IT Act 1961 + IT Act 2025 · AY 2026-27 · RNPO Framework

NPO & NGO Tax Compliance — ITR-7, Forms 10B/10BB/112 & Annual Obligations

A complete dual-law guide covering ITR-7 filing, audit requirements (Form 10B, 10BB, and the new Form 112), the 85% application rule, FC-4 FCRA return, donation forms, and all annual compliance scenarios for trusts, societies, and Section 8 companies.

Source: incometaxindia.gov.in
Sec 332-355 | Rule 187-188 | FCRA 2010
Trusts · Societies · Section 8 Companies
📋 For FY 2025-26 (AY 2026-27) — Filing Now
Income Tax Act, 1961
Form 10B / 10BB by 30 Sep 2026 · ITR-7 by 31 Oct 2026 · Sec 11/12/12AB/80G
vs
📈 From Tax Year 2026-27 (Filing in 2027)
Income Tax Act, 2025 (RNPO)
Form 112 by 30 Sep 2027 · ITR-7 by 31 Oct 2027 · Sec 332-355 · Rule 187/188
ITR-7 (31 Oct) Form 10B/112 FC-4 (31 Dec) Form 10BD 85% Rule
◯ Annual Compliance Wheel — All Forms at a Glance
FORM 10B Income > ₹5Cr OR Foreign FC FORM 10BB Income ≤ ₹5Cr No Foreign FC vs NEW: FORM 112 (from Tax Year 2026-27) Single unified form replacing both 10B & 10BB
📄 Form 10B vs 10BB — & the New Form 112
85% + 15% = 100% 85% Must be applied for Charitable Purposes 15% Retained Always exempt
🌟 The 85% Application Rule — Income Utilisation

NPO / NGO Compliance — Navigating Two Laws Simultaneously

If you manage a charitable trust, religious society, NGO, or Section 8 company, June to December is your most compliance-intensive period. The current annual return for FY 2025-26 (AY 2026-27) is still governed entirely by the Income Tax Act, 1961. At the same time, the new Income Tax Act, 2025 has taken effect from 1 April 2026 — introducing the RNPO framework and Form 112 for filings starting from Tax Year 2026-27.

This guide covers both frameworks clearly, tells you exactly which forms apply for the current filing cycle and what changes next year, and covers all four corner scenarios: small domestic trusts, large trusts, FCRA-registered NGOs receiving foreign funds, and Section 8 companies.

📌 The Golden Rule — Filing Never Stops, Even on Nil Income

ITR-7 is mandatory for every registered trust, society, or institution even if its income is fully exempt, even if it received no income at all. As confirmed by the Income Tax Department and supported by multiple court decisions, non-filing is treated as a compliance violation that can lead to loss of exemption for the year and — if continued for 3 consecutive years — cancellation of registration under Section 334 of IT Act 2025 (previously under Section 12AB of the 1961 Act).


Entities Required to File ITR-7

ITR-7 is the income tax return form for entities claiming exemption under specific provisions of the Income Tax Act. It is filed under various sub-sections of Section 139:

Entity TypeFiling ProvisionExemption Claimed Under
Charitable or religious trustsSection 139(4A)Sections 11 & 12 (old Act) / Sections 335-337 (IT Act 2025)
Political partiesSection 139(4B)Section 13A (old Act)
Research institutions, news agencies, trade unionsSection 139(4C)Section 10(21), 10(22B), 10(23A)
Universities, hospitals, educational institutionsSection 139(4D)Section 10(23C)
NGOs with 80G approvalSection 139(4A)Sections 11/12 (old) / Chapter XVII-B (new)
Section 8 Companies (non-profit)Section 139(4A)Sections 11/12 with valid 12AB / Section 332 registration

Which Audit Form Applies to Your Organisation?

Required when ANY ONE of these conditions is met:

  • Total income (before exemptions) exceeds ₹5 crore
  • Organisation received any foreign contribution (even ₹1, if FCRA-registered)
  • Income applied outside India (even in part)
Form 10BB — Standard Audit (Current, FY 2025-26)

Required for all other RNPOs — i.e., when ALL of these are true:

  • Total income (before exemptions) is ₹5 crore or below
  • No foreign contribution received from any source
  • All income applied within India only
💡 NEW — Form 112 Replaces Both 10B & 10BB From Tax Year 2026-27

Under the Income Tax Act, 2025 and Rule 188 of the Income Tax Rules, 2026, Form 112 is a single unified “smart” audit report that replaces both Forms 10B and 10BB, effective from Tax Year 2026-27 (the return to be filed in October 2027). Key changes:

Single form with differential reporting — smaller NPOs (income ≤ ₹5 crore, no foreign contribution, no overseas application) file simplified schedules; larger NPOs file expanded disclosures
New deadline: Form 112 must be filed at least one month before the ITR due date (so by 30 September 2027 if ITR is due 31 October 2027)
Pre-filled with ITR data, with UDIN and DSC required
• Over 2.25 lakh annual filings will use this new form from 2027 onwards
For FY 2025-26 (current filing): Use Forms 10B/10BB as before — Form 112 does NOT apply yet


85% Rule — The Heart of NPO Tax Exemption

Every registered NPO/RNPO must apply at least 85% of its total regular income (excluding corpus donations) for charitable or religious purposes during the financial year to claim full exemption. The remaining 15% is always exempt without any conditions or justification.

Minimum Application
85%
Of regular income must be spent on charitable/religious purposes in the same year (old: Sec 11(1)(a); new: Sec 336)
Always Retained
15%
May be kept without any conditions — no form required, no explanation needed
Accumulation Window
5 Years
Shortfall from 85% can be accumulated via Form 10 (old) / Form 109 (new) for up to 5 years for specific purposes
If Rule Violated
Full Tax
Shortfall amount becomes taxable at normal rates; no exemption on that portion
📑 Form 10 / Form 109 — Accumulation of Income

If the NPO cannot apply 85% in the current year (due to a large project planned for future years, or pending receipt of permissions), it can “accumulate” the unspent income by filing:

Old Act (FY 2025-26): Form 10 under Section 11(2), filed by 31 August 2026 (before the ITR filing date). Must specify: the purpose of accumulation, the period (max 5 years), and the prescribed investment modes used to park the funds.
New Act (from Tax Year 2026-27): Form 109 under Section 342, filed before the end of the tax year. Same conditions apply — purpose, period, and prescribed investment modes must be specified.


Which Forms Apply? — Scenario-Wise Compliance Map

Scenario A: Small Domestic Trust

Rural NGO — income ₹30 lakh, all from Indian donors, activity only in India

Audit FormForm 10BB
Audit Due Date30 Sep 2026
ITR FormITR-7
ITR Due Date31 Oct 2026
Form 10BD (80G donors)31 May 2026
FCRA / FC-4Not Required
Scenario B: Large Trust (Income > ₹5 Cr)

Urban hospital trust — income ₹8 crore, all domestic, operates hospital & school

Audit FormForm 10B
Audit Due Date30 Sep 2026
ITR FormITR-7
ITR Due Date31 Oct 2026
Form 10BD31 May 2026
FCRA / FC-4Not Required
Scenario C: FCRA-Registered NGO

Hyderabad NGO — income ₹2 crore domestic + ₹80 lakh FCRA foreign donation

Audit FormForm 10B (FC received)
Audit Due Date30 Sep 2026
ITR FormITR-7
ITR Due Date31 Oct 2026
FC-4 Annual Return31 Dec 2026
Form 10BD31 May 2026
Scenario D: Section 8 Company

Mumbai Section 8 company — income ₹1.5 crore, valid 12AB + 80G, no FCRA

Audit FormForm 10BB
Audit Due Date30 Sep 2026
Income Tax ReturnITR-7 by 31 Oct 2026
ROC ComplianceAOC-4 by 30 Sep 2026
Form 10BD (80G)31 May 2026
FC-4Not Required

Form 10BD & Form 10BE — Donation Statement & Donor Certificates

Every NPO registered under Section 80G (donor deduction) must issue two related compliance documents for each financial year:

FormNew Act EquivalentPurposeFiled ByDue Date
Form 10BDForm 113Statement of donations received — NPO discloses every donor’s name, PAN, and donation amount to the IT DeptThe NGO / trust (on IT portal)31 May (of the assessment year)
Form 10BEForm 114Donor certificate — issued to each donor confirming their donation and the NPO’s 80G registration numberGenerated and issued by the NGO (from TRACES after 10BD filing)Within 15 days of 10BD due date
❌ Cash Donations Above ₹2,000 Not Eligible for 80G

A critical compliance trap: if a donor contributes more than ₹2,000 in cash to your organisation, that donation is not eligible for the Section 80G deduction — regardless of whether you issue a receipt or Form 10BE for it. Encourage all donors to pay by cheque, NEFT/RTGS, or UPI for amounts above ₹2,000. This also protects the NGO from disqualification of its 80G approval on account of cash donation acceptance.


FC-4 Annual Return — Separate from Income Tax, Same Deadline Pressure

If your organisation holds FCRA registration from the Ministry of Home Affairs (MHA), the annual FCRA compliance return — Form FC-4 — is filed entirely separately from your Income Tax return at fcraonline.nic.in. The IT Department and MHA receive different information through different portals, and a failure in one does not excuse non-filing in the other.

FC-4 Due Date
31 Dec 2026
For FY 2025-26. NIL return mandatory even if no foreign contribution received during the year
CA Audit Required
FC > ₹1 Cr
If foreign contribution exceeds ₹1 crore, CA-certified audit must accompany FC-4
Admin Expense Cap
Max 20%
Admin expenses cannot exceed 20% of total foreign contributions received in any year
FCRA Renewal
Every 5 Yrs
Apply at least 6 months before expiry — missed renewal leads to suspension of receiving foreign funds

Complete NPO Annual Compliance Calendar — FY 2025-26

31 May 2026
Form 10BD — Statement of Donations (FY 2025-26) File statement of all donations received in FY 2025-26 on the income tax portal. Mandatory for 80G-approved organisations. Issue Form 10BE to all donors within 15 days.
31 Aug 2026
Form 10 — Accumulation of Income (if applicable) If the NPO could not apply 85% in FY 2025-26 and wants to accumulate the shortfall, file Form 10 under Section 11(2) specifying the purpose, period, and prescribed investment modes.
30 Sep 2026
Form 10B or 10BB — Audit Report (FY 2025-26) Upload the CA-signed audit report on the IT portal with UDIN. This MUST be filed before ITR-7. Filing ITR-7 without the audit report is treated as defective. For Section 8 companies — also file Form AOC-4 with ROC by this date.
31 Oct 2026
ITR-7 — Income Tax Return (FY 2025-26 / AY 2026-27) File ITR-7 on the e-filing portal. Mandatory even if income is fully exempt. Quote the audit report acknowledgement number. Verify using DSC or authorised signatory EVC.
31 Dec 2026
FC-4 — FCRA Annual Return (FY 2025-26) For FCRA-registered organisations only. File at fcraonline.nic.in. Must include source-wise FC received, project-wise utilisation, unutilised balance, and CA audit (if FC > ₹1 crore).
Ongoing
Quarterly TDS Returns (Forms 24Q/26Q/27Q) If the NGO pays salaries, rent, or professional fees and deducts TDS, quarterly TDS returns must be filed within 31 days of each quarter end. TDS on NRI payments requires Form 27Q.
6 Months
Before Expiry
Registration Renewal — Form 10AB (IT Act 1961) / Form 105 (IT Act 2025) Apply for renewal of Section 12AB / 80G registration at least 6 months before expiry. Late applications may be condoned but carry the risk of tax on “accreted income” under Section 115TD of old Act / Section 352 of new Act.

Key Form & Section Changes — IT Act 1961 to IT Act 2025

For trustees and CA practitioners managing NGO compliance, here is the complete mapping of old provisions to the new Act framework that takes effect from Tax Year 2026-27 onwards.

Old IT Act, 1961New IT Act, 2025What Changed
Sections 11, 12, 12A, 12AA, 12ABChapter XVII-B, Sections 332–355Consolidated into a single chapter; entities renamed “RNPO”
Form 10A (provisional registration)Form 104Renumbered; auto-fill added; fewer documents
Form 10AB (regular registration)Form 105Renumbered; same process
Form 10AC (provisional order)Form 106Renumbered
Form 10B / 10BB (audit reports)Form 112 (single unified)Two forms merged into one “smart” form; differential reporting; new deadline (1 month before ITR)
Form 10 (income accumulation)Form 109Renumbered; filed before year-end (new Act); purpose and mode must still be specified
Form 10BD (donation statement)Form 113Renumbered; same process
Form 10BE (donor certificate)Form 114Renumbered; same process
Section 80G (donor deduction)Section 354Same concept; separate 5-year renewal cycle
Section 11(1)(a) — 85% ruleSection 336Same rule, new section number
Section 115TD — accreted income taxSection 352Renumbered; triggers on cancellation or conversion
“The new Income Tax Act, 2025 largely reorganises and consolidates the existing NPO taxation framework rather than introducing fundamental changes to core principles. The income is still computed the same way — only the section numbers, form numbers, and some filing timelines have changed.”

Consequences of Non-Compliance

Income Tax Non-Compliance
  • Miss ITR-7 → Exemption lost for that year; all income taxed
  • 3 years of non-filing → Registration cancelled (Section 334, IT Act 2025)
  • Miss Form 10B/10BB → ITR-7 treated as defective
  • 85% rule violation → Shortfall taxed at applicable rates
  • Cancel registration → Tax on accreted income (Sec 352 / old 115TD)
FCRA Non-Compliance
  • Miss FC-4 filing → MHA notice; FCRA registration may be suspended
  • Admin > 20% of FC → Grounds for FCRA cancellation
  • Sub-granting FC funds → Criminal prosecution; registration cancelled
  • Receiving FC without FCRA → Bank account frozen; up to 5 years imprisonment
  • FCRA renewal missed → Cannot receive any new foreign funds until renewed

🏛 NGO / Trust Annual Compliance Support

For More Details or Consultancy,
Contact DVR Murty & Co.

Our Chartered Accountants handle end-to-end annual compliance for trusts, societies, and Section 8 companies — ITR-7, Form 10B/10BB/112 audit, Form 10BD donor statements, FC-4 FCRA returns, registration renewals, and transition to the new IT Act 2025 framework.

Website
dvrmurtyandco.in
Expertise
ITR-7 · 10B/112 · 80G · FCRA · RNPO
ITR-7 Deadline
31 Oct 2026 ⏱
🔗 Visit dvrmurtyandco.in
📚 Official Sources & References 1. Income Tax Department — incometaxindia.gov.in — ITR-7, Forms 10B, 10BB for AY 2026-27
2. Income Tax Act, 1961 — Sections 11, 12, 12A, 12AA, 12AB, 80G, 115TD; Section 139(4A)/(4B)/(4C)/(4D) (ITR-7 filing obligation)
3. Income Tax Act, 2025 (effective 1 April 2026) — Chapter XVII-B, Sections 332-355 (RNPO framework); Section 334 (cancellation); Section 349 (filing obligation); Section 352 (accreted income tax)
4. Rule 188, Income Tax Rules, 2026 — Form 112 (replacing Forms 10B/10BB); due 1 month before ITR date (from Tax Year 2026-27)
5. CBDT Press Release, April 2026 — Form 112 launch; 2.25 lakh NPO filings impacted; pre-filled smart form
6. Form 10BD (donation statement) and Form 10BE (donor certificate) — due by 31 May annually; renamed Form 113 and Form 114 under IT Act 2025
7. Foreign Contribution (Regulation) Act, 2010 (as amended 2020) — FC-4 annual return due 31 December; FCRA portal: fcraonline.nic.in
Disclaimer: This article is for educational and informational purposes only. The dual-law framing reflects the transition between IT Act 1961 (governing FY 2025-26 filings) and IT Act 2025 (applicable from Tax Year 2026-27). Provisions are subject to further CBDT notification. Verify at incometaxindia.gov.in. Always consult a qualified Chartered Accountant for NGO compliance.