Rule 311: Annuity arrangements when the employer's business closes
Rule 311 protects employees if the employer's business is closed or discontinued. Rules 301 to 315 govern approved superannuation funds under Part B of Schedule XI to the Act. The trustees must, with prior approval of and subject to conditions imposed by the approving authority, make suitable arrangements for annuities to current employees, or to their widows, children or dependants on death.
Official notified Income-tax Rules, 2026Need advice on Rule 311?
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Bare law
Rule 311 - Arrangements on winding up, etc., of business
When the business of the employer is to be closed or discontinued, the trustees shall, with the prior approval of and subject to the conditions imposed by the approving authority, make suitable arrangements for providing annuities to current employees, or to their widows, children, or dependents in the event of their death.
Rule breakdown
What trustees must do
Obtain prior approval of the approving authority.
Make suitable arrangements for annuities to current employees or, on death, their widows, children or dependants.
Follow conditions imposed.
Key takeaways
Prior approval
Needed before arrangements.
Protect beneficiaries
Annuities for employees and dependants.
Conditions
Approving authority may impose conditions.
Practical checklist
- Approach the approving authority early in a closure.
Avoid
- Do not distribute fund money without approval.
FAQs
What happens to superannuation benefits if the business shuts?
Trustees make suitable annuity arrangements with prior approval of the approving authority (Rule 311).
Who is protected?
Current employees, and their widows, children or dependants on death.
Is there a gratuity equivalent?
Yes, Rule 325.
Glossary
- Discontinued business
- Business that is closed or stopped.
- Approving authority
- Defined in Rule 301(a).