Regulatory Framework for Commercial Activities by Non-Profit Organizations: A Comparative Analysis of Income Tax Bill, 2025 and Income-tax Act, 1961

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....ies undertaken by non-profit organizations has been a critical aspect of tax legislation in India. This article analyzes the proposed Clause 346 of the Income Tax Bill, 2025, and compares it with the existing provisions u/s 2(15) of the Income-tax Act, 1961, focusing on the restrictions placed on commercial activities by organizations pursuing objects of general public utility. 2. Objective and P....

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....ial activities must be directly related to charitable objectives * Revenue cap of 20% of total receipts * Mandatory separate accounting for commercial activities 3.2.2 Income-tax Act, 1961 [Section 2(15)] The existing provision stipulates: * Activities must be integral to charitable purpose * 20% ceiling on receipts from commercial activities * Applies to activities in nature of trade,....

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....hanism * Clear parameters for assessment * Defined compliance requirements * Better enforcement capabilities 5. Potential Challenges and Considerations 5.1 Implementation Challenges * Defining commercial activities * Measuring direct relationship with charitable objectives * Maintaining separate accounts * Monitoring compliance 5.2 Legal Interpretations * Scope of "commercial ac....