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.
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.
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 Type | Filing Provision | Exemption Claimed Under |
|---|---|---|
| Charitable or religious trusts | Section 139(4A) | Sections 11 & 12 (old Act) / Sections 335-337 (IT Act 2025) |
| Political parties | Section 139(4B) | Section 13A (old Act) |
| Research institutions, news agencies, trade unions | Section 139(4C) | Section 10(21), 10(22B), 10(23A) |
| Universities, hospitals, educational institutions | Section 139(4D) | Section 10(23C) |
| NGOs with 80G approval | Section 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 |
For the return you are filing now (FY 2025-26, AY 2026-27), use the ITR-7 form notified by CBDT on 30 March 2026 under the IT Act, 1961. The sections to cite are: 11, 12, 12AB, 80G, 10(23C). The new IT Act 2025 terminology (RNPO, Section 332-355) will apply only from the next filing cycle (Tax Year 2026-27, due October 2027).
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)
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
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.
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
Rural NGO — income ₹30 lakh, all from Indian donors, activity only in India
Urban hospital trust — income ₹8 crore, all domestic, operates hospital & school
Hyderabad NGO — income ₹2 crore domestic + ₹80 lakh FCRA foreign donation
Mumbai Section 8 company — income ₹1.5 crore, valid 12AB + 80G, no FCRA
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:
| Form | New Act Equivalent | Purpose | Filed By | Due Date |
|---|---|---|---|---|
| Form 10BD | Form 113 | Statement of donations received — NPO discloses every donor’s name, PAN, and donation amount to the IT Dept | The NGO / trust (on IT portal) | 31 May (of the assessment year) |
| Form 10BE | Form 114 | Donor certificate — issued to each donor confirming their donation and the NPO’s 80G registration number | Generated and issued by the NGO (from TRACES after 10BD filing) | Within 15 days of 10BD due date |
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.
Complete NPO Annual Compliance Calendar — FY 2025-26
Before Expiry
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, 1961 | New IT Act, 2025 | What Changed |
|---|---|---|
| Sections 11, 12, 12A, 12AA, 12AB | Chapter XVII-B, Sections 332–355 | Consolidated into a single chapter; entities renamed “RNPO” |
| Form 10A (provisional registration) | Form 104 | Renumbered; auto-fill added; fewer documents |
| Form 10AB (regular registration) | Form 105 | Renumbered; same process |
| Form 10AC (provisional order) | Form 106 | Renumbered |
| 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 109 | Renumbered; filed before year-end (new Act); purpose and mode must still be specified |
| Form 10BD (donation statement) | Form 113 | Renumbered; same process |
| Form 10BE (donor certificate) | Form 114 | Renumbered; same process |
| Section 80G (donor deduction) | Section 354 | Same concept; separate 5-year renewal cycle |
| Section 11(1)(a) — 85% rule | Section 336 | Same rule, new section number |
| Section 115TD — accreted income tax | Section 352 | Renumbered; triggers on cancellation or conversion |
Consequences of 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)
- 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
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