Registration under section 332

Introduction

The Income Tax Act, 2025 provides a comprehensive regime for registration of Non-Profit Organisations (NPOs) as a pre-condition for availing tax exemption. This framework replaces the earlier provisions contained in Sections 11, 12A and 12AB of the Income-tax Act, 1961, and seeks to ensure:

• Uniformity in registration procedures
• Periodic review of charitable entities
• Enhanced regulaltory oversight and transparency 

Registration of a Non-profit organization under section 332 is mandatory for claiming exemption of income derived from property held for charitable or religious purposes.

Section 332 is the foundation of the tax exemption framework for charitable and religious organizations or institutions referred to as Non-profit organization in Income Tax Act, 2025. It provides for exemption of income derived from property held by the non-profit organization, subject to application of such income for charitable or religious purposes in India.

Eligible Persons for Registration 

An application for registration may be made by the following persons:

• A public trust;
• A society registered under the Societies Registration Act, 1860 or any other law in force;
• A company registered under section 8 of the Companies Act, 2013 (including deemed registration under earlier law);
• A university established by law or recognised educational institution;
• An institution financed wholly or partly by Government or local authority;
• Specified persons covered under notified Schedules;
• Any other person notified by the Board in this behalf.

The scope of eligible applicants is intentionally wide, covering all forms of legally recognised Non-profit organizations.

Conditions for Exemption

Section 332 lays down the conditions to be fulfilled for a Non-profit Organization to claim exemption, which provide tax exemptions on income derived from property held under trust wholly for charitable or religious purposes. Without registration under Section 332, the benefits of exemption cannot be claimed. The registration is mandatory for:

• Charitable Organization
• Religious Organization
• Educational or medical institutions

Following are the conditions to be fulfilled by an NPO to avail the benefit of tax exemption under sections 332 to 342. In other words, if an NPO does not comply with the requirements under Section 332, it will not be eligible to claim such tax exemptions.

Registration shall be granted only if the following conditions are satisfied:

• The applicant is constituted or incorporated in India;
• It is established for charitable or public religious purposes;
• The property is held under an irrevocable obligation;
• The benefits are intended for the general public.

Where an organization is engaged partly for charitable or religious purposes, eligibility is restricted to those entities established prior to the commencement of the Income-Tax Act, 1961.

Classification of Registration under Section 332

Section 332 of the Income Tax Act, 2025, prescribes the procedure and types of registration available to NPOs seeking exemption. The section enumerates specific scenarios under which an NPO must apply for registration or re-registration. To streamline the registration process, the Central Board of Direct Taxes (CBDT) has introduced two electronic forms:

• Form No.104 – for provisional registrations or approval,
• Form No. 105 – for renewal, conversion or modification-based applications.

Each form must be filed within a prescribed timeline, depending on the nature of the trust's application.

1. Provisional Registration for New NPOs - When a new NPO is formed and intends to claim income tax exemption under Sections 332, it must first obtain registration under the Income Tax Act. Since a new NPO has no history of activities or financial records, the law provides a mechanism to provisionally register such NPOs so that they can begin their operations and later convert to regular registration. This provisional mechanism ensures that newly created NPOs are not barred from accessing tax exemption benefits merely because they have not yet started their charitable work.

   This type of registration applies to:

   - Newly formed NPOs,
   - NPOs that have never been registered before under Sections 332.
   
   The application for the provisional registration has to be filed electronically in Form No.104 at any time during the tax year beginning from which exemption is sought under section 332. The validity of the Registration is for 3 years from the tax year in which the application was made in case where the activities of the applicant have not commenced and it has not been registered under any specified provision at any time before making the application.

2. Conversion of Provisional to Regular Registration - A provisional registration granted to a newly created NPO under Section 332 is valid for a limited period of 3 years. It is granted without any inquiry, based solely on the documents submitted. However, to continue availing income tax exemption under Sections 332 beyond the provisional period, the NPO must convert this into a regular (final) registration. This process is governed by Sl. No. 3 or 4 of the table given in section 332 and is critical to secure long-term tax-exempt status for the NPO. This clause applies to the NPOs that:
   
   - Have obtained provisional registration;
   - Have commenced their charitable or religious activities or not.
   
   The application for the regular registration is electronically filed in Form No.105:

   - At least 6 months before the expiry of provisional registration; or
   - Within 6 months of commencement of activities;
   
   whichever is earlier.

   The validity of the regular registration is 5 years from the Tax year in which the application is made. Moreover, the important point to be noted here is the commissioner may call for additional documents, verify genuineness of activities and ensure compliance with other laws before granting the registration. If satisfied, Commissioner grants registration for 5 years. If not satisfied, the Commissioner rejects the application after giving the applicant an opportunity of being heard.

   Note: If the total income of applicant, without giving effect to the provisions of “Part B of Chapter XVII - Special provisions for registered non-profit organisation” of the Income Tax Act 2025, does not exceed five crore rupees during each of the two tax years, preceding the tax year in which such application is made, the regular registration shall be awarded for “ten years”.      

3. Renewal of Registration - Once a Non-profit organization obtains regular registration under Section 332, it is valid for a period of five years or ten years, as the case may be. Before the expiry of this 5-year period or ten-year period, the NPO must apply for renewal to continue availing exemption under Sections 332.
   
   The requirement to apply for renewal before expiry ensures that the NPO remains compliant, transparent and actively engaged in charitable or religious work.  This provision is governed by of Sl. No. -5 of Table under Section 332. This clause applies to NPOs that are holding a valid 5 year or ten years registration under section 332 of the Income Tax Act,2025 or under section 12A of Income Tax Act,1961.

   The renewal application shall be filed electronically in Form No.105 at least 6 months before the expiry of the registration period under Sl. No. 3 or 4 of Table under Section 332. Further, the important point to be noted here is the commissioner may call for additional documents, verify genuineness of activities and ensure compliance with other laws before granting the registration. If satisfied, Commissioner grants registration for 5 years or ten years. If not satisfied, the Commissioner rejects the application after giving the applicant an opportunity of being heard.

4. Direct Regular Registration where activities have commenced - Sl. no. 2 of Table under Section 332 pertains to the filing of a registration application by NPOs that have already commenced their activities. The NPO's are permitted to apply directly for regular registration without the need to first obtain provisional registration. However, to be eligible for regular registration under this provision, the applicant must fulfil the following two conditions:
   
   (i) Commencement of Activities - The NPO must have actually commenced its activities prior to making the application.
   
   (ii) No Claim of Exemption under any Section - The NPO must not have been registered under any specified provision for any previous year ending on or before the date of such application, after the commencement of its activities. The application should be filed electronically in the Form No. 105 at any point of time after the commencement of the activities, during the tax year, beginning from which registration is sought. Exemption will not be available for the Tax year, which has already passed.
    

5. Change or Modification of Objects Clause

Non-profit Organizations often revise or expand their object clauses in their trust deed, memorandum of association or constitution documents to address evolving social needs, regulatory expectations or operational goals. While such changes are allowed, the Income Tax Act, 2025 treats these modifications as material for the purpose of tax exemption. To ensure that the modified objects continue to serve charitable purposes as defined in the law, the NPOs must seek fresh registration under the new framework of Section 332. The fresh registration under section 332 is mandatory when:

- The objects of the NPO are modified, and
- The change does not conform to the conditions of the original registration.

This ensures that the tax authorities can re-assess whether the altered objects continue to qualify as charitable purposes under Section 2(23) of the Act. The application of fresh registration has to be filed electronically under Sl. No. 7 of the table under section 332 within 30 days from the date of modification of objects. Failure to apply within this timeline may result in withdrawal of exemption or cancellation of existing registration.

Time limits for Application 

The statute prescribes specific timelines based on the status of the applicant:

1. New Organisations
   • Where activities have not commenced: Application may be made at any time during the relevant tax year beginning from which registration is sought.
   • Where activities have commenced: Application to be made during the relevant tax year beginning from which registration is sought.
2. Conversion Cases
   • Where the applicant has been granted provisional registration and activities have commenced: Application to be made within 6 months of the commencement of activities.
   • Where the provisional registration of the applicant is due to expire and activities have not commenced: Application to be made at least 6 months prior to the expiry of the provisional registration.
3. Renewal
   • Application to be made at least 6 months prior to expiry.
4. Modification of Objects
   • Where the applicant being a registered non-profit organisation has adopted or undertaken modification of its objects which do not conform to the conditions of registration. Application to be made within 30 days of modification.
5. Inoperative Registration
   • Where the registration of the applicant has become inoperative due to switching over of regime under section 333, Application may be made to revive registration where it has become inoperative due to shifting of regime. Application is to be made at any time during the tax year beginning from which the registration is sought to be made operative.

Validity of Registration

The Provisional registration shall be valid for 3 years and the regular registration shall be valid for 5 years, however, where the total income of the applicant does not exceed ?5crore in each of the two tax years, preceding the tax year in which such application is made the validity period of registration shall be 10 years instead of 5 years.

Note: Where an application is filed beyond the prescribed time, the delay may be condoned if reasonable cause is shown. However, where delay is not condoned, the entity shall be liable to tax on accreted income under section 352.

Summary of Kind of Registration/ Statutory Deadline/ Form/ Validity

Summary of the types of registration, along with the relevant clause under Section 332, the applicable form, the statutory deadline, and the validity of such registration: