The Central Board of Direct Taxes (CBDT) has released Draft Form No. 112, prescribing a comprehensive audit report format for registered non-profit organisations (NPOs) under Section 348 of the Income-tax Act, 2025. The draft form is part of the transition to the new income-tax regime effective from 1 April 2026 and significantly expands reporting, disclosure, and compliance requirements for both small and large registered NPOs.
Purpose of Draft Form 112
Form 112 is designed to standardise audit reporting for NPOs, ensuring enhanced transparency in:
- Application of income
- Donations (including foreign and anonymous donations)
- Corpus management
- Related-party transactions
- Commercial activities
- Compliance with charitable objectives
The form applies to registered non-profit organisations whose accounts are required to be audited under Section 348 of the Income-tax Act, 2025.
Two-Tier Reporting: Small vs Large Registered NPOs
Draft Form 112 introduces differential reporting requirements based on size thresholds:
Small Registered NPOs: where regular income does not exceed ₹5 crore and foreign contribution/application outside India remains within prescribed limits.
Large Registered NPOs: where any of the following thresholds are crossed:
- Regular income exceeds Rs 5 crore
- Foreign contribution exceeds Rs 10 lakh
- Application of income outside India exceeds Rs 10 lakh
Large NPOs are subject to expanded schedules and granular disclosures compared to small NPOs.
Key Information Captured in Draft Form 112
1. Core Identification & Registration Details
The form captures:
- Name, address, PAN, tax year
- Status as a registered NPO under Section 355(g)
- Recognition details under the Income-tax Act, 1961 or 2025
- Provisional and final registration details (Schedule A)
2. Governance & Management Disclosures
Mandatory reporting includes:
- Trustees, founders, directors, governing council members
- Beneficial owners holding 5% or more interest
- Changes in management during the tax year (Schedule B)
- Related persons under Section 355(h)
Click here to download: Draft Form 112 for NPO Audits
3. Income, Donations & Corpus Reporting
Draft Form 112 contains detailed schedules for:
- Donations reported and not reported in Form 113
- Foreign donations and corpus donations
- Anonymous donations taxable under Section 337
- Regular income under Section 335
- Corpus utilisation and reinvestment (Schedule U)
4. Application of Income
Separate and detailed reporting is required for:
- Application of income within India
- Application outside India (Schedule Y)
- Deemed application and accumulated income
- Capital vs revenue expenditure
- Disallowable applications under Sections 341, 353 and related provisions
5. Commercial Activities & Business Income
The form requires disclosures on:
- Commercial activities under Section 346
- Business undertakings under Sections 344 and 345
- Separate books of account for incidental businesses
- Aggregate receipts and gains from such activities
6. Specified Income & Violations
Form 112 mandates exhaustive reporting of:
- Specified income under Section 337
- Violations under Section 351
- Non-compliance triggering taxation under Section 353
- Investments made in contravention of Section 350
Extensive Schedule-Based Reporting Structure
Draft Form 112 includes over 30 detailed schedules, covering:
- Donations (Schedules J, V, U)
- Income computation (Schedules K, N, O)
- Application of income (Schedules L, M, P)
- Loans, borrowings, and corpus utilisation
- Related-party transactions (Schedule S)
- Foreign contribution and overseas application
- Deemed income and accumulated income tracking
This schedule-driven architecture reflects CBDT’s move towards data-driven assessments and automated scrutiny under the new tax law.
Compliance Impact for NPOs and Auditors
Once notified, Form 112 will:
- Significantly increase audit documentation requirements
- Demand systematic tracking of donations, corpus, and application
- Require close coordination between NPO management and auditors
- Raise compliance standards for foreign contributions and related-party dealings
Registered NPOs will need to strengthen internal controls, accounting systems and documentation practices to ensure accurate and timely reporting.
CAclubindia
