The Finance Bill, 2026 proposes an amendment to section 349 of the Income-tax Act, 2025 to expressly allow registered non-profit organisations (NPOs) to file belated returns of income. Under the existing framework, section 349 permits NPOs to furnish returns only within the time limit prescribed under section 263(1)(c), with no explicit reference to belated return provisions. This created a departure from the position under the Income-tax Act, 1961, where NPOs were permitted to file belated returns within the extended statutory timeline. To restore consistency and provide compliance flexibility, Clause 67 of the Finance Bill, 2026 inserts a reference to section 263(4) in section 349, thereby enabling registered NPOs to furnish returns even after the original due date. The amendment ensures that delay in filing does not automatically deprive NPOs of the opportunity to comply with return filing requirements. This change will take effect from 1 April 2026 and will apply to the tax year 2026–27 and subsequent years.
Amendment in section 349 of the Income-tax Act, 2025 to provide for filing of belated return by NPO
Existing section 349 inter alia provides furnishing of return by a registered non-profit organisation within the time limit allowed under section 263(1)(c).
In order to enable furnishing of belated return by registered non-profit organisation as was there in the Income-tax Act, 1961, it is proposed to amend the provisions of section 349 to provide reference of section 263(4) in the said section.
These amendments will take effect from the 1st day of April, 2026 and shall accordingly, apply to the tax year 2026-27 and subsequent tax years.
[Clause 67]
Extract of Relevant Clauses of Finance Bill, 2026
Clause 67 of the Bill seeks to amend section 349 of the Income-tax Act, 2025 relating to return of income under Chapter XVII.
It is proposed to amend the said section so as to provide the reference of section 263(4) therein.
This amendment will take effect from 1st April, 2026.
Extract of Relevant Amendment Proposed by Finance Bill, 2026
67. Amendment of section 349.
In section 349 of the Income-tax Act, after the word, figures, brackets and letter “section 263(1)(c)”, the word, figures and brackets “or 263(4)” shall be inserted.
