Overview of Environmental (Protection) Fund Rules, 2026

Overview of Environmental (Protection) Fund Rules, 2026 Environment Ministry has notified the Environmental Protection Fund Rules, 2026, which govern the collection, allocation, and utilization of environmental penalties.

These Rules have been framed under Sections 6 and 25 of the Environment (Protection) Act, 1986.

Rule 2 explains the relevant terms essential for the interpretation of these Rules. Under these Rules, the Environmental Protection Fund is created in the Public Account of India to ensure that environmental penalties are used exclusively for environmental restoration, monitoring, and improvement activities.

These Rules outline the purposes for which the Environmental Protection Fund and how it will be utilised, ensuring transparent, accountable, and need-based environmental protection activities.

The Fund will be used for: Environmental monitoring equipment Environmental laboratories Research related to clean technologies Assessment and remediation of environmental damage Capacity building and strengthening of regulatory institutions such as:

○ SEIAA ○ SEAC ○ CPCB ○ SPCBs ○ Pollution Control Committees ○ Commission for Air Quality Management ○ Urban Local Bodies Development of IT enabled systems and related equipment Studies directed by Courts and Tribunals Awareness generation projects, including through eco clubs Demonstration projects involving innovative environmental technologies Measures for prevention, control, and mitigation of environmental pollution Administrative expenses (up to 5% of available funds)

The Fund will not be used for: Payment of medical expenses Foreign visits Construction of office buildings or residences Purchase of furniture, office equipment, vehicles, ACs, generators, etc. for government offices The following amounts will be credited into Environmental Protection Fund: Penalties imposed under: 1. Air (Prevention and Control of Pollution) Act, 1981  2. Water (Prevention and Control of Pollution) Act, 1974  3.Environment (Protection) Act, 1986.  4.Incomes under Section 16(2) of the Environment Protection Act.

Rule 5 outlines the manner in which the funds will be credited: The amount credited will be deposited online via the Bharatkosh portal. All payments made through Bharatkosh will be first credited to the Consolidated Fund of India (‘CFI’). The credited amount will be transferred to the Public Account of India under the Environmental Protection Fund (‘EPF’) in accordance with prescribed accounting procedures. Distribution between Centre and States: ○ 75% of the collected penalty is remitted by the Administrator to the Consolidated Fund of the respective State/Union Territory. ○ 25% is retained by the Central Government. Each State/UT, upon receiving its share, must credit the amount into a dedicated Reserve Fund within the Public Account of the State/UT.

The Reserve Fund can be utilised for purposes specified under Rule 3 and Section 16 of the Act. Under Rule 6, the Fund will be administered through dedicated Project Management Units (‘PMUs’) established by the Centre and each State/UT, headed by a Joint Secretary or State Secretary. All payments will be submitted and States/UTs will be required to annually report total funds received, utilized, and remaining balances.

Rule 8 clarifies that the Fund will be audited by the Comptroller and Auditor General (‘CAG’). The Central Pollution Control Board (‘CPCB’) will develop and maintain a dedicated online portal that will serve as the exclusive interface for all authorities and stakeholders involved in implementing these Rules once it becomes operational.