Non-Profit Organizations Face New Commercial Activity Rules Under Clause 346 With 20% Revenue Cap and Strict Accounting

The Income Tax Bill, 2025 introduces enhanced regulatory framework for commercial activities by non-profit organizations through Clause 346, building upon Section 2(15) of Income-tax Act, 1961. The provision maintains the 20% revenue threshold for commercial activities while introducing stricter compliance requirements. Key modifications include mandatory separate accounting for commercial ventures, explicit definition of activities directly related to charitable objectives, and enhanced monitoring mechanisms. The framework applies specifically to registered non-profits, compared to the broader application under the 1961 Act. The provision aims to balance legitimate revenue generation with charitable purposes while preventing misuse through..... .....

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