Published 19 October 2026
Most of what a registered charity does to keep its exemption happens once a year, in a fixed order: the books are closed, the accounts are audited, the audit report is filed, and the return is filed after it. The dates are a month apart, and the exemption depends on each step. Under the 2025 Act, a charity that fails to keep books, to get its accounts audited or to file its return is taxed on its whole regular income for the year, less only revenue expenditure on its objects. This guide sets out the books, the audit report and the return in ITR-7 under both Acts, as they stand on 19 October 2026. For assessment year 2026-27, the audit report for an audited charity is due on 21 October 2026.
Which Act governs which year
Under section 536(2) of the Income-tax Act, 2025, the 1961 Act governs financial year 2025-26 (assessment year 2026-27) and earlier. The 2025 Act and the Income-tax Rules, 2026 govern tax year 2026-27 onwards, whose audit report and return fall due in 2027.
| Requirement | 1961 Act | 2025 Act |
|---|---|---|
| Books of account | s.12A(1)(b)(i); tenth proviso to s.10(23C), clause (a) | s.347; rule 187 |
| Audit report | s.12A(1)(b)(ii); tenth proviso to s.10(23C), clause (b); Form 10B or Form 10BB | s.348; Form No. 112 under rule 188 |
| Return | s.12A(1)(ba) and s.139(4A); s.139(4C) for s.10(23C) institutions; ITR-7 | s.349 and s.263(1)(a)(iii); ITR-7 under rule 164(10) |
| Consequence of default | s.13(10), (11) | s.353 |
Who must comply
All three duties turn on the same threshold. Under sections 347, 348 and 349 of the 2025 Act, they apply where the total income of the registered non-profit organisation, “without giving effect to the provisions of this Part”, exceeds the maximum amount not chargeable to income-tax. The 1961 Act uses the same test in section 12A(1)(b), computed “without giving effect to the provisions of sections 11 and 12”. The comparison is of gross income before the exemption, so most active charities cross it.
The books
Rule 187 of the 2026 Rules lists what a registered non-profit organisation must keep. Besides cash book, ledger, journal and bills, it requires separate books for a business undertaking held under section 344 and for any other business, and “other documents” that track the Part B computation, including:
- records of projects and institutions run;
- income by head (registered activity, property and investments, voluntary contributions, commercial activity, specified income and residual income);
- application of income in and outside India, amounts paid to other registered organisations, deemed application, and accumulated income, with names, addresses and objects;
- application in the year out of earlier accumulations and deemed applications;
- corpus donations and deemed corpus (temple and similar renovation funds), with donor names, addresses, PAN and Aadhaar where available, and their investment;
- loans and borrowings, and their application and repayment;
- immovable and movable properties, with cost and transfer details; and
- related persons, with PAN and Aadhaar where available, and transactions with them.
The books may be kept in written or electronic form (rule 187(2)), at the registered office or at another place in India chosen by resolution, with intimation to the Assessing Officer within seven days (rule 187(3), (4)). They must be kept for six years from the end of the relevant tax year, and longer where an assessment is reopened (rule 187(5), (6)).
The audit report
Form
Under rule 188 of the 2026 Rules, the report of audit required by section 348 “shall be furnished in Form No. 112”. It replaces both 1962 forms. Under the 1962 Rules, as substituted by Notification No. 7/2023 (G.S.R. 118(E), 21 February 2023) from 1 April 2023, rules 16CC (section 10(23C)) and 17B (section 12A) require Form 10B where total income before the exemption exceeds five crore rupees, where the entity has received any foreign contribution, or where it has applied any part of its income outside India, and Form 10BB in other cases.
The audit is by an “accountant”. Under section 12A(1)(b)(ii) of the 1961 Act, that means an accountant as defined in the Explanation to section 288(2); the 2025 Act uses the definition in section 515(3)(b).
Due date
| Year | Governing Act | Form | Due by |
|---|---|---|---|
| FY 2025-26 (AY 2026-27) | 1961 Act | Form 10B or 10BB | The “specified date referred to in section 44AB” (s.12A(1)(b)(ii)): 21 October 2026, under CBDT Circular No. 07/2026 |
| Tax year 2026-27 | 2025 Act | Form No. 112 | “one month prior to the due date of furnishing the return of income under section 263(1)” (rule 188): 30 September 2027 where the return is due on 31 October 2027 |
CBDT Circular No. 07/2026 dated 28 September 2026, issued under section 119 of the 1961 Act read with section 536 of the 2025 Act, extended the return due date for persons in serial number 2 of the Table in Explanation 2 to section 139(1) (companies and persons whose accounts must be audited) from 31 October 2026 to 21 November 2026, and stated that “the specified date for furnishing of report of audit … shall stand extended to 21.10.2026 in terms of clause (ii) of Explanation to section 44AB”. Because section 12A(1)(b)(ii) and the tenth proviso to section 10(23C) fix the audit date by reference to that specified date, the same date governs Forms 10B and 10BB.
For tax year 2026-27, an organisation whose accounts must be audited under the Act falls in serial number 2 of the Table in section 263(1)©, with a return due date of 31 October 2027.
The return
Form and who files it
Rule 164(10) of the 2026 Rules prescribes ITR-7 for any person, including a company registered under section 8 of the Companies Act, 2013 or section 25 of the 1956 Act, “required to file a return under section 349” or under section 263(1)(a)(iv) or (v). Under the 1961 Act, ITR-7 is the return for persons required to file under section 139(4A), (4B), (4C) or (4D).
Due date and late filing
Section 349 requires the return “within the time limit allowed under section 263(1)© or 263(4)”. The words “or 263(4)” were inserted by the Finance Act, 2026 from 1 April 2026, so a belated return under section 263(4) satisfies section 349. Section 12A(1)(ba) of the 1961 Act already allowed a return within section 139(1) or 139(4). A belated return still carries the fee under section 234F of the 1961 Act or section 428 of the 2025 Act, interest, and the losses described in the guide on belated and revised returns.
A belated return has a further cost for a 1961 year. Under section 13(9)(ii), income accumulated under section 11(2) is not excluded if the return is not furnished on or before the section 139(1) due date. Section 342 of the 2025 Act, which governs accumulation from tax year 2026-27, ties the Form No. 109 statement to the section 263(1) due date but does not repeat a return condition of that kind.
| Year | Governing Act | Return due (audited charity) |
|---|---|---|
| FY 2025-26 (AY 2026-27) | 1961 Act | 21 November 2026 (Circular No. 07/2026) |
| Tax year 2026-27 | 2025 Act | 31 October 2027 (s.263(1)©) |
What the return carries
ITR-7 reports the computation the earlier guides describe: regular income, application, deemed application and accumulation, specified income at 30 per cent and residual income. The ITR-7 notified for assessment year 2025-26 asked, in the computation of income, whether the Form 9A option and the Form 10 statement had been furnished and on what date. The audit report, the Form No. 108 or 109 (or Form 9A or 10) and the donation statement are therefore filed before the return in the ordinary sequence.
Signing and verification
Under the table in rule 164 of the 2026 Rules, a company files under digital signature. Any other person not covered by the company and section 63 audit rows may file under digital signature, under an electronic verification code, or by transmitting the return electronically and then submitting the verification in Form ITR-V. The return is verified by the person named in section 265: for a company, the managing director or a director; for an association, a member or the principal officer; for any other person, the person himself or one competent to act on his behalf. The audit report is signed by the accountant and uploaded on the e-filing portal; the portal’s help pages for these forms could not be retrieved for this guide, and screen-level steps are not given here. Verification of the return is described in the guide on e-verifying a return.
What happens if a step is missed
Section 353(1) of the 2025 Act applies where a registered non-profit organisation fails to maintain books under section 347, fails to get its accounts audited under section 348, or fails to furnish its return under section 349. Its regular income for the year, as reduced by expenditure that meets the conditions of section 353(3), becomes taxable regular income chargeable under section 334. The allowable expenditure must be revenue expenditure incurred in India for the objects, not out of corpus held at the end of the preceding year, not out of a loan, not a donation to any person, not depreciation on an asset already claimed as application, and must comply with the TDS and cash-payment rules in section 35(b)(i) and section 36(4) to (7). Section 353(4) allows no other deduction or set-off. Specified income and residual income are taxed as well (s.353(2)).
The 1961 Act reaches a similar result in section 13(10) and (11), which apply where a trust “violates the conditions specified under clause (b) or clause (ba) of sub-section (1) of section 12A”, and allow only revenue expenditure in India for the objects, on conditions like those above.
Under neither Act is a default of this kind, by itself, a ground for cancelling registration: the specified violations are listed separately in section 351(1) (section 12AB(4) of the 1961 Act), and are covered in the next guide.
What to have ready
- Closed books for the year, including the rule 187 records.
- Separate accounts for each commercial activity and business undertaking.
- The computation of regular income, application and accumulation, with the Form No. 108 or 109 (or 9A or 10) already filed.
- The donor-wise statement for Form No. 113 (Form 10BD), reconciled with voluntary contributions.
- Foreign contribution receipts and any application outside India (these decide Form 10B or 10BB for a 1961 year).
- The registration and approval orders, with their Unique Registration Numbers.
- The digital signature of the person verifying the return, and the auditor’s credentials on the portal.
What can be changed after filing
A return can be revised within the time in section 263(5) of the 2025 Act (section 139(5) of the 1961 Act); see the guide on belated and revised returns. The 2026 Rules do not provide for revising Form No. 112 once filed. Neither do they allow a late Form No. 108 or 109.
The procedure in order
- Keep the rule 187 books through the year, at the registered office or an intimated place.
- Close the accounts and compute regular income, application and accumulation.
- File Form No. 108 or 109 (Form 9A or 10 for 1961 years) by its due date.
- Get the accounts audited and file Form No. 112 one month before the return due date (Form 10B or 10BB by 21 October 2026 for assessment year 2026-27).
- File ITR-7 by the section 263(1)© due date (21 November 2026 for assessment year 2026-27), and verify it.
- File Form No. 113 and issue Form No. 114 by 31 May for the donations of the financial year.
- Preserve the books for six years from the end of the tax year.
The next guide covers cancellation of registration, the specified violations, and the tax on accreted income on cancellation, conversion, merger or dissolution.