Sections 351 and 353 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.
Section 351 of the Income-tax Act, 2025 lists the "specified violations" that can cost a registered non-profit organisation its registration, and sets out the procedure and the six-month time limit for the order. Section 353 deals with "other violations" such as failure to keep books, get them audited or file a return, and taxes the income in those cases. This article explains both as per the Income-tax Act, 2025 (30 of 2025) as amended by the Finance Act, 2026. (Section 352, the tax on accreted income, sits between them and has its own articles.)
Section 351(1) lists seven specified violations in clauses (a) to (g). If the Principal Commissioner or Commissioner finds one, receives a reference from the Assessing Officer, or selects the organisation under the Board's risk management strategy, he calls for documents, inquires, and passes a written order cancelling or not cancelling the registration, within six months counted from the end of the quarter in which the first notice is issued. Section 353 taxes the regular income less permitted expenditure where books, audit, return or the section 346 condition is breached.
Where these sections sit
Both sections are in part 5, "Violations", of Part B of Chapter XVII (sections 332 to 355); see the Chapter XVII guide. Registration and its grounds are in section 332. Section 351 was amended by the Finance Act, 2026 with effect from 1 April 2026 (footnotes 66 and 67 of the copy consulted); the amendments are noted below. Later amendments, rules and notifications should be checked.
For help with registration and compliance of a trust or society, see our page on 12A, 80G and CSR registration.
Section 351(1): what is a specified violation
| Clause | Specified violation |
|---|---|
| (a) | Any income of the organisation has been applied other than for its objects |
| (b) | It carries out any commercial activity in contravention of the provisions of section 345 |
| (c) | It has applied any part of its total income for private religious purposes which does not enure for the benefit of the public |
| (d) | An organisation created or established after the commencement of this Act for charitable purpose has applied any part of its income for the benefit of any particular religious community or caste other than the Scheduled Castes or the Scheduled Tribes or backward classes or women and children |
| (e) | Any activity being carried out is not genuine or is not being carried out in accordance with all or any of the conditions subject to which it was registered |
| (f) | It has not complied with the requirements of any other law as referred to under section 332(7)(a), and the order, direction or decree holding that the non-compliance has occurred has either not been disputed or has attained finality |
| (g) | The application referred to in section 332(1) contains any false or incorrect information |
Two points on the text. First, in clause (b) the words "or 346" were omitted by the Finance Act, 2026 with effect from 1 April 2026, so the clause now refers to section 345 only; commercial activity in breach of section 346 is dealt with in section 353(1)(d). See our post on sections 344 to 346. Second, in clause (c) the word "enure" was substituted for "ensure" by the same Act.
Clause (f) refers to "any other law" through section 332(7)(a). The Act names no law in section 351 itself; check the law concerned.
Section 351(2): who acts and how
The Principal Commissioner or Commissioner acts in any of three situations:
- he has noticed the occurrence of one or more specified violations during any tax year (clause (a));
- he has received a reference from the Assessing Officer under section 270(13) for any tax year (clause (b)); or
- the organisation has been selected as per the risk management strategy formulated by the Board for any tax year (clause (c)).
He shall then:
- (i) call for such documents or information from the organisation, or make such inquiry as he thinks necessary to satisfy himself about the occurrence of any specified violation;
- (ii) pass an order in writing, either (A) cancelling the registration, after affording a reasonable opportunity of being heard, for such tax year and all subsequent tax years, if he is satisfied that one or more specified violations have taken place, or (B) not cancelling the registration, if he is not so satisfied; and
- (iii) forward a copy of the order to the Assessing Officer and to the organisation.
Note the hearing requirement is written into clause (ii)(A): cancellation follows only after "a reasonable opportunity of being heard".
Section 351(3): the time limit
The order under sub-section (2)(ii) shall be passed before the expiry of six months, calculated from the end of the quarter in which the first notice is issued by the Principal Commissioner or Commissioner calling for any document or information, or for making any inquiry, under clause (i).
What follows a cancellation
The Act does not stop at cancellation. Section 352 imposes a charge on accreted income in several cases where registration is cancelled or withdrawn; see our articles on that section: first five cases and remaining cases, payment and recovery. An appeal against an order cancelling registration is dealt with in the appeal provisions; see the Chapter XVIII guide.
Section 353: other violations
Sub-section (1). If a registered non-profit organisation, during any tax year:
- (a) fails to maintain books of account under section 347;
- (b) fails to get books of account audited under section 348;
- (c) fails to furnish its return of income under section 349; or
- (d) while carrying out advancement of any other object of general public utility, carries out any commercial activity in contravention of section 346,
its regular income for that tax year, as reduced by the expenditure referred to in sub-section (3), is taxable regular income, chargeable to tax as per section 334.
Sub-section (2). Irrespective of section 338, any specified income and residual income of the organisation which is not included in sub-section (1) is also chargeable to tax under section 334.
Sub-section (3). The expenditure that may be reduced is expenditure incurred in India (other than capital expenditure) for the objects of the organisation, subject to these conditions:
| Clause | Condition |
|---|---|
| (a) | Incurred in India |
| (b) | For the objects of the organisation |
| (c) | Not made from the corpus standing to credit at the end of the immediately preceding tax year |
| (d) | Not out of any loan or borrowing |
| (e) | No depreciation claim on an asset whose acquisition has been claimed as application of income in the same or any other tax year |
| (f) | Not in the form of any contribution or donation to any person |
| (g) | Not on account of payment(s) made in contravention of section 36(4), (5), (6) and (7) |
| (h) | The payment is allowable under section 35(b)(i) |
Sub-section (4). No set off, deduction or allowance of any application or expenditure other than those in sub-section (3) is allowed.
The Act's heading for section 353 is "Other violations". The rules for the compliances it refers to are in our post on sections 347 to 350.
Worked example
Lakshmi Seva Samiti (an invented name) is a registered non-profit organisation. In a tax year its regular income is Rs. 12,00,000. It did not get its accounts audited although section 348 applied. It spent Rs. 5,00,000 in India on its objects, all revenue expenditure, none from corpus or loan, none as a donation to any person, and allowable under section 35(b)(i).
- Section 353(1)(b) applies.
- Taxable regular income = Rs. 12,00,000 - Rs. 5,00,000 = Rs. 7,00,000, chargeable to tax as per section 334.
- Any specified income and residual income not included in this is also chargeable under section 334 by sub-section (2).
If the same samiti had, instead, applied income for private religious purposes that did not enure for the benefit of the public, that would be a specified violation under section 351(1)(c) and could lead to an order cancelling registration under section 351(2)(ii)(A), to be passed within six months from the end of the quarter in which the first notice was issued.
Need help with a notice or violation question?
If your organisation has received a notice on its registration or wants to review its position under sections 351 and 353, our team can help. Please contact us through the page for 12A, 80G and CSR registration.
Key takeaways
- Section 351(1) has seven specified violations, clauses (a) to (g).
- The Principal Commissioner or Commissioner may act on his own notice, an Assessing Officer's reference under section 270(13), or risk-based selection.
- A cancellation order needs a reasonable opportunity of being heard and applies to the tax year and all subsequent tax years.
- The order must be passed before six months from the end of the quarter in which the first notice is issued.
- Section 353 taxes regular income less permitted expenditure for failures under sections 347, 348, 349 and 346.
Read next
- Sections 344 to 346: commercial activities
- Section 352: tax on accreted income, first five cases
- Sections 347 to 350: books, audit, return and investments
- Section 332: registration of a non-profit organisation
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.