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Act Rules Income Tax
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Representative assessee recovery rights secure retention via Assessing Officer certificate limiting recoverability at final settlement.
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When an Assessing Officer is satisfied that seized money, assets, books, documents or any information therein pertain to a person other than the person searched, those materials must be handed to the Assessing Officer having jurisdiction over that other person, who shall proceed under section 294 and apply the block assessment provisions; for abatement under section 292 the reference date for the other person is the date the receiving AO obtains the seized materials or information.
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Block assessment procedure: time limited compelled return after search, limits revision rights and prescribes applicable procedural and penalty provisions.
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Total undisclosed income: rules for block-period computation, exclusions for short-period transfer-pricing transactions and loss restrictions.
Computation of the total undisclosed income of the block period aggregates undisclosed income declared under the statutory declaration mechanism and undisclosed income determined by the Assessing Officer from seized material, survey or requisition results, and other material coming to the AO's notice; it prescribes temporal windows for book-based computation, excludes certain international and specified domestic transactions in the short inter-authorisation period from block computation to be assessed separately, and restricts set-off of brought-forward losses and unabsorbed depreciation against undisclosed block income while allowing carry-forward post-block period.
Act Rules Income Tax
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Block assessment procedure centralises search-related assessments, abating parallel year-wise proceedings where initiated and enabling revival on annulment.
Assessing Officers must assess or reassess the total undisclosed income of the block period under the Part, with those proceedings taking priority over ordinary year wise assessments; pending assessments for years in the block period abate (and may be deemed to have abated on the date certain notices were issued), non undisclosed income of the year of last authorisation is assessed separately, multiple searches are sequenced with timing extensions where needed, and abated proceedings may be revived if Part proceedings or specified orders are annulled.
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Intimation of loss: mandatory written notification to assessee when loss is established and eligible for carry forward and set-off.
Section 291 requires the Assessing Officer to notify the assessee by an order in writing the amount of loss as computed by him when (a) a loss is established in assessment and (b) the assessee is entitled to carry forward and set off that loss for the purposes of the listed statutory provisions. The duty is mandatory and procedural, linking the notification obligation to both the establishment of loss in assessment and the assessee's statutory entitlement to carry forward and set-off.
Act Rules Income Tax
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Recomputation of assessments tied to triggering events allows targeted amendments within specified limitation periods.
Clause 288 permits an Assessing Officer to amend or recompute completed assessments in a limited set of scenarios triggered by downstream events-such as reassessment or recomputation orders, valuation or compensation revisions, patent revocation, settlement of foreign tax disputes, or validated transfer pricing determinations-with timelines generally governed by a four year limitation reckoned from the end of the relevant financial year or specified event, and subject to procedural safeguards and cross references to amendment and limitation provisions.

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Comparison of section 354 "Application for approval for purpose of section 133(1)(b)(ii)." between the Income-Tax Act, 2025 (as passed) and the Income-Tax Bill, 2025 (as originally introduced)

12 September, 2025

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Section 354 Application for approval for purpose of section 133(1)(b)(ii).

Income-tax Act, 2025

At a Glance

Clause 354 of the Income Tax Bill, 2025 - Old Version sets out the statutory scheme for applications by registered non-profit organisations or specified persons for approval u/s 133(1)(b)(ii) (approval relevant to receipt of donations). It matters to charitable organisations, donors and tax authorities because approval enables donor deduction treatment under the linked provision. The Bill sets eligibility conditions, timelines for application and orders, procedural safeguards and validity periods for approvals. Effective date or commencement is Not stated in the document.

Background & Scope

Statutory hook: Clause 354 is drafted for the purpose of obtaining approval for application of section 133(1)(b)(ii) (as referenced in the heading). The provision governs who may apply (a registered non-profit organisation or a person referred to in Schedule III (Table: Sl. No. 1)), the conditions for eligibility, procedural stages for the Principal Commissioner or Commissioner, timelines for applications and orders, and the period of validity of approvals. The text contains no defined terms other than references to "tax year," "registered non-profit organisation," and the referenced Schedule III; definitions of those terms are Not stated in the document. The Bill prescribes that forms, manner, statements, verifications, certificates to donors and correction statements shall be "prescribed" but the prescriptive instruments themselves are Not stated in the document.

Statutory Provision Mode

Text & Scope

Coverage: Clause 354 permits a registered non-profit organisation or a person listed in Schedule III (Table: Sl. No. 1) to apply to the Principal Commissioner or Commissioner for approval for the purpose of section 133(1)(b)(ii). The authority for application, the form and manner are to be as prescribed. The clause sets out seven express conditions (clauses (a) to (g)) that the applicant must satisfy or comply with:

  • (a) the organisation's activities are not expressed to benefit any particular religious community or caste;
  • (b) it is established in India for a charitable purpose and "does not incur any expenditure of an amount being 5% or more of its total income during a tax year which is of a religious nature";
  • (c) no instrument or rules allow transfer of whole or part of assets for any purpose other than a charitable purpose;
  • (d) it maintains regular accounts of receipts and expenditure;
  • (e) it prepares and delivers a prescribed statement for prescribed periods, in prescribed form and verified manner, within prescribed time, to the prescribed income-tax authority or an authorised person;
  • (f) it delivers correction statements for rectification or updating of the statement required under (e), in prescribed form and verified manner;
  • (g) it furnishes a certificate to the donor specifying the donation amount within a prescribed period from date of receipt, containing requisite particulars in the prescribed manner.

Timelines and validity: Sub-section (2) contains a five-row Table specifying application time limits, time for the Principal Commissioner or Commissioner to pass orders, and the validity period of approval, distinguishing cases where activities have commenced, where activities have not commenced, provisional approvals, and expiry/renewal situations. The Table prescribes: provisional approvals for new applicants (three tax years), approvals for applicants with commenced activities (five tax years), and specific application windows and order timelines (one month for the month-end case; six months from end of quarter in other cases).

Interpretation

Legislative intent indicated by the text: The structure indicates an intent to balance facilitation of charitable funding (by providing a route to obtain approval relevant for donor deduction) with safeguards to ensure charitable character and compliance with other laws. The enumerated conditions focus on: non-discrimination by religion/caste; confinement of assets to charitable purposes; limits on religious expenditure; maintenance and submission of accurate accounts and statements; and donor-level certification. The procedural timeframe table suggests an intent to provide predictability in administrative processing. The text does not contain an express legislative statement of purpose or policy rationale beyond these provisions.

Exceptions/Provisos

No separate provisos or exceptions beyond the specified conditions and the Table are included in Clause 354. There are no express carve-outs for particular categories of organisations, acute exigencies, or definitions of "religious nature" expenditure. Any exceptions or further qualifying language is Not stated in the document.

Illustrations

  • Example 1: A registered non-profit which has not commenced activities applies during the tax year from which it seeks approval; the authority must pass an order within "One months from the end of the month in which application is made" and, if provisional approval is granted, the approval is valid for "Three tax years commencing from the tax year in which such application is made." (This example follows the Table text.)
  • Example 2: A registered non-profit whose activities have commenced applies at any time during the tax year from which approval is sought; the authority has six months from the end of the quarter in which application is made to pass an order; if approved the validity is five tax years commencing from that tax year. (Derived directly from the Table.)
  • Example 3: An organisation incurs religious-nature expenditure equal to 5% of total income in a tax year. Under clause (b) its status is affected because clause (b) provides it "does not incur any expenditure of an amount being 5% or more..."-therefore, an organisation with exactly 5% religious expenditure would be ineligible. (The document does not provide a worked example; this is a textual reading of clause (b).)

Interplay

The clause refers to section 133(1)(b)(ii) as the substantive hook for approval but does not reproduce that section or explain the precise consequence of approval under that section. The clause references compliance "of such requirements of any other law in force" but does not specify which laws or how conflicts are to be resolved. The clause requires prescribed forms, statements and donor certificates but the relevant Rules or Notifications prescribing them are Not stated in the document. Interaction with income-tax assessment procedures, charitable trust law, the applicable Schedules (Schedule III), or other regulatory regimes is not elaborated in the text.

Differences between the two provisions and practical impact

  • Reference to Schedule: Document 1 (Section 354, Income-tax Act, 2025) refers to "Schedule VII (Table: Sl. No. 1)"; Document 2 (Clause 354, Income Tax Bill, 2025 - Old Version) refers to "Schedule III (Table: Sl. No. 1)".
    • Practical impact: This change alters which classes of persons fall within the eligibility reference. The precise practical effect depends on the contents of the respective Schedules; those listed in Schedule III will differ from those in Schedule VII, so an entity's eligibility to apply may be expanded or narrowed depending on which Schedule applies. The document does not state the contents of either Schedule.
  • Religious-expenditure threshold wording: Document 1 states the applicant "does not incur any expenditure of an amount exceeding 5% of its total income during a tax year which is of a religious nature." Document 2 states the applicant "does not incur any expenditure of an amount being 5% or more of its total income during a tax year which is of a religious nature."
    • Practical impact: The two phrasings create different inclusive/exclusive thresholds. Document 1 prohibits expenditure that exceeds 5% (i.e., expenditure >5% is prohibited; expenditure equal to 5% appears permissible). Document 2 prohibits expenditure that is "5% or more" (i.e., expenditure >=5% is prohibited). This is a material drafting difference: under Document 2 an organisation whose religious-nature expenditure equals exactly 5% of total income would be ineligible; under Document 1 that organisation would appear eligible. The documents do not provide further clarifying definitions or examples.
  • Minor drafting differences in procedural wording: The order and phrasing in sub-section (3) differ slightly. Document 2 frames the inquiries as being "in order to satisfy himself as to the compliance of such requirements of any other law in force, as are material for the purpose of achieving its objects, and the genuineness of activities," with an explicit conjunctive linking; Document 1 lists genuineness and compliance first then continues.
    • Practical impact: These are drafting variations that change emphasis but, on their face, not the substantive standard-the authority must be satisfied as to genuineness and compliance. Absent further context or definitions, the operational test remains similar. The document does not state any interpretive guidance about how these differences should be resolved.
  • Other variations: Minor differences (for example "as prescribed" versus "as may be prescribed") are present.
    • Practical impact: These appear stylistic and do not, by themselves in the provided text, change substantive rights or obligations. The document does not state any consequential administrative guidance.

Practical Implications

  • Eligibility screening: Applicants must ensure they satisfy the seven listed conditions. In particular, the religious-expenditure metric ("5% or more") is a hard threshold in the text and can render otherwise qualifying organisations ineligible if religious spending equals or exceeds that proportion. Organisations should carefully compute and document the nature of expenditures to demonstrate compliance with clause (b). The document does not provide a methodology for such calculation.
  • Record-keeping and reporting: Clauses (d), (e) and (f) require maintenance of regular accounts and submission (and correction) of prescribed statements. This creates clear record-keeping obligations; the precise contents, form, timing and verification procedures are to be prescribed and are Not stated in the document. The requirement to furnish donor certificates (clause (g)) imposes an administrative obligation on the recipient organisation.
  • Timelines for administrative action: The Table sets finite time windows for applicants to file and for the Principal Commissioner/Commissioner to decide; applicants should plan filings to avoid missed windows, especially on expiry/renewal scenarios where advance filings (at least six months) are mandated.
  • Risk of rejection/cancellation: Sub-section (3) allows the authority to call for documents and make inquiries; if not satisfied, it may reject an application (and in some cases cancel approval). The clause provides procedural fairness by requiring a reasonable opportunity of being heard before rejection, but the operational scope of inquiries and what constitutes satisfaction is Not stated in the document.

Key Takeaways

  • Clause 354 provides a statutory route for registered non-profits or specified persons to obtain approval relevant to donations u/s 133(1)(b)(ii).
  • Seven express eligibility and compliance conditions cover non-discrimination, charitable purpose, restrictions on asset transfer, accounts, prescribed statements, correction mechanisms and donor certificates.
  • The provision sets distinct application windows, decision timeframes and validity periods (three or five tax years, depending on circumstances) in a five-row Table.
  • Clause (b) contains a strict threshold on "religious-nature" expenditure-"5% or more" of total income-which can render organisations ineligible even if expenditure equals exactly 5%.
  • The Principal Commissioner/Commissioner has inquiry powers and may approve, reject or (where applicable) cancel approvals, but must afford a reasonable opportunity of being heard before rejection.
  • Many operational details (definitions, prescribed forms, calculation rules, content of Schedules, and applicable other laws) are left to prescription or are Not stated in the document.

Full Text:

Section 354 Application for approval for purpose of section 133(1)(b)(ii).

Topics

Acts Income Tax