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CS Professional · Advanced Direct Tax Laws and Practice · Tax Audit

Under Section 348 of the Income-tax Act, 2025 (effective for the June 2027 session), when must the accounts of a registered non-profit organisation be audited by an accountant?

Audit is required when the registered non-profit organisation's total income, computed without giving effect to the exemption provisions of the Part, exceeds the maximum amount not chargeable to income-tax in the tax year. The test is on income before exemption, not on receipts or foreign contributions.

  1. AWhen its total income, before giving effect to the provisions of the relevant Part, exceeds the maximum amount not chargeable to income-tax in the tax yearCorrect
  2. BWhen its gross receipts exceed one crore rupees in the tax year
  3. CWhen it has received any foreign contribution during the tax year
  4. DWhen its total income after claiming exemption exceeds the basic exemption limit

Explanation

Section 348 requires audit 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 tax in the tax year. The one-crore test belongs to business tax audit, and the test is applied before, not after, claiming exemption.

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