The Income-tax Act, 2025 introduces major changes impacting revenue-generating activities of NGOs and charitable institutions. Breach of commercial receipt thresholds can now lead to cancellation of tax registration, while the expanded definition of “commercial activity” applies equally to GPU and per se charities such as education and healthcare. These developments significantly increase compliance risks, making it essential for NGOs to reassess pricing models, surplus gener

In the case of NSEFI v. Income Tax Officer, the ITAT ruled that voluntary contributions made to the society for promoting solar energy were not membership fees or commercial receipts, thus exempt under sections 11 and 12. The Tribunal noted varied donation amounts, lack of service in return, and prior acceptance of similar receipts by revenue. Consequently, the exemption was upheld, reversing the AO’s decision and granting full relief to the assessee.

The ITAT ruled in Dudhsagar Research and Dement Association's case that compulsory levies from milk societies were not corpus donations but taxable revenue income. The Tribunal reaffirmed prior decisions, stating these contributions lacked donor discretion. Despite this, the Trust qualifies for a 15% statutory deduction on revenue receipts under sections 11 and 12, leading to partial allowance of appeals.

The Head of Finance plays a critical role in the financial function of NGOs, ensuring daily operations run smoothly and efficiently. While the CFO is the strategist and storyteller, the Head of Finance is the process champion, responsible for aligning legal compliance, accounts, and finance operations. They oversee timely and accurate financial operations, compliance with complex regulations, and the structure, accuracy, and closure discipline of accounts. Additionally, they

ITAT Chennai denied registration to Agastya Gurukulam Public Charitable Trust under Section 12AB, citing lack of formal education and recognized curriculum. The Tribunal upheld the Commissioner’s finding that the trust's activities did not meet the criteria for advancing education or relieving the poor as defined in the Income-tax Act.

The ITAT ruled that payments made by the assessee, a registered educational society, to the Institute of Chartered Shipbrokers in London for books and fees were valid applications of income in India, as all benefits were utilized exclusively for Indian students.

Effective finance operations in the non-profit sector ensure smooth program execution, timely decisions, and donor trust. Key roles include CFO, Head of Finance, and operational pillars. Systematized finance operations improve accountability, reporting, and efficiency, helping NGOs better track funds, comply with budgets, and strengthen decision-making through collaboration and dedicated staff investment.

Aria CFO Services has worked with over 400 NGOs over the past 15 years, focusing on financial management for non-profits. They emphasize the importance of accountability, trust, and compliance in financial statements. They emphasize the need for clear accounting systems and capacity building to generate reports that inspire confidence among donors and stakeholders.

The ITAT Ahmedabad rejected a charitable trust's application for continuation of approval under section 80G(5)(iii) due to its religious expenditure exceeding the 5% limit. The trust incurred 38.53% of its income on religious activities, failing to provide evidence of charitable expenditure. The ITAT upheld the Commissioner's decision and dismissed the trust's appeal.

The ITAT Mumbai case involved Hemani Industries Ltd. claiming deduction under Section 80G on donations from CSR funds. The Tribunal ruled that CSR expenses qualify for deduction under section 80G, and the Principal Commissioner's reasoning was misplaced.

Dive into how a strong Legal & Compliance Function can help properly your NGOs growth. Learn about what the actual scope of the function should be, who does what, practical insights, common failures and more.

The Income Tax Appellate Tribunal (ITAT) clarified that there is no blanket ban on claiming Corporate Social Responsibility (CSR) deductions under Section 80G of the Income-tax Act. In a case involving a government undertaking donating to a CSR fund, the ITAT ruled that the donation could not be deducted as a business expenditure but could be considered for Section 80G deduction. The ITAT also denied a revision in a claim under Section 14A due to lack of proper audit backing.

The Bombay High Court has lifted the Interim Order on Maharashtra Public Trusts Contribution

In the evolving landscape of CSR, impact measurement has become the buzzword. But behind every impactful project lies something less glamorous yet equally essential — due diligence. While many corporates do conduct due diligence, it's often seen as a checkbox activity. A report is generated, a conversation is had, and then it's business as usual. But is that enough?

For NGOs in India, staying compliant with tax regulations is key to maintaining credibility and funding opportunities. Two important registrations under the Income Tax Act-Section 12A and Section 80G-play a vital role in this.

The ITAT ruled on a case involving Gujarat State Financial Services Ltd. regarding a ₹3.57 crore CSR donation to the Mukhyamantri Shree Swachchta Nidhi Gujarat. Initially, the assessee claimed a deduction under Section 80G, which the authorities disallowed, stating CSR donations were not eligible. However, the Tribunal found the donation qualifies under Section 80G and allowed the deduction.

The ITAT decided that a charitable society registered under Section 12A can still get tax exemption, even if it has a surplus from operations. The society, which runs eye hospitals, reported no income for 2017-18. The AO saw a surplus of 31.29% and classified it as taxable. However, the Tribunal concluded that the main activity was eye care, qualifying it for exemption, since it met the 85% application requirement.

The assessee, registered under Section 12A, applied for 80G approval under Section 80G of the Income-tax Act. The trust received school bus, tuition, and exam fees, but the Commissioner rejected the application, stating the receipts were not valid donations.

The High Court ruled that a statutory authority, recognized as a charitable institution under the Income-tax Act, was not covered by Section 2(15)Proviso for statutory development work done without profit motive. The assessee filed a nil income return for 2014-15, but the Assessing Officer added ₹21.62 crore, stating the first proviso was applicable.

Not-for-Profit Organizations (NPOs) are at the forefront of driving meaningful change. In their mission to build a better world, principles like accountability, transparency, and impact are not just expectations, but guiding principles. Earning the trust of donors, boards, regulators, and communities is both a privilege and a responsibility. Amidst this noble pursuit, Internal Audit stands out as a transformative tool. It not only strengthens systems and safeguards integrity