Allowing registered NPOs to file a Belated Return u/s 263(4)
Section 349 of the Income Tax Act, 2025 mandates that where the total income
of a registered NPO, exceeds the maximum amount not chargeable to tax for
any tax year, shall furnish its return of income within the due date prescribed
under section 263(1)(c).
The IT Act, 2025 does not recognise the concept of a belated return for a
registered NPO which was available under IT Act, 1961. Exemption under the
special NPO regime is available only where the return is furnished within the
original due date specified u/s 263(1)(c). There is no reference to section
263(4), which otherwise permits belated filing of returns within the extended
statutory timeline. The absence of reference to section 263(4) had a legal
effect that a delay in filing the return would be treated as an “Other Violation”
u/s 353.
The Finance Bill, 2026 proposes to amend Section 349 to insert a reference to
section 263(4), allowing registered NPOs to file a belated return and still claim
exemption. Accordingly, where the return is furnished within the time limit
permitted for filing an original or belated return, it shall not be treated as an
“Other Violation” u/s 353.