Draft Rule 187 of the Draft Income-tax Rules, 2026 prescribes an extensive compliance framework for books of account and documentation to be maintained by registered non-profit organisations (NPOs) under section 347. It mandates maintenance of core accounting records such as cashbook, ledger, journal, bills, receipts, and other documents necessary to present a true and fair view of affairs. Separate books must be maintained for business undertakings under section 344 and other business activities. The rule requires detailed records of projects, income streams (including charitable income, voluntary contributions, commercial income, specified and residual income), application of income in India and abroad, accumulation under section 342, and investments in prescribed and non-prescribed modes under section 350. It also mandates granular documentation for corpus donations, temple/ religious renovation corpus, loans and borrowings, movable and immovable properties, and transactions with related persons as defined in section 355(h), including evidence that such dealings are not for their benefit. Records may be kept in physical or electronic form and generally must be retained at the registered office, unless shifted by resolution with intimation to the Assessing Officer. Books must be preserved for six years, or longer if reassessment proceedings are pending. The rule significantly strengthens transparency, traceability, and audit readiness of NPO finances.
Extract of Rule No. 187 of Draft Income-tax Rules, 2026
Rule 187
Books of account and other documents to be kept and maintained by a registered nonprofit organisation.
(1) Every registered non-profit organisation which is required to keep and maintain books of account and other documents under section 347 shall keep and maintain the following, namely: —
(a) books of account, including the following, namely: —
(i) cashbook;
(ii) ledger;
(iii) journal;
(iv) copies of bills, whether machine numbered or otherwise serially numbered, wherever such bills are issued by the assessee, and copies or counter foils of machine numbered or otherwise serially numbered receipts issued by the assessee;
(v) original bills wherever issued to the person and receipts in respect of payments made by the person;
(vi) any other book that may be required to be maintained in order to give a true and fair view of the state of the affairs of the person and explain the transactions effected;
(b) books of account, as referred to in clause (a) for business undertaking referred in section 344;
(c) books of account, as referred to in clause (a) for business carried on by the assessee other than the business undertaking referred in section 344;
(d) other documents for maintaining, —
(i) record of all the projects and institutions run by the person containing details of their name, address and objectives;
(ii) record of income of the person during the tax year in respect of, —
(I) charitable or religious activity, for which it is registered;
(II) any property, deposit or investment held by such registered non-profit organization;
(III) voluntary contributions received;
(IV) any commercial activity permissible under section 344, 345 and 346;
(V) specified income, as referred to in section 337; and
(VI) residual income as referred in section 355(j);
(iii) record of the following, out of the income of the person during the tax year, namely: —
(I) application of income, in India, containing details of amount of application, name and address of the person to whom any credit or payment is made and the object for which such application is made;
(II) amount credited or paid to any registered non-profit organisation, containing details of their name, address, permanent account number and the object for which such credit or payment is made;
(III) application of income outside India containing details of amount of application, name and address of the person to whom any credit or payment is made and the object for which such application is made;
(IV) income accumulated or set apart as per the provisions of sub-section (1) of section 342 which has not been applied or deemed to be applied containing details of the purpose for which such income has been accumulated;
(V) money invested or deposited in the forms and modes referred to in section 350;
(VI) money invested or deposited in the forms and modes other than those referred to in section 350;
(iv) record of the following, out of the income of the person of any tax year preceding the current tax year, namely: —
(I) application out of the income accumulated or set apart containing details of year of accumulation, amount of application during the tax year out of such accumulation, name and address of the person to whom any credit or payment is made and the object for which such application is made;
(II) application out of the deemed application of income referred in subsection (5) of section 341, for any preceding tax year, containing details of year of deemed application, amount of application during the tax year out of such deemed application, name and address of the person to whom any credit or payment is made and the object for which such application is made;
(III) application, other than the application referred in item (II), out of income accumulated during any preceding tax year containing details of year of accumulation, amount of application during the tax year out of such accumulation, name and address of the person to whom any credit or payment is made and the object for which such application is made;
(IV) money invested or deposited in the forms and modes referred to in section 350;
(V) money invested or deposited in the forms and modes other than those referred to in section 350;
(v) record of donations made with a specific direction that they shall form part of the corpus, in respect of-
(I) the donation received during the tax year containing details of name of the donor, address, permanent account number (if available) and Aadhaar number (if available);
(II) application out of such donation referred to in item (I) containing details of amount of application, name and address of the person to whom any credit or payment is made and the object for which such application is made;
(III) amount credited or paid towards corpus to any registered non-profit organization the Act, out of such donation received during the tax year containing details of their name, address, permanent account number and the object for which such credit or payment is made;
(IV) the forms and modes referred to in section 350 in which such voluntary contribution, received during the tax year, is invested or deposited;
(V) money invested or deposited in the forms and modes other than those referred to in section 350 in which such donation, received during the tax year, is invested or deposited;
(VI) application out of such donation, received during any tax year preceding the tax year, containing details of the amount of application, name and address of the person to whom any credit or payment is made and the object for which such application is made;
(VII) amount credited or paid towards corpus to any registered non-profit organization of the Act, out of such donation received during any year preceding the tax year, containing details of their name, address, permanent account number and the object for which such credit or payment is made;
(VIII) the forms and modes referred to in section 350 in which such voluntary contribution, received during any tax year preceding the tax year, is invested or deposited;
(IX) money invested or deposited in the forms and modes other than those referred to in section 350 in which such voluntary contribution, received during any tax year preceding the tax year, is invested or deposited;
(X) amount invested or deposited back into such donation (which was applied during any preceding tax year and not claimed as application) including details of the forms and modes referred to in section 350 in which such voluntary contribution is invested or deposited;
(vi) record of donation received for the purpose of renovation or repair of temple, mosque, gurdwara, church or other place notified under section 133(1)(b)(vi) which is being treated as corpus as referred in section 340, in respect of, —
(I) the donation received during the tax year containing details of name of the donor, address, permanent account number (if available) and Aadhaar number (if available);
(II) donation received during any tax year preceding the tax year, treated as corpus during the tax year, containing details of name of the donor, address, permanent account number (if available) and Aadhaar number (if available);
(III) application out of such donation referred to in item (I) and item (II) containing details of amount of application, name and address of the person to whom any credit or payment is made and the object for which such application is made;
(IV) amount credited or paid towards corpus to any registered non-profit organisation, out of such donation received during the tax year containing details of their name, address, permanent account number and the object for which such credit or payment is made;
(V) the forms and modes referred to in section 350 in which such corpus, received during the tax year, is invested or deposited;
(VI) money invested or deposited in the forms and modes other than those referred to in section 350 in which such corpus, received during the tax year, is invested or deposited;
(VII) application out of such corpus, received during any tax year preceding the tax year, containing details of amount of application, name and address of the person to whom any creditor payment is made and the object for which such application is made;
(VIII) amount credited or paid towards corpus any registered non-profit organisation, out of such donation received during any year preceding the tax year, containing details of their name, address, permanent account number and the object for which such credit or payment is made;
(IX) the forms and modes referred to in section 350 in which such corpus, received during any tax year preceding the tax year, is invested or deposited; money invested or deposited in the forms and modes other than those referred to in section 350 in which such corpus, received during any tax year preceding the tax year, is invested or deposited;
(vii) record of loans and borrowings, —
(I) containing information regarding amount and date of loan or borrowing, amount and date of repayment, name of the person from whom loan taken, address of lender, permanent account number and Aadhaar number (if available) of the lender;
(II) application out of such loan or borrowing containing details of amount of application, name and address of the person to whom any credit or payment is made and the object for which such application is made;
(III) application out of such loan or borrowing, received during any tax year preceding the tax year, containing details of amount of application, name and address of the person to whom any credit or payment is made;
(IV) repayment of such loan or borrowing (which was applied during any preceding tax year and not claimed as application) during the tax year;
(viii) record of properties held by the assessee, with respect to the following, namely: —
(I) immovable properties containing details of, —
(i) nature, address of the properties, cost of acquisition of the asset, registration documents of the asset;
(ii) transfer of such properties, the net consideration utilised in acquiring the new capital asset;
(II) movable properties including details of the nature and cost of acquisition of the asset;
(ix) record of related person, as referred to in section 355(h), —
(I) containing details of their name, address, permanent account number and Aadhaar number (if available);
(II) transactions undertaken by the registered non-profit organisation with related personas referred to in section 355(h) containing details of date and amount of such transaction, nature of the transaction and documents to the effect that such transaction is, directly or indirectly, not for the benefit of such specified person;
(x) any other documents containing any other relevant information.
(2) The books of account and other documents specified in sub-rule (1) may be kept in written form or in electronic form or in digital form or as printouts of data stored in electronic form or in digital form or any other form of electromagnetic data storage device.
(3) Subject to the provisions of sub-rule (4), the books of account and other documents specified in sub-rule (1) shall be kept and maintained by the registered non-profit organisation at its registered office.
(4) All or any of the books of account and other documents as referred to in sub-rule(1) may be kept at such other place in India as the management may decide by way of a resolution and where such are solution is passed, the registered non-profit organisation shall, within seven days thereof, intimate the jurisdictional Assessing Officer in writing giving the full address of that other place and such intimation shall be duly signed and verified by the person who is authorized to verify the return of income.
(5) Subject to the provisions of sub-rule (6), the books of account and other documents specified in sub-rule (1) shall be kept and maintained for a period of six years from the end of the relevant tax year.
(6) Where the assessment in relation to any tax year has been reopened under section 279 within the period specified in section 282, the books of account and other documents which were kept and maintained at the time of reopening of the assessment shall continue to be so kept and maintained till the assessment so reopened has become final.
