The Finance Bill, 2026 proposes a clarificatory amendment to section 332(1)(f) of the Income-tax Act, 2025 to remove certain funds from the requirement of registration as registered non-profit organisations. Under the existing provision, persons listed in Schedule VII (Table Sl. Nos. 10 to 16) were included among those eligible to apply for registration, even though such persons were not required to register under the Income-tax Act, 1961 to claim exemption under section 10. This resulted in inconsistency with the earlier law and imposed avoidable compliance requirements. To align the 2025 Act with the 1961 Act and bring clarity, Clause 66 of the Finance Bill, 2026 restricts the reference in section 332(1)(f) only to persons listed in Schedule VII (Table Sl. Nos. 17 to 19). Consequently, entities covered under Sl. Nos. 10 to 16 will no longer be required to seek registration under section 332. The amendment will take effect from 1 April 2026 and apply from tax year 2026–27 onwards.
Amendment of section 332(1)(f) of the Income-tax Act, 2025 to remove certain funds from the requirement of registration
Section 332 inter alia specifies the persons who may apply for registration as a registered non-profit organisation. The aforesaid provision also includes the persons referred to in Schedule VII (Table: Sl. No. 10) to (Table: Sl. No. 16), who were not required to register themselves under the Income-tax Act, 1961 to claim benefit of exemption under section 10 of the Income-tax Act, 1961.
In order to align the said provision with the Income-tax Act, 1961 and provide clarity it is proposed to remove the reference of aforesaid persons from section 332(1)(f) of the Income-tax Act, 2025, so that such person shall not be required to registered themselves under section 332 of the Act.
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 66]
Extract of Relevant Clauses of Finance Bill, 2026
Clause 66 of the Bill seeks to amend section 332 of the Income-tax Act, 2025 relating to application for registration.
It is proposed to amend clause (f) of sub-section (1) of the said section to give reference of “Schedule VII [Table : S. Nos. 17 to 19]”.
This amendment will take effect from 1st April, 2026.
Extract of Relevant Amendment Proposed by Finance Bill, 2026
66. Amendment of section 332.
In section 332 of the Income-tax Act, in sub-section (1), in clause (f), for the words, figures, brackets and letters “Schedule VII (Table: Sl. No. 10) to (Table: Sl. No. 19)”, the words, figures, brackets and letters “Schedule VII [Table: Sl. Nos. 17 to 19]” shall be substituted.
