employer, not to the trustees

Explanation

Rule 298(1) gives the approving authority the right to revoke recognition for failure to meet the specified conditions, and withdrawal of the section 17 exemption can also ground it. Rule 298(2) requires an opportunity to the employer and the trustees to show cause before withdrawal. Therefore a hearing for only the employer, or no hearing, is wrong, and employee consent is not required.

Did you get it right without looking?

One question tells you little. A timed set on Miscellaneous Provisions shows your real accuracy, how long you take and where you lose marks.

Practise Miscellaneous ProvisionsFree diagnostic mock

More Miscellaneous Provisions questions