From Uncertainty to Clarity | From Compliance Burden to Confidence
“A Trust-Based Tax Architecture for the Non-Profit Sector”
Union Budget 2026 marks a paradigm shift in the taxation of Trusts & NGOs by laying the foundation of a dedicated, predictable, and litigation-light regime under the Income-tax Act, 2025 — balancing accountability with autonomy.
🔹 1. Structural Separation
Dedicated NGO Tax Framework
- NGOs recognised as a distinct tax category
- Clear transition roadmap from ITA 1961 → ITA 2025
- Reduced interpretational ambiguity
🔹 2. Tax Neutrality
Tax-Free NGO Mergers
- No tax on accreted income for mergers with similar-object NPOs
- Encourages consolidation & capacity building
🔹 3. Operational Freedom
Relief on Commercial Activities
- Genuine commercial receipts no longer trigger cancellation
- Protects NGOs working in public utility domains
🔹 4. Compliance Rationalisation
Registration-Linked Exemptions Simplified
- Fewer registrations
- Focused oversight only where required
- Reduced procedural friction
🔹 5. Equity & Fairness
Belated Return with Exemption
- Exemption preserved despite delayed filing
- Aligns NGO regime with general taxpayer fairness
Overall Impact
“Less Fear. More Trust. Smarter Compliance.”
- ✅ Lower litigation risk
- ✅ Greater operational flexibility
- ✅ Predictable tax outcomes
- ✅ Easier compliance for genuine charities
Business So Simple 