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A Registered Non-Profit Organization (RNPO) is a new, unified statutory classification introduced in the proposed Income Tax Act, 2025, which is scheduled to come into force from 1 April 2026. The Registered Non-Profit Organisation concept consolidates all earlier tax regimes applicable to charitable and religious institutions into a single, uniform framework. This reform is not about creating a new type of entity. it is about simplifying, standardizing, and modernizing the tax architecture governing nonprofit organizations.
Under the 1961 Act, the provisions governing nonprofits were scattered across many sections, such as 2(15), 10(23C), 11, 12, 12A, 12AA, 12AB, 13, 80G, etc. This fragmentation led to overlapping regimes, confusion, and litigation. The Income-tax Act, 2025, consolidates all these provisions into Part B of Chapter XVII (Sections 332–355). This makes the Registered Non-Profit Organization regime a single code for all non-profit taxation.
The term “registered non-profit organization” replaces multiple earlier expressions such as “trust,” “society,” “charitable institution,” “religious institution,” “NGO,” etc. The goal is terminological clarity: one category, one compliance system, and one exemption framework.
Entities already registered under Sections 12A / 12AA / 12AB or Section 10(23C) of the 1961 Act will automatically transition to RNPO status, provided their current registration is valid and not cancelled. No fresh registration is needed; tax benefits continue seamlessly. Key Features of the RNPO Framework
All earlier provisions relating to charitable and religious institutions are now consolidated into a single chapter to ensure coherence and reduce ambiguity. The word count for NPO-related provisions has been reduced from ~12,800 to ~7,600, making it clearer and more accessible.
Registered Non-Profit Organisation cannot carry on commercial activities except those incidental to their charitable purpose. Non-incidental commercial activities may jeopardise Registered Non-Profit Organisation status. (This principle is consistent with the long-standing charitable purpose test carried over into the 2025 Act.)
The 2025 Act codifies long‑standing judicial interpretations into statute.
Regulatory Intent Behind Registered Non-Profit Organization: The reform aims at simplification, uniformity, litigation reduction, and greater clarity for compliance officers, tax administrators, and non-profits. As experts note, the new Registered Non-Profit Organization framework eliminates redundant provisions, reduces cross‑references, and enhances ease of compliance.
Donor Deductions Simplified : The old Section 80G regime is consolidated under Section 354 of the 2025 Act. Registered nonprofit organizations remain eligible for donor deductions subject to compliance.
What RNPO Does Not Change : The Registered Non-Profit Organization is not a new tax privilege. The fundamental principles remain intact: purpose test, application of income, compliance discipline & restriction on private benefit. The reform changes how nonprofits are classified and regulated, not the underlying philosophy of charitable taxation.
Commercial Activities
Application & Accumulation of Income
This codifies earlier judicial interpretations into statute.
Donor Deductions
When Does the Registered Non-Profit Organisation Regime Begin? : The Income Tax Act, 2025—including RNPO provisions—is proposed to take effect from 1 April 2026. Registered Non-Profit Organization is the new unified tax identity for all charitable and religious organisations under the Income Tax Act, 2025, replacing fragmented regimes with a single, simplified statutory framework.
| Particulars | Regime under Income-tax Act, 1961 (Section 12AB / 10(23C)) | Regime under Income-tax Act, 2025 (RNPO Framework) |
|---|---|---|
| Legal Classification | Trust / Society / Institution / NGO / Charitable or Religious Entity | Registered Non-Profit Organisation (RNPO) single statutory category |
| Governing Provisions | Scattered across multiple sections: 2(15), 10(23C), 11, 12, 12A, 12AA, 12AB, 13, 80G | Consolidated in Part B of Chapter XVII (Sections 332–355) |
| Registration Authority | Registration under 12AB or approval under 10(23C) | Unified registration as RNPO |
| Terminology | Multiple overlapping terms (trust, institution, fund, NGO) | Single uniform term RNPO |
| Transition / Migration | Fresh registration often required on conversion or amendment | Automatic migration for existing registered entities (if registration valid) |
| Validity of Registration | Time-bound registration (typically 5 years) | Expected structured periodic validity & renewal under RNPO rules |
| Charitable Purpose Test | Defined under Section 2(15) | Retained but codified within RNPO framework |
| Commercial Activity | Allowed if incidental to objects (Section 11(4A)); litigation-prone | Explicitly restricted; only incidental permitted |
| Separate Books for Business Activity | Mandatory if business incidental | Continues to be mandatory |
| Application of Income Rule | Minimum 85% application required | 85% rule retained |
| Accumulation of Income | 15% permitted; additional accumulation via Form 10 | 15% treated as “deemed accumulated income” with prescribed investment norms |
| Investment Restrictions | Section 11(5) specified modes | Codified and aligned under RNPO provisions |
| Violation Consequences | Exemption denial under Section 13 / cancellation under 12AB | RNPO cancellation/suspension/denial of exemption under unified regime |
| Cancellation Grounds | Specified under Section 12AB(4) | Expanded & codified cancellation triggers |
| Donor Deduction Provision | Section 80G | Section 354 (RNPO donor deduction regime) |
| Reporting & Compliance | Form 10B/10BB audit, ITR-7 filing | Expected unified reporting architecture |
| Assessment Framework | Multiple parallel regimes (11–13 vs. 10 (23°C)) | Single assessment & exemption framework |
| Litigation Exposure | High due to fragmented provisions | Designed to reduce disputes via clarity |
| Regulatory Objective | Exemption-driven | Governance-driven compliance framework |
12AB regulated entities. RNPO regulates the ecosystem.
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