Taxable regular income
[Section-336 as per the Income Tax Act, 2025 (this Act) w.e.f. 1st April, 2026.]
The taxable regular income of a registered non-profit organisation for any tax year shall be––
- (a) nil, where 85% or more of the regular income for such tax year has been applied or accumulated under section 342 for charitable or religious purposes, in such tax year as per the provisions of this Part; and
- (b) in any other case, 85% of the regular income for such tax year as reduced by its application for charitable or religious purposes or accumulation thereof under section 342 in such tax year as per the provisions of this Part.
FAQs on Section 336 of Income Tax Act 2025
What is meant by “taxable regular income” for a registered non-profit organisation under Section 336?
Taxable regular income refers to the portion of the regular income of a registered non-profit organisation that is subject to income tax for a given tax year as determined under Section 336.
When is the taxable regular income of a non-profit organisation considered nil under Section 336?
It is considered nil if 85% or more of the regular income is applied or accumulated under Section 342 for charitable or religious purposes in the same tax year.
What happens if a non-profit organisation applies or accumulates less than 85% of its regular income for charitable or religious purposes?
In such cases, the taxable regular income will be 85% of the regular income, reduced by the amount applied or accumulated under Section 342 during that tax year.
Is accumulation of income under Section 342 treated the same as application of income for computing taxable income?
Yes, both application and accumulation of income under Section 342 are considered for determining if 85% of the regular income has been utilised for charitable or religious purposes.
Does Section 336 apply to all types of income earned by non-profit organisations?
No, it applies only to the regular income as defined and subject to the provisions of Part D of Chapter XII of the Act.
Is it necessary to apply exactly 85% of regular income to qualify for nil taxable income?
No, the provision requires application or accumulation of 85% or more. Anything equal to or above 85% qualifies.
What if a non-profit applies 90% of its income for charitable purposes—will there still be any taxable income?
No, if the organisation applies or accumulates 85% or more of its regular income as per Section 342, the taxable regular income will be nil.
What is the tax implication if only 60% of the income is applied and the rest is neither applied nor accumulated?
In this case, 85% of the regular income will be computed and reduced by the 60% applied. The balance 25% (i.e., 85% – 60%) will be treated as taxable regular income.
Can application of income in a subsequent year be considered for reducing taxable income under Section 336?
No, only the application or accumulation in the same tax year is considered under Section 336.
Does Section 336 provide any relief for partial application of income if future application is planned?
No, future intentions do not affect the computation under Section 336. Only application or accumulation made in the relevant tax year counts.
Is there any provision under Section 336 for carry forward or set-off of unapplied income?
Section 336 itself does not deal with carry forward or set-off; it purely computes taxable regular income based on application or accumulation in the relevant tax year.
Does Section 336 require separate documentation to prove application or accumulation under Section 342?
Yes, proper documentation and compliance with Section 342 provisions are necessary to claim exemption under Section 336.
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