Merger of registered non-profit organisation in certain cases

Section 354A — Merger of registered non-profit organisation in certain cases

Inserted by the Finance Act, 2026, with effect from 1 April 2026.

What the section says

Where a registered non-profit organisation merges with another registered non-profit organisation, section 352 (tax on accreted income) does not apply if (a) the other registered non-profit organisation has the same or similar objects, and (b) the merger fulfils such conditions as may be prescribed.

Corresponding provision under the 1961 Act

The counterpart is section 12AC of the Income-tax Act, 1961, inserted by the Finance (No. 2) Act, 2024 (Act 15 of 2024) with effect from 1 April 2025. Under section 12AC, a merger of a trust or institution registered under section 12AB, or approved under section 10(23C)(iv), (v), (vi) or (via), with another trust or institution kept it outside Chapter XII-EB (sections 115TD to 115TF) where the other entity had the same or similar objects, was itself so registered or approved, and the merger met the prescribed conditions.

Section 354A carries the same relief into the 2025 Act. Its separate condition about the other entity's registration is absorbed in the words "any other registered non-profit organisation".

Points to note

• The relief is from the tax on accreted income in section 352 only. It says nothing about any other consequence of a merger.
• At the time of writing, the Income-tax Rules, 2026 (as notified on 20 March 2026) prescribe no conditions for section 354A(b). Until conditions are prescribed, how clause (b) operates is not settled by the rules.
• "Registered non-profit organisation" and "registration" are defined for this Part in section 355.