TaxSaral

Section 349 · was Sections 12A & 139 in the 1961 Act

Filing Income Tax Return for Charitable Organisations

Every registered NPO must file an income tax return even if its total tax liability is zero. The return must be filed by 31 October of the assessment year, along with Form No. 112 (earlier Form 10B) (audit report). A late return leads to loss of accumulation benefits and penalties.

Who it applies to: All registered NPOs — filing is mandatory regardless of whether there is any tax payable.

Key points

  • Form ITR-7 is the applicable return form for trusts, NPOs, and political parties
  • Due date: 31 October of the assessment year (for trusts with mandatory audit)
  • Form No. 109 (earlier Form 10) (for accumulation beyond 15%) must be filed BEFORE the return due date
  • Late filing leads to: loss of Form No. 109 accumulation benefit (the accumulated amount becomes taxable)
  • Penalty for late filing: up to ₹5,000 under Section 428 (equivalent to old 234F)
  • Even zero-tax returns are mandatory — failure to file attracts notices and potential penalties

Worked example

Impact of Late Return on Accumulation Benefit

A trust with ₹1 crore income wants to accumulate ₹13 lakh via Form No. 109. The CA audit is done on time. However, the trust misses the 31 October due date and files on 15 December.

Income:                                ₹1,00,00,000
Applied to objects (87%):              ₹  87,00,000 → Exempt ✓
Wanted to accumulate (Form No. 109):   ₹  13,00,000

Return filed: 15 December — LATE
Form 10 filed: 15 December — LATE

Consequence of late Form No. 109:
  ₹13L accumulation DISALLOWED
  Treated as unapplied income
  Tax at MMR (30%):                    ₹ 3,90,000
  Late fee (Section 428):              ₹     5,000
  Interest (Section 423):              ₹    23,400
  Total additional cost:               ₹ 4,18,400

Result: Missing the 31 October deadline cost the trust ₹4.18 lakh. Set a calendar reminder for early October every year — file Form No. 109 at least two weeks before the return to avoid last-minute issues.

Related sections

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Section references are based on the Income Tax Act 2025 (Tax Year 2026-27). Examples are illustrative; verify with a Chartered Accountant before filing.