The Income Tax Act, 2025 (effective 1 April 2026) restructures the taxation of charitable and religious organisations while largely retaining the substantive framework of the 1961 Act. The concept of “trusts” is replaced by “registered non-profit organisations” (NPOs), with detailed eligibility and registration requirements under section 332. Provisions earlier treated as exemptions are now computation provisions, classifying income into regular, specified, and residual categories, with differential tax treatment. Anonymous donations, impermissible investments, and violations in commercial activity attract strict tax consequences, including 30% levy and possible cancellation of registration. Key exemptions, such as corpus donations and reinvested capital gains, remain, while accumulations are permitted for up to five years. Compliance obligations relating to books, audit, returns, and investments are tightened, with harsher penalties for violations. The exit tax on accreted income and donation approval rules under section 133 also continue. Despite restructuring, complexity persists, raising risks of litigation
The Income Tax Act 2025 (“new Act”), which comes into force from 1st April 2026, has by and large retained the substance of the manner of taxation of charitable and religious organisations as existed in the Income Tax Act, 1961 (“existing A
