The Income-tax Act, 2025 consolidates and re-codifies four decades of accumulated amendments to the 1961 statute. For registered non-profit organisations, the substantive framework remains broadly continuous — but the chapter structure, definitions and procedural mechanics have all moved.
01Background
The Income-tax Act, 2025 received Presidential assent in August 2025 and is operative from the assessment year 2026-27. It replaces the 1961 Act in its entirety, while preserving the substantive policy direction of most provisions and tightening procedure where the older statute had grown unwieldy.
For registered non-profit organisations — charitable trusts, Section 8 companies, religious institutions and societies registered under the now-replaced provisions — the practical question is what changes in the working files. The answer, on first reading, is "less than one might expect, and more than is comfortable."
02The 1961 framework, in summary
Under the Income-tax Act, 1961, the taxation of charitable and religious organisations was anchored in three places:
- Sections 11 to 13 — the exemption framework: what may be exempt, on what conditions, with what application of income, and where the exemption breaks down.
- Section 12A / 12AB — the registration framework that conferred eligibility for the exemption.
- Section 80G — the donor-side framework allowing deductions for contributions made to registered organisations.
The architecture had been modified repeatedly between 2020 and 2023 — most consequentially the introduction of provisional and definitive five-year registrations, mandatory re-registration of all existing entities, and the linking of 80G eligibility to ongoing 12A status.
03The 2025 framework
The Income-tax Act, 2025 consolidates these scattered provisions into Chapter 17, headed "Special Provisions Relating to Registered Non-Profit Organisations". The chapter is organised around five themes:
- Definitions and scope of "registered non-profit organisation"
- Computation of income — receipts, application and accumulation
- Registration, renewal and cancellation
- Donor-side deductions
- Consequences of non-compliance — including the treatment of accreted income
Statutory references are placeholders
Section and chapter numbers in this note are illustrative. The firm's working file for each engagement carries the verified citations.
The substantive conditions — application of 85% of income, restrictions on related-party transactions, the limited window for accumulation — are preserved. What has shifted is the procedural mechanics: re-registration timelines, the format of Form 10B and 10BB, the alignment of the financial year for trust accounts, and the treatment of donations received in kind.
04Side by side
A summary view of where the two statutes diverge for the working file of a typical mid-sized registered charitable trust:
| Item | IT Act, 1961 | IT Act, 2025 |
|---|---|---|
| Governing chapter | Sections 11–13, 12A/12AB, 80G | Chapter 17, consolidated |
| Registration | Provisional (3 yrs) → Definitive (5 yrs) | Provisional (3 yrs) → Definitive (5 yrs) — retained |
| 80G eligibility | Linked to 12AB registration | Linked to active "registered NPO" status |
| Application threshold | 85% of income | 85% of income — retained |
| Audit form | Form 10B / 10BB | Form revised under Rule 17B (notification awaited) |
| Anonymous donations | Taxed at 30% u/s 115BBC above threshold | Taxed at 30% — retained, threshold revised |
| Accreted income on cessation | Taxed at MMR u/s 115TD | Taxed at MMR — chapter retained |
| Related-party transactions | Restricted u/s 13(1)(c) / 13(3) | Restricted — provisions consolidated |
The 2025 Act has not so much rewritten the law for charitable trusts as it has tidied the cupboard. The substantive policy is preserved; what changes is the labelling, the procedure and the documentation. Trustees who treat that as merely administrative will find themselves correcting filings later. — Anand Mehta, FCA · Practice Lead, Direct Taxation
05Implications for trustees
Three practical consequences for the trustee or finance head of a registered NPO:
First — registration certificates need to be re-read
Certificates issued under Section 12AB of the 1961 Act remain valid for the periods they cover, but the citation on the face of the certificate is now a defunct reference. The audit file for FY 2025-26 onwards should include a covering note recording the equivalent provision under the 2025 Act.
Second — the audit form is changing, and the timeline is short
Form 10B and 10BB are being revised to reflect the chapter restructure. The CBDT notification is awaited at the time of writing; once issued, the format change will need to be incorporated into the audit working papers before the September filing window.
Third — 80G renewals fall due on the new framework
Trusts whose 80G certificates fall due for renewal in FY 2026-27 will renew under the 2025 framework. The application form is being updated; the substantive eligibility conditions have not changed.
06Action points
- Pull the registration certificates currently held by the trust and add a covering note recording the 2025 Act equivalents.
- Confirm with the auditor that audit working papers will be updated for the revised Form 10B / 10BB format once notified.
- Identify any 12A or 80G renewals falling due between FY 2026-27 and FY 2028-29 and add them to the compliance calendar.
- Review related-party transactions during FY 2025-26 against the consolidated restrictions in the new chapter, and ensure the audit file captures the rationale for each.
- Where the trust receives anonymous donations, revisit the threshold treatment in the light of the revised provisions.
This note is the first in a short series on the 2025 Act as it affects registered non-profit organisations. Subsequent notes will look at the revised Form 10B requirements, the treatment of donations in kind, and the practical mechanics of 80G renewal under the new framework.