Trust and NGO Income 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.
Under the Income-tax Act, 2025 a trust, society or section 8 company is taxed as a registered non-profit organisation. Registration is under section 332, the code runs from section 332 to section 355, donors' approval is under section 354, and donations are reported in Form No. 113.
An earlier version of this guide described the new Act using the 1961 Act's numbers — sections 11, 12, 12A, 12AB, 13, 10(23C) and 80G, and Forms 10B, 10BB, 10BD and 10BE. Those provisions were repealed with the 1961 Act. The Income-tax Act, 2025 replaces them with a single code, set out below.
One code instead of ten scattered sections
The Income-tax Act, 1961 spread the taxation of charities across sections 11, 12, 12A, 12AB, 13, 80G, 115BBC, 115BBI, 115TD and 115TF. The Income-tax Act, 2025 gathers it into Part B of Chapter XVII — sections 332 to 355 — and gives the entity a name: a registered non-profit organisation.
The Income-tax Act, 2025 takes effect from 1 April 2026 and applies from tax year 2026-27. The Income-tax Act, 1961 continues to govern every year up to 31 March 2026, including assessments, appeals and penalties for those years, because of the repeal and savings provision in section 536.
Old Act and new Act, side by side
| Income-tax Act, 1961 | What it did | Income-tax Act, 2025 |
|---|---|---|
| 12A / 12AB | Application and grant of registration | 332 |
| 2(15) | Definition of charitable purpose | 2(23) |
| 11 and 12 | Exemption of trust income | 334 onwards |
| 13 | Denial of exemption on violations | 351 and 353 |
| 11(5) | Permitted modes of investment | 350 with Schedule XVI |
| 115TD | Tax on accreted income | 352 |
| 80G(5) | Approval so that donors get a deduction | 354 |
| 80G | Donor's deduction | 133 |
Registration — section 332
An application may be made by a public trust, a society, a section 8 company, a University or recognised educational institution, an institution financed by the Government or a local authority, certain persons named in Schedules III and VII, and any other person the Board notifies. Two conditions must both be met: the applicant is constituted in India for a charitable purpose under section 2(23) or a public religious purpose, and its properties are held for the benefit of the general public under an irrevocable trust.
Rule 181 of the Income-tax Rules, 2026 prescribes the form. Form No. 104 is for provisional registration where activities have not commenced, decided by the Commissioner of Income-tax (CPC) in Form No. 106. Form No. 105 is for every other case, decided by the jurisdictional Principal Commissioner or Commissioner in Form No. 107. Both orders carry a 16-digit Unique Registration Number. A Form No. 104 filed after activities have commenced is treated as non-est.
Registration is granted for a fixed period and has to be renewed. The periods and the application windows are in the table to section 332(3) — read it for your case.
How the income is taxed — sections 333 to 344
Section 334 charges tax on the income of a registered non-profit organisation, and sections 335 to 344 deal with regular income, specified income, corpus donations and the application of income. The pattern is the familiar one: income applied to the objects is not taxed, and the audit report in Form No. 112 tracks a 15% deemed accumulation alongside it. Two reliefs exist for income that is not spent in the year:
- Deemed application — income not received, or received too late to spend. The option under section 341(7) is exercised in Form No. 108 (the old Form 9A).
- Accumulation — income set apart for a stated purpose. The statement under section 342(1) is furnished in Form No. 109 (the old Form 10).
Both are due on or before the due date for the return under section 263(1) — the statutory due date, not the date the return is actually filed.
Anonymous donations — section 337
Anonymous donations up to ₹1,00,000 or 5% of donations, whichever is higher, are not taxed under section 337. Anonymous donations beyond that are taxable at 30%.
Restrictions — sections 345, 346 and 350 to 353
Sections 345 and 346 restrict commercial activity. Section 350 read with Schedule XVI sets the permitted modes of investment. Sections 351 to 353 deal with violations: benefits to related persons, lending without adequate security or interest, excessive payments for services, and transactions at an inadequate price are all tested there, and section 352 taxes accreted income on specified events.
Books, audit and return — sections 347 to 349
- Books of account under section 347, in the detail rule 187 prescribes, kept for six years from the end of the tax year.
- Audit report under section 348 in a single Form No. 112 (replacing Forms 10B and 10BB), furnished one month before the section 263(1) due date. It is not attached to the return.
- Return of income under section 349, in ITR-7, filed after the audit report has gone in.
Donations — section 354, Form No. 113 and Form No. 114
For donors to get the deduction under section 133, the organisation needs approval under section 354, applied for in the same Form No. 104 or 105. An approved organisation must then, for every financial year:
- file a statement of donations in Form No. 113 by 31 May (the old Form 10BD); and
- issue each donor a certificate in Form No. 114 by 31 May (the old Form 10BE).
The donor's deduction for such a donation is 50% of the donation, subject to 10% of adjusted gross total income, under section 133(2).
The compliance calendar
| Filing | Form | Due |
|---|---|---|
| Donation statement and donor certificates | 113 and 114 | 31 May following the financial year |
| Audit report | 112 | One month before the section 263(1) due date |
| Deemed application option / accumulation statement | 108 / 109 | Section 263(1) due date |
| Return of income | ITR-7 | Section 263(1) due date |
Foreign contributions and CSR
Foreign contributions are regulated separately by the Foreign Contribution (Regulation) Act, 2010 and need FCRA registration or prior permission from the Ministry of Home Affairs. To receive CSR funds from companies, the organisation files Form CSR-1 with the Ministry of Corporate Affairs. Neither is part of the income-tax registration.
How TaxClue helps
TaxClue handles NPO registration (12A), 80G approval and CSR-1, the Form No. 113 and 114 cycle, the audit report and the return for charitable trusts, societies and section 8 companies.
This is an explanatory guide, not tax advice, and it does not reproduce the sections in full. Read the bare text before you rely on it, and check for later amendments, the Income-tax Rules, 2026 and CBDT circulars and notifications.