Quick Summary
The Income Tax Department has released a detailed explanatory document outlining the taxation framework applicable to Registered Non-Profit Organisations (NPOs) under the Income-tax Act, 2025. The new regime introduces a comprehensive structure covering registration, taxation, compliance requirements, commercial activities, donor approvals, and consequences of violations. Under the new law, the special provisions relating to Registered NPOs are contained in Part B of Chapter XVII of the Income-
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FAQ :
The Income Tax Department has released detailed guidance on the taxation framework for Registered Non-Profit Organisations (NPOs) under the Income-tax Act, 2025.
Public trusts, registered societies, Section 8 companies, educational institutions, government-funded institutions, and certain other notified entities can seek registration as Registered NPOs.
Income is classified into three categories: Regular Income (from charitable activities, investments, etc.), Specified Income (from violations, taxed at 30%), and Residual Income (taxed under normal provisions).
Registered NPOs must apply at least 85% of their regular income towards charitable or religious purposes or validly accumulate it for future use.
Yes, for most NPOs, commercial activities must be incidental to their objectives. For organisations advancing general public utility, receipts from commercial activities cannot exceed 20% of total receipts.
No, NPO registration does not automatically grant donor deduction benefits. A separate approval process is required for donors to claim deductions.
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