The Income Tax Bill, 2025 introduces enhanced regulatory ...

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

February 25, 2025

Notes Bill

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 commercial operations. This structured approach provides clearer operational guidelines for organizations and regulators, though implementation challenges remain regarding activity classification and compliance monitoring.

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The Income Tax Bill, 2025 introduces enhanced regulatory ...

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

February 25, 2025

Notes Bill

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