The Finance Bill, 2026 has proposed an important amendment to Section 349 of the Income-tax Act, 2025, allowing registered Non-Profit Organisations (NPOs) to file belated income tax returns. This change restores a flexibility that was available under the earlier Income tax Act, 1961, but was missing in the new law.
What was the position earlier?
Under the existing provisions of Section 349, a registered NPO is required to furnish its return of income within the due date prescribed under Section 263(1)(c). However, unlike the earlier law, there was no express provision permitting an NPO to file a belated return if it missed the original due date.
This absence created compliance concerns, especially for smaller trusts and charitable institutions that often face procedural delays.
What has changed now?
To address this gap, it is proposed to amend Section 349 to include a reference to Section 263(4). Section 263(4) deals with the filing of belated returns, thereby expressly enabling registered NPOs to furnish their return even after the due date, subject to the conditions prescribed.
Key highlights of the amendment
- Registered NPOs can now file belated income tax returns
- Aligns the Income-tax Act, 2025 with the earlier provisions of the Income-tax Act, 1961
- Reduces risk of denial of exemption due to procedural delays
- Improves compliance ease for trusts, societies, and charitable institutions
Effective date
- Applicable from 1st April 2026
- Applies to Tax Year 2026–27 and subsequent years
- Introduced via Clause 67 of the Finance Bill, 2026
Why this amendment matters
Timely filing of returns is critical for NPOs to retain tax exemptions and registrations . By allowing belated returns, the government has provided much-needed relief and flexibility, particularly for smaller and volunteer-driven organisations. This amendment reflects a pragmatic approach towards compliance under the new Income-tax regime.
Official copy of the Cause is as follows
Amendment in section 349 of the Income-tax Act, 2025 to provide for filing of belated return by NPO
Existing section 349 inter alia provides furnishing of return by a registered non-profit organisation within the time limit allowed under section 263(1)(c).
In order to enable furnishing of belated return by registered non-profit organisation as was there in the Income-tax Act, 1961, it is proposed to amend the provisions of section 349 to provide reference of section 263(4) in the said section.
These amendments will take effect from the 1st day of April, 2026 and shall accordingly, apply to the tax year 2026-27 and subsequent tax years.
[Clause 67]
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