The new Income Tax Bill, 2025 has streamlined and simplified provisions related to the taxability of non-profit organisation (NPO), which is expected to help the NPOs to comply with tax laws in an easier and seamless manner, say experts.
I-T Bill tabled; “substantial changes,” says Finance Minister
According to FAQs issued by the Central Board of Direct Taxes (CBDT), the provisions linked to NPOs were present at different places in the I-T Act 1961, in section 11, section 12, section 12A, section 12AA, section 12AB, section 13, section 115BBC, etc.
These have been simplified and consolidated into one chapter. All the provisions related to registered NPOs have now been arranged in Part B of Chapter XVII, said the FAQs.
Experts say the new bill consolidates all provisions relating to tax exempt charities, removes superfluous provisions such as reinvestment of capital gains in a capital asset, tabulates the registration process to enhance readability, and neatly places commercial activities, compliances and violations under separate heads.
Gouri Puri, Partner, Shardul Amarchand Mangaldas & Co said: “This should be beneficial since many charities that are small scale cannot afford good tax counsel. Saddling them with a complex exemption regime impacted their operations significantly.”
ALSO READRules on construction & service contracts now part of main I-T law
The 2025 Bill, to avoid confusion, uses single terms – such as ‘registered non-profit organisation’ instead of multiple terms like trust / institution etc. Further, the proposed law seeks to provide clarity with respect to key concepts like ‘corpus donation’ also by defining them in the law itself.
Raghav Kumar Bajaj, Counsel, Khaitan & Co said: “In the past few years, the law relating to charitable entities’ exemption has undergone substantial changes. From taxpayers’ perspective, this led to a challenge in keeping a track of annual changes in this space.”
» Read More
