Sections 333-336 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Part B of Chapter XVII sets out how a registered non-profit organisation is taxed. After registration under section 332, sections 333 to 336 settle four things: what happens when an organisation moves between the registration regime and the regime of notified exemptions in the Schedules; how the tax payable is made up; what counts as "regular income"; and when regular income is taxable. This article reads the four sections as per the Income-tax Act, 2025 (30 of 2025) as amended by the Finance Act, 2026. Registration itself is covered in our article on section 332.
Tax on a registered non-profit organisation is the total of 30 per cent on specified income and the rate applicable on taxable regular income and any residual income under other provisions. Regular income is activity income, income from property held for charitable or religious purposes, voluntary contributions and gains of permitted commercial activity. It is nil taxable if 85 per cent or more is applied or accumulated; otherwise 85 per cent of regular income less application is taxable.
Section 333: switching over of regimes
| Sub-section | Rule |
|---|---|
| (1) | Nothing in section 11, other than Schedule II (Table: serial number 1), Schedule III (Table: serial numbers 27 to 29 and 36) and Schedule VII (Table: serial numbers 10 to 19 and 42 to 45), excludes any income of a registered non-profit organisation from its total income for that tax year |
| (2) | The registration under section 332 ceases to operate from the date on which the organisation is notified as specified in Schedule III (Table: serial number 27, 28, 29 or 36) or Schedule VII (Table: serial number 42), or from the 1st day of April of the tax year for an organisation which claims exemption under Schedule VII (Table: serial number 43, 44 or 45) |
| (3) | A person whose registration ceases under sub-section (2) may apply for registration under section 332, on the condition that the notification granting exemption under Schedule III (Table: serial number 27, 28, 29 or 36) or Schedule VII (Table: serial number 42) ceases to have effect from the date registration is granted, and thereafter the person is not entitled to exemption under those serial numbers |
In plain terms, the two routes do not run together. An organisation is either registered under section 332 or exempt under the notified entries of the Schedules named, and moving from one to the other has the consequences above. For section 11 and the Schedules, see our income-tax guides; what has been notified under the Schedules is not in the text consulted. If you are weighing registration against a notified exemption, our 12A, 80G and CSR registration team can help.
Section 334: tax on income of a registered non-profit organisation
Sub-section (1): how the tax is made up
The income-tax payable by a registered non-profit organisation on its total income for any tax year is the aggregate of the amounts calculated:
- (a) at the rate of 30 per cent on specified income for that tax year; and
- (b) at the rate applicable on taxable regular income and any residual income for that tax year under other provisions of the Act.
"Specified income" is defined by the Table in section 337; our article on section 337 lists its rows. The rate in clause (b) is the rate applicable under other provisions; the Act does not print it here.
Sub-section (2): the Chapter overrides
The provisions of the Chapter apply irrespective of anything to the contrary in any other provision of the Act, other than sections 96 to 98.
Section 335: regular income
Regular income of a tax year of a registered non-profit organisation means:
| Clause | Item |
|---|---|
| (a) | Income from any charitable or religious activity, for which the organisation is registered, carried out by it in that tax year |
| (b) | Income, other than income covered in clause (e), derived from any property, deposit or investment held wholly for charitable or religious purposes in that tax year |
| (c) | Income, other than income covered in clause (e), derived from any property, deposit or investment held in part for charitable and religious purposes as referred to in section 332(2)(b)(ii) in that tax year |
| (d) | Voluntary contributions received in that tax year |
| (e) | Gains of any commercial activity permissible under sections 344, 345 and 346, carried out in that tax year, computed in such manner as may be prescribed |
The manner of computing gains under clause (e) is left to the Income-tax Rules, 2026. For the commercial activities in sections 344 to 346, see our article on sections 344 to 346.
Corpus donations under section 339 are not included in regular income (section 338(b)); see our article on sections 338 to 340.
Section 336: taxable regular income
The taxable regular income of a registered non-profit organisation for any tax year is:
| Clause | Case | Taxable regular income |
|---|---|---|
| (a) | 85 per cent or more of the regular income of that tax year has been applied as per section 341 or accumulated under section 342 for charitable or religious purposes in that tax year as per this Part | Nil |
| (b) | Any other case | 85 per cent of the regular income for that tax year, as reduced by its application for charitable or religious purposes as per section 341 or accumulation under section 342 in that tax year as per this Part |
So there is a threshold. At or above 85 per cent applied or accumulated, nothing is taxable as regular income. Below it, the taxable amount is 85 per cent of regular income less what was applied or accumulated, which can be a positive figure only when application and accumulation together fall short of 85 per cent. Application and accumulation are explained in our article on sections 341 to 343.
Records that track application and accumulation month by month make this test easy to prove.
A worked example
Names and amounts are assumed. The rates other than the 30 per cent printed in section 334(1)(a) are not given in these sections, so the examples stop at the taxable amounts.
The Sundar Education Society is a registered non-profit organisation. In a tax year its regular income is Rs. 50,00,000: Rs. 35,00,000 from its school (section 335(a)), Rs. 10,00,000 from investments held wholly for charitable purposes (clause (b)) and Rs. 5,00,000 of voluntary contributions (clause (d)).
Case 1: 85 per cent or more applied. The society applies Rs. 45,00,000 for charitable purposes in the tax year.
- 85 per cent of Rs. 50,00,000 = Rs. 42,50,000.
- Rs. 45,00,000 is more than Rs. 42,50,000, so section 336(a) applies.
- Taxable regular income = nil.
Case 2: less than 85 per cent applied. The society applies Rs. 30,00,000 and accumulates nothing.
- 85 per cent of Rs. 50,00,000 = Rs. 42,50,000.
- Rs. 42,50,000 - Rs. 30,00,000 = Rs. 12,50,000.
- Taxable regular income = Rs. 12,50,000 under section 336(b), taxed at the rate applicable under other provisions.
Specified income. Separately, the society has Rs. 2,00,000 that falls within the Table of section 337 (assumed). That is taxed at 30 per cent under section 334(1)(a): Rs. 2,00,000 x 30 per cent = Rs. 60,000.
Need help with a trust or society's tax position?
Whether an organisation pays tax on regular income depends on how much it applies or accumulates, in the right form and in the right year. If you manage a trust, society or section 8 company, our team can help you plan the application of income and keep the records the Part requires. See our 12A, 80G and CSR registration service.
Key takeaways
- Tax is the aggregate of 30 per cent on specified income and the applicable rate on taxable regular income and residual income.
- The Chapter applies irrespective of other provisions, other than sections 96 to 98.
- Regular income covers activity income, income from property held for charitable or religious purposes (wholly or in part), voluntary contributions and gains of permitted commercial activity.
- If 85 per cent or more of regular income is applied or accumulated in the tax year, taxable regular income is nil.
- Otherwise it is 85 per cent of regular income less the application and accumulation.
- Switching between registration and the notified exemptions in Schedules III and VII is governed by section 333.
Read next
- Section 332: registration of a non-profit organisation
- Section 337: specified income of a registered non-profit organisation
- Sections 338 to 340: corpus donation and deemed corpus donation
- Chapter XVII: special provisions relating to certain persons
Disclaimer: Based on the Income-tax Act, 2025 (30 of 2025) as amended by the Finance Act, 2026, as consulted on 2 October 2026. It explains the words of the Act only; the Income-tax Rules, 2026, notifications, circulars, later amendments and the way the tax authorities and courts apply these provisions should be checked. This article is general information, not legal advice; check the official text before acting.