[Taxmann's Analysis] Union Budget 2026 – Trusts and NGOs | Key Taxation and Compliance Changes
The taxation framework for trusts and NGOs is undergoing a structural shift, with the Income-tax Act, 2025, introducing a dedicated, organised approach to the taxation of NGOs as a separate category. In this backdrop, the Union Budget 2026 becomes important in setting the transition framework, compliance expectations, and operational clarity for NGOs. This article reviews the Budget provisions relevant to trusts and NGOs.
Key Changes:
1. A new section 354A has been inserted into ITA 2025 to specify that the merger of a registered NPO with another registered NPO having the same or similar objects will not attract tax on accreted income, following the provisions of section 12AC of the ITA 1961.
2. Commercial activity by an NPO engaged in the advancement of any other object of general public utility has been removed from the category of “specified violation” under section 351 of ITA 2025, thus preventing the cancellation of registration on this ground.
3. Section 332(1)(f) of ITA 2025 has been amended to limit the reference solely to Schedule VII [Sl. Nos. 17 to 19], removing earlier listed funds (Sl. Nos. 10 to 16) from the registration requirement for claiming exemption.
4. Section 349 of ITA 2025 has been amended to permit registered NPOs to file a belated return and still claim exemption, by including a reference to section 263(4), in line with the ITA 1961.
About Us Advisory
Founded 1972
Evolution From a small family business to a leading technology-oriented Publishing/Product company
Expansion
Launch of Taxmann Advisory for personalized consulting solutions
Our Vision
Aim
Achieve perfection, skill, and accuracy in all endeavour
Growth
Evolution into a company with strong independent divisions: Research & Editorial, Production, Sales & Marketing, and Technology
Future
Continuously providing practical solutions through Taxmann Advisory
Our Strength
Core
Editorial and Research Division
Team
Over 200 motivated legal professionals (Lawyers, Chartered Accountants, Company Secretaries)
Expertise
Monitoring and processing developments in judicial, administrative, and legislative fields with unparalleled skill and accuracy
Impact
Helping businesses navigate complex tax and regulatory requirements with ease
Taxmann Today
Legacy Innovation Commitment
Over 60 years of domain knowledge and trust
Technology-driven solutions for modern challenges
Ensuring perfection, skill, and accuracy in every solution provided
Our Core Domain Areas
Income Tax
Corporate Tax Advisory
Trusts & NGO Consultancy
TDS Advisory
Global Mobility Services
Personal Taxation
Training
Due Diligence
Foreign Exchange Management Laws
Due Dilligence
Advisory Services
Assistance in compounding of offences
Transactions Services
Investment outside India
Your Partners for Frictionless Advice
Goods
Transaction Advisory
Business Restructuring
Classification & Rate Advisory
Due Diligence
Training
Trade Facilitation Measures
Corporate
Corporate Structuring
VAT Advisory
Residential Status
A Glimpse of the People Behind Taxmann
Naveen Wadhwa Research and Advisory [Corporate and Personal Tax]
Chartered Accountant (All India 24th Rank)
14+ years of experience in Income tax and International Tax Expertise across real estate, technology, publication, education, hospitality, and manufacturing sectors
Contributor to renowned media outlets on tax issues
Vinod K. Singhania
Expert on Panel | Research and Advisory (Direct Tax)
Over 35 years of experience in tax laws
PhD in Corporate Economics and Legislation
Author and resource person in 800+ seminars
V.S. Datey
Expert on Panel | Research and Advisory [Indirect Tax]
Holds 30+ years of experience
Engaged in consulting and training professionals on Indirect Taxation
A regular speaker at various industry forums, associations and industry workshops
Author of various books on Indirect Taxation used by professionals and Department officials
S.S. Gupta
Expert on Panel | Research and Advisory [Indirect Tax]
Chartered Accountant and Cost & Works Accountant
34+ Years of Experience in Indirect Taxation
Bestowed with numerous prestigious scholarships and prizes
Author of the book GST – How to Meet Your Obligations', which is widely referred to by Trade and Industry
Manoj Fogla
Expert on Panel | Research and Advisory [Charitable Trusts and NGOs]
Over three decades of practising experience on tax, legal and regulatory aspects of NPOs and Charitable Institutions
Law practitioner, a fellow member of the Institute of Chartered Accountants of India and also holds a Master's degree in Philosophy
PhD from Utkal University, Doctoral Research on Social Accountability Standards for NPOs
Author of several best-selling books for professionals, including the recent one titled 'Trust and NGO's Ready Reckoner' by Taxmann
Drafted publications for The Institute of Chartered Accountants of India, New Delhi, such as FAQs on GST for NPOs & FAQs on FCRA for NPOs.
Has been a faculty and resource person at various national and international forums
