Comparison of section 345 "Restriction on commercial activities by a registered non-profit organisation." between the Income-Tax Act, 2025 (as passed) and the Income-Tax Bill, 2025 (as originally introduced)

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....ffects registered non-profits (charitable/other institutions) engaged in commercial activity; it sets conditions under which such activity may be undertaken. Effective date or commencement is Not stated in the document. Background & Scope Statutory hooks: Income-tax Act, 2025 / Income Tax Bill, 2025 (Clause 345 / Section 345). Both texts are short statutory provisions regulating commercial activities of a registered non-profit organisation. The Bill (Old Version) contains an explicit additional clause excluding registered non-profit organisations "carrying out advancement of any other object of general public utility" from the restriction; the enacted Act version omits that qualifying exception and instead explicitly excludes organisation....

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....rcial activity is incidental to the attainment of the objectives of the registered non-profit organisation. * Condition (b): separate books of account are maintained for such activities. Interpretation * Legislative intent and interpretive signals are minimal in the text. The provision seeks to limit commercial activities by registered non-profits to those that are incidental to their objectives and to require accounting segregation of such activities. The Bill's phrasing suggests an intent to exclude organisations advancing objects of general public utility from restriction; the enacted provision replaces that descriptive exclusion with a cross-reference to section 346, indicating a legislative choice to rely on a defined category....

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....Not stated in the document whether further tests apply.) * Example 3: A registered non-profit described in the Bill as "carrying out advancement of any other object of general public utility" - under the Bill it would have been excluded from the restriction; under the enacted Act such an entity would be governed by section 346 (contents Not stated in the document). Interplay The Act text expressly references section 346, creating an interplay that depends on the content of that section. The Bill used an open-ended descriptive exclusion ("advancement of any other object of general public utility") whereas the Act ties the exclusion to a specific statutory category (section 346). Any Rules, Notifications, or Circulars are Not stated in th....

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....actitioners to consult additional provisions to determine applicability, increasing the compliance perimeter that must be checked. * Substantive conditions: Both texts retain identical substantive conditions (incidental nexus; separate books). * Practical impact: No substantive change on these fronts. The consistent retention means existing compliance focus on demonstrating incidental connection and maintaining segregated accounting remains central. However, whether a given organisation is within the scope depends on the changed exception/cross-reference. Practical Implications * Compliance and risk areas: Registered non-profits must assess whether a commercial activity is "incidental" to their objectives. The text imposes a dual com....