Union Budget 2026-27 - Finance Bill, 2026

Existing provisions of section 352(4) [Table: Sl. No. 8.B] inter alia provides that the specified person shall be liable to pay the tax on accreted income where it has merged with any other entity other than a registered non-profit organisation having the same or similar objects. However, the said provision does not capture the situation where a registered non- profit organisation has merged with any other registered non-profit organisation having same or similar objects as was provided under section 12AC of the Income-tax Act, 1961.

In order to provide for the provisions similar to section 12AC of the Income-tax Act, 1961 it is proposed to insert a new Section 354A in the Income-tax Act to provide that where any registered nonprofit organisation has merged with any other registered nonprofit organisation, the provisions of section 352 shall not apply if, —

(a) the other registered non-profit organisation has same or similar objects; and

(b) the said merger fulfils such conditions as may be prescribed.

Further, in order to align the existing provisions with the provisions of Income-tax Act, 1961 it is proposed to amend said serial number 8 of Table below section 352(4) so as to provide that the specified person shall be liable to pay the tax on accreted income where it has merged with, any other __

(a) entity other than a registered non-profit organisation;

(b) registered non-profit organisation having objects same or similar to it but the said merger does not fulfil such conditions, as may be prescribed; or

(c) registered non-profit organisation that does not have same or similar objects.

These amendments will take effect from the 1st day of April, 2026 and shall accordingly, apply to the tax year 2026-27 and subsequent tax years.

[Clauses 69 and 70]

 

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Full Text:

Union Budget 2026-27 - Finance Bill, 2026

Merger of non-profit organisations exempt from accreted-income tax if same or similar objects and prescribed conditions are met. A new provision exempts registered non-profit organisations from accreted-income tax on merger when the transferee and transferor are registered non-profit organisations with the same or similar objects and the merger meets prescribed conditions; the merger-liability rule is amended to make tax payable where the merging entity is non-registered, where a registered non-profit's merger fails to satisfy prescribed conditions despite similar objects, or where objects are not the same or similar.