Section 352 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.
This second article on section 352 of the Income-tax Act, 2025 covers serial numbers 6 to 9 of the Table in sub-section (4) (failure to apply for registration, conversion, merger and dissolution) and sub-sections (5) to (8), which deal with final payment, interest and recovery. The charge, the formula and serial numbers 1 to 5 are in the first article on section 352. The text is read as per the Income-tax Act, 2025 (30 of 2025) as amended by the Finance Act, 2026.
Serial numbers 6 to 9 add four cases in which tax on accreted income is payable: failure to apply for registration in time, conversion into a form not eligible for registration, merger, and dissolution without transferring all assets to another registered non-profit organisation within twelve months. The tax is a final payment; late payment attracts simple interest of 1% of (T x P), where P is the number of months; and a transferee of assets can be an assessee in default in a dissolution case, up to the value of the asset received. Serial number 8 was substituted by the Finance Act, 2026, and section 354A now disapplies section 352 in certain mergers.
Where this fits
Section 352 sits in part 5, "Violations", of Part B of Chapter XVII; see the Chapter XVII guide. It follows sections 351 and 353. Later amendments, rules and notifications should be checked.
If your organisation is planning a merger, conversion or closure, our page on 12A, 80G and CSR registration explains how we can assist.
Serial numbers 6 to 9 of the Table in section 352(4)
The Table has these columns: A (serial number), B (case, divided into (i) and (ii)), C (specified date) and D (due date for payment of tax on accreted income). As before, payment is due within fourteen days from the due date in column D. The Table in the copy consulted is cut by page breaks inside serial numbers 6 and 8, with the header repeated; the rows below are rebuilt from the lines on either side.
| Serial number | Column B: case | Column C: specified date | Column D: due date |
|---|---|---|---|
| 6 | (i) The specified person fails to make an application as per the provisions of: (a) sub-clause (i) or (ii) or (iii) of the first proviso to section 10(23C) of the Income-tax Act, 1961 (43 of 1961); or (b) sub-clause (i) or (ii) or (iii) of section 12A(1)(ac) of the Income-tax Act, 1961 (43 of 1961); or (c) as specified in section 332(3) (Table: serial number 3, 4, 5 or 7). (ii) The period specified in the respective clause or sub-clauses or Table, as the case may be, expires in the tax year in which the said application is to be made | The last date for making an application for registration | The end of such tax year |
| 7 | Where a specified person converts itself into a form which is not eligible for grant of registration during any tax year | The date of such conversion | The end of such tax year |
| 8 | The specified person has merged with any other: (a) entity other than a registered non-profit organisation; or (b) registered non-profit organisation having objects same or similar to it but the said merger does not fulfil such conditions, as may be prescribed; or (c) registered non-profit organisation that does not have same or similar objects | The date of merger | The date of merger |
| 9 | The specified person has failed to transfer upon dissolution, all its assets to any other registered non-profit organisation within twelve months from the end of the month in which the dissolution takes place | The date of dissolution | The date on which such period of twelve months expires |
The references to the Income-tax Act, 1961 in serial number 6 are quoted as printed. They name the provisions under which the application was to be made; check that Act if you need their content.
Serial number 8 was substituted by the Finance Act, 2026 with effect from 1 April 2026 (footnote 68 of the copy consulted). The Table in the text now prints serial number 8 within square brackets as the substituted entry. Section 352 is also the section affected by new section 354A (see below).
For serial number 8 both date columns show the date of merger.
Section 352(5): final payment
The payment of tax on accreted income under this section is deemed to be the final payment of tax on the income. No further credit is to be claimed by, and no deduction allowed to, the specified person or any other person in respect of the tax so paid under any other provision of the Act.
Section 352(6): interest for late payment
If the specified person, or its principal officer or trustee, fails to pay the whole or any part of the tax within the time allowed under sub-section (4), such person is liable to pay simple interest computed by the formula:
I = 1% of (T x P)
where I is interest, T is the tax on accreted income, and P is the number of months beginning on the date immediately after the last date on which the tax was payable and ending with the date on which the tax is actually paid, including part thereof (that is, a part of a month counts as a month).
Section 352(7) and (8): recovery
Under sub-section (7), all provisions of the Act apply for the collection and recovery of the tax payable by the specified person, principal officer or trustee, and the following are deemed to be assessee in default:
- (a) the specified person and the principal officer or the trustee of the specified person; and
- (b) the person to whom any asset forming part of the computation of accreted income under sub-section (2) has been transferred, where the tax is payable in the case in serial number 9 of the Table.
Under sub-section (8), subject to sub-section (7), the liability of the transferee in clause (b) is limited to the extent to which the asset received by him is capable of meeting the liability. For the same expression in the context of tax deducted at source, see our post on section 398.
Section 354A and mergers
Section 354A (inserted by the Finance Act, 2026 with effect from 1 April 2026) says that where a registered non-profit organisation merges with another registered non-profit organisation, the provisions of section 352 shall not apply if the other organisation has same or similar objects and the merger fulfils such conditions as may be prescribed. See our post on sections 354 and 354A. The detail of conditions is left to the Income-tax Rules, 2026.
Worked example
Vidya Mitra Trust (an invented name) is a specified person. It is dissolved on 15 March. It has to transfer all its assets to another registered non-profit organisation within twelve months from the end of the month of dissolution, that is, by 31 March of the next year (serial number 9). It transfers only part of them by then. The case in serial number 9 applies; column D is the date on which the twelve months expire, 31 March, and the tax is payable within fourteen days from that date, that is by 14 April.
Suppose the tax on accreted income is Rs. 4,00,000 and it is actually paid on 20 June, which is more than two months after 14 April but not three full months. Counting P as the months beginning on 15 April and ending on 20 June, including part of a month, gives 3 (15 April to 14 May, 15 May to 14 June, and part of the next period). Interest I = 1% of (T x P) = 1% of (Rs. 4,00,000 x 3) = 1% of Rs. 12,00,000 = Rs. 12,000.
If an asset forming part of the computation had been transferred to another person, that person would be an assessee in default under sub-section (7)(b), but only to the extent the asset he received can meet the liability (sub-section (8)).
Need help with a merger, conversion or closure?
If your trust or society is considering a merger, conversion into another form, or winding up, we can walk through the Table in section 352(4) with you. Please contact us through the page for 12A, 80G and CSR registration.
Key takeaways
- Serial numbers 6 to 9 cover failure to apply for registration, conversion, merger and dissolution.
- In a dissolution case the assets must be transferred to another registered non-profit organisation within twelve months from the end of the month of dissolution.
- Tax on accreted income is a final payment, with no credit or deduction elsewhere.
- Late payment attracts simple interest, I = 1% of (T x P).
- A transferee of assets in a dissolution case is an assessee in default, but only up to the asset received.
- Section 354A disapplies section 352 in a qualifying merger of registered non-profit organisations.
Read next
- Section 352: the charge, computation and first five cases
- Sections 354 and 354A: approval for donation deduction and merger
- Section 355: definitions for registered non-profit organisations
- Chapter XVII guide
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.