Sections 347 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.
Sections 347 to 350 of the Income-tax Act, 2025 are the compliance sections for a registered non-profit organisation: keep books of account, get the accounts audited, furnish the return of income, and invest or deposit money only in permitted modes. This article explains them as per the Income-tax Act, 2025 (30 of 2025) as amended by the Finance Act, 2026.
When the total income of a registered non-profit organisation, without giving effect to the provisions of this Part, exceeds the maximum amount which is not chargeable to income-tax in a tax year, it must keep books of account (section 347), get its accounts audited by an accountant and furnish the audit report (section 348), and furnish a return of income (section 349). Money under this Part may be invested or deposited only in the modes in Schedule XVI or those the Central Government specifies by notification (section 350).
Where these sections sit
Sections 347 to 350 are headed "Compliances" (part 4) in Part B of Chapter XVII, the part on registered non-profit organisations. Read them with section 332, which deals with registration, and the Chapter XVII guide. Later amendments, rules and notifications should be checked.
If your organisation needs help to meet these compliances, see the page on 12A, 80G and CSR registration.
The common trigger in sections 347, 348 and 349
All three sections begin with the same test. The total income of the registered non-profit organisation is taken without giving effect to the provisions of this Part, that is, before the benefits of sections 332 to 355 are applied. If that figure exceeds the maximum amount which is not chargeable to income-tax in any tax year, the compliance applies.
The test is on gross total income before the benefits of the Part. An organisation that is wholly exempt in effect, but whose income before the Part's benefits is above the maximum amount not chargeable to tax, still has to comply. The Act does not print the maximum amount in these sections; it speaks of "the maximum amount which is not chargeable to income-tax". That amount comes from the rates in force for the year and is not stated here.
Section 347: books of account
The organisation shall keep and maintain books of account and other documents in such form and manner and at such place as may be prescribed. The Act itself prescribes no particular book or ledger here. The detail is left to the Income-tax Rules, 2026; see our rule-wise guides, for example the post on books of account for a registered non-profit organisation.
Section 348: audit
Under section 348 the accounts of the organisation for that tax year shall be audited by an accountant. The person in receipt of the income must furnish a report of an audit of such income by a date, in the prescribed form, duly signed and verified by the accountant and setting forth such particulars as may be prescribed.
Points to note from the text:
- The audit is of the accounts for the tax year in which the trigger is met.
- The report must be signed and verified by the accountant.
- The Act says "by such date in the prescribed form", so the date and form are left to the Income-tax Rules, 2026. The post on the audit report rule explains the Rules; the text of the Act here gives no date.
- The expression "accountant" is not defined in section 348 itself. Check the definitions elsewhere in the Act.
Section 349: return of income
Section 349 requires the organisation to furnish the return of income for that tax year. It does so by cross-reference:
| Element | What section 349 says |
|---|---|
| Kind of return | As per the provisions of section 263(1)(a)(iii) and (2) |
| Time limit | Within the time limit allowed under section 263(1)(c) or section 263(4) |
The words "or 263(4)" were inserted by the Finance Act, 2026 with effect from 1 April 2026 (footnote 65 of the copy consulted). Section 263 deals with the return of income in general; see our post on the Chapter XV return provisions for the neighbouring sections 266 and 267 and the updated return. The text of section 263 itself is not explained in this article.
Section 350: permitted modes of investment
Section 350 has two sub-sections.
- Sub-section (1): the modes of investing or depositing the money under this Part shall be such as are specified in Schedule XVI. Our post on Schedule XVI explains that Schedule.
- Sub-section (2): modes of investing or depositing money under this Part, other than those in Schedule XVI, shall be specified by the Central Government by notification. What has been notified is not in the text consulted; check the current notifications.
Section 350 is referred to in other sections of the Part. For example, section 341(2)(a) refers to investing or depositing back in the modes permitted under section 350; section 342(4) requires accumulated income to be invested or deposited in those modes; and section 343(1) does the same for deemed accumulated income. See our post on sections 341 to 343.
What happens if you do not comply
Sections 347 to 349 do not carry their own consequence. Section 353(1)(a), (b) and (c) names the failures to maintain books of account under section 347, to get books audited under section 348 and to furnish the return under section 349 as "other violations". For the tax year of the failure, the regular income reduced by the permitted expenditure becomes taxable regular income chargeable to tax as per section 334. See our post on sections 351 and 353.
Worked example
Kamdhenu Charitable Trust (an invented name) is a registered non-profit organisation. For a tax year its total income, without giving effect to the provisions of this Part, is above the maximum amount which is not chargeable to income-tax for that year. The trust therefore:
- keeps books of account and other documents in the prescribed form, manner and place (section 347);
- has its accounts for that tax year audited by an accountant, and the accountant signs and verifies the audit report in the prescribed form (section 348);
- furnishes its return of income as per section 263(1)(a)(iii) and (2), within the time limit under section 263(1)(c) or section 263(4) (section 349); and
- invests its surplus only in a mode specified in Schedule XVI or in a mode the Central Government has specified by notification (section 350).
If the trust skips the audit, section 353(1)(b) applies for that tax year; its regular income less the permitted expenditure is then chargeable to tax as per section 334.
Need help with non-profit compliances?
Our team can help a trust or society plan its books, audit and return in line with these sections. Please reach us through the page for 12A, 80G and CSR registration.
Key takeaways
- The trigger is total income, without the benefit of this Part, exceeding the maximum amount not chargeable to income-tax in the tax year.
- Section 347: books of account and documents in the prescribed form, manner and place.
- Section 348: audit by an accountant and a signed, verified report.
- Section 349: return of income under section 263, within the time in section 263(1)(c) or section 263(4).
- Section 350: Schedule XVI modes, plus any modes notified by the Central Government.
Read next
- Sections 344 to 346: commercial activities
- Sections 341 to 343: application and accumulation of income
- Sections 351 and 353: specified and other violations
- Schedule XVI: permitted investments
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.