Quick Summary
The Income Tax Bill, 2025, has consolidated tax laws governing non-profit organisations (NPOs), streamlining provisions that were previously scattered across multiple sections of the Income Tax Act, 1961. While this move enhances clarity and reduces compliance burdens, tax experts are calling for mo
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FAQ :
The Bill consolidates various tax laws for non-profit organisations (NPOs) into a single place, aiming to enhance clarity and simplify compliance.
Experts are seeking detailed criteria for NPOs to qualify for tax concessions, especially concerning what constitutes 'permissible commercial activities'.
Under the Bill, registered NPOs can only engage in commercial activities if they are incidental to their objectives. Commercial activity is defined as trade, commerce, or business conducted for a fee or other consideration.
Tax experts suggest introducing objective criteria, such as mandatory social audits, to help tax officers make more informed assessments of an NPO's activities.
The Bill lists investment modes in Schedule XVI, similar to the current law. However, experts suggest the government should have flexibility to modify these modes via notification.
Experts are calling for clearer guidelines on the nature of benefits provided to related persons, how these benefits are calculated, and the relevant compliance rules.
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