Cancellation Risk For GPU-based NPOs Diluted: A Shift Under The Income-tax Act, 2025

In brief

The article examines how the amendment by the Finance Act, 2026 in the Income-tax Act, 2025 changes the consequences for not-for-profit organisations (‘NPOs’) pursuing general public utility objects. The 2026 amendment removes many breaches from the ‘specified violations’, thus reducing the risk of cancellation. The authors however note that non-compliance may still lead to denial of exemption, taxation of commercial income, and scrutiny of charitable purpose. According to them, the change offers operational flexibility while preserving discipline governing NPOs.

The transition of India’s income-tax regime from the Income-tax Act, 1961 (‘1961 Act’) to the Income-tax Act, 2025 (‘2025 Act’) has brought to the fore several noticeable and significant changes in the overall legislative framework. This is notwithstanding the Government’s stated position that the 2025 Act is not intended to depart from the policy foundations underpinning the 1961 Act. Closer scrutiny, however,