Section 333 · Special persons
Section 333 of the Income-tax Act, 2025 — Switching Over of Exemption Regimes for Non-Profit Organisations
By CA Rajat Agrawal
Updated 05 Jul 2026
Chapter XVII
📜 What the law says — Section 333, Income-tax Act 2025
333. (1) Nothing contained in section 11, other than Schedule II (Table: Sl. No. 1),
Schedule III (Table: Sl. Nos. 27 to 29 and 36) and Schedule VII (Table: Sl. Nos.
10 to 19 and 42 to 45), shall exclude any income of a registered non-profit organi-
sation from its total income for that tax year.
(2) The registration under section 332 shall cease to operate from the date on which
the registered non-profit organisation is notified as specified in Schedule III (Table:
Sl. No. 27, 28, 29 or 36) or Schedule VII (Table: Sl. No. 42), or from the 1st day of
April of the tax year for a registered non-profit organisation which claims exemption
under Schedule VII (Table: Sl. No. 43, 44 or 45).
(3) A person, whose registration ceases to operate under sub-section (2), may apply
for registration under section 332 subject to the condition that the notification
granting exemption to such person under Schedule III (Table: Sl. No. 27, 28, 29 or
36) or Schedule VII (Table: Sl. No. 42) ceases to have effect from the date on which
the said registration is granted and thereafter shall not be entitled to exemption
under the respective serial numbers of the said Schedules.
2. —Income of registered non-profit organisation
Tax on income of registered non-profit organisation.
In plain language
What Section 333 actually deals with
Contrary to what the heading "registration" might suggest, Section 333 is not the registration provision — registration of a non-profit organisation is governed by Section 332. Section 333, titled "Switching over of regimes", is the bridge provision that decides what happens when a Registered Non-Profit Organisation (RNPO) moves out of the general Section 332 exemption route and instead claims exemption under a specified entry of Schedule III or Schedule VII of the Act.
Section 333 sits inside Part B of Chapter XVII (Sections 332 to 355), the self-contained code for charitable and religious trusts under the new Act, effective 1 April 2026. This code replaces the old machinery of Sections 11, 12A/12AA/12AB, 10(23C) and 13 of the Income-tax Act, 1961.
The three things Section 333 does
- Sub-section (1) — blocks general Section 11 exemption. Once you are a registered NPO, no income can be excluded from your total income under Section 11 except through the specifically listed entries — Schedule II (Sl. No. 1), Schedule III (Sl. Nos. 27 to 29 and 36) and Schedule VII (Sl. Nos. 10 to 19 and 42 to 45). In plain words, an RNPO cannot cherry-pick the wide old exemptions; it must stay within its own Part B code or the named schedule doors.
- Sub-section (2) — registration ceases on switching. Your Section 332 registration stops operating from the date you are notified under the relevant Schedule III / Schedule VII entries (e.g. Schedule VII Sl. No. 42), or from 1 April of the tax year in which you claim exemption under Schedule VII Sl. Nos. 43, 44 or 45.
- Sub-section (3) — re-registration is allowed, but no double-dipping. An organisation whose registration has ceased may apply afresh under Section 332. The catch: the earlier Schedule-based notification must cease from the date the new registration takes effect, and once back under Section 332 you cannot again claim exemption under those same schedule serial numbers.
Who this applies to
Section 333 is relevant to any charitable or religious trust, society, Section 8 company or institution that is registered as an RNPO under Section 332 and is eligible to be notified for a special exemption under Schedule III or Schedule VII — typically Government-notified funds, institutions of national importance, notified research/educational/medical bodies and similar entities. An ordinary local charitable trust that simply runs on the Section 332 + 336 (85% application) route will rarely trigger Section 333.
The core principle: one regime at a time
No dual benefit. The entire design of Section 333 is to stop an entity enjoying both ordinary RNPO exemption and a special Schedule notification for the same income. You pick a lane. If you move into the Schedule lane, your Section 332 registration goes dormant; if you later want to come back, you re-register but forfeit the schedule route going forward.
How it interacts with the rest of Part B
- Section 332 is the single registration door (replaces 12A/12AA/12AB and 10(23C)); Section 333 turns that registration on or off when a regime switch happens.
- Section 334 taxes an RNPO's specified income at a flat 30%; regular income is governed by Sections 335–336.
- Section 336 is the 85% application rule — apply 85% or more of regular income to charitable/religious purposes and taxable income is effectively nil.
- Section 337 is the "danger zone" — anonymous donations, benefits to related persons, impermissible investments etc., all taxed at 30%.
- Section 351 deals with cancellation of registration and Section 352 with accreted-income (exit) tax. Note the distinction: Section 333 covers a voluntary regime switch, not a penal cancellation.
Practical implications
- Do not assume you keep both. Getting a Schedule VII/III notification silently switches off your Section 332 registration — plan your compliance calendar accordingly.
- Timing matters. For Schedule VII Sl. Nos. 43–45, cessation is backdated to 1 April of the tax year, so mid-year switches can have a full-year effect.
- Re-entry is one-way on the schedule. Once you return to Section 332, that specific schedule exemption is permanently off the table — take advice before switching.
- Existing 1961-Act registrations valid on 1 April 2026 are grandfathered into RNPO status automatically; lapsed ones need a fresh Section 332 application.
💡 Example
Worked example 1 — a research institution switches to Schedule VII. Shakti Research Foundation is registered under Section 332 and runs on the 85% application route. In FY 2026-27 it earns regular income of ₹4 crore and applies ₹3.6 crore (90%) to research — so under Section 336 its taxable income is nil. Midway, the Government notifies it under Schedule VII Sl. No. 42. From the date of that notification, its Section 332 registration ceases to operate under Section 333(2). Going forward its income is exempt only through that Schedule VII entry, and it can no longer claim the ordinary Section 336 route.
Worked example 2 — cost of re-entry. Suppose the same Foundation later finds the Schedule route too restrictive and re-applies under Section 332 in FY 2028-29. Section 333(3) lets it re-register, but from the effective date the Schedule VII Sl. No. 42 notification must cease and it cannot claim that entry again. If ₹50 lakh of income would have been exempt under that entry, it is now taxable/assessable under the ordinary RNPO rules instead — so the Foundation must be sure the 85% application route genuinely covers it before switching back.
A relatable story. Think of it like a mobile phone plan. You are on the "RNPO Section 332" plan. One day the operator offers you a special "Schedule VII" plan and you accept — the moment you do, your old plan is switched off automatically; you cannot run both SIMs at once. Later you can port back to the Section 332 plan, but the special Schedule offer you gave up is gone for good. Section 333 is simply the rulebook that makes sure you are always on exactly one plan.
| Trigger under Section 333 | What happens | Date of effect |
|---|
| Notified under Schedule III (Sl. No. 27–29, 36) or Schedule VII (Sl. No. 42) | Section 332 registration ceases to operate | Date of notification |
| Claims exemption under Schedule VII (Sl. No. 43, 44 or 45) | Section 332 registration ceases to operate | 1 April of that tax year |
| General Section 11 exemption (outside listed entries) | Not allowed for an RNPO — income stays in total income | Throughout registration |
| Re-application after cessation (sub-section 3) | Fresh Section 332 registration allowed; earlier schedule notification ends | From new registration date |
| Claiming the same schedule entry again after re-registration | Not permitted — permanently forfeited | After re-registration |
Related sections
Section 332 — Registration of non-profit organisations Section 334 — Tax on income of a registered NPO (30% on specified income) Section 336 — 85% application of income rule Section 337 — Specified income taxed at 30% Section 351 — Cancellation of registration Section 352 — Tax on accreted (exit) income
Frequently asked questions
Does Section 333 deal with registration of a non-profit organisation?
No. Registration is governed by Section 332. Section 333 is titled 'Switching over of regimes' and only decides what happens to that Section 332 registration when the NPO moves to a Schedule III or Schedule VII exemption route.
Can an RNPO claim both Section 332 exemption and a Schedule VII exemption at the same time?
No. Section 333 prohibits dual benefit — the moment you are notified under or claim a specified Schedule entry, your Section 332 registration ceases to operate. You must be on one regime at a time.
When exactly does my Section 332 registration stop under Section 333?
From the date of notification for Schedule III (Sl. No. 27–29, 36) or Schedule VII Sl. No. 42, and from 1 April of the tax year if you claim exemption under Schedule VII Sl. Nos. 43, 44 or 45.
If my registration ceases, can I get it back?
Yes. Section 333(3) allows you to apply afresh under Section 332. But the earlier schedule notification must cease from the new registration date, and you cannot claim that same schedule entry again.
Is Section 333 the same as cancellation of registration?
No. Cancellation (a penal outcome for violations) is dealt with under Section 351. Section 333 covers a voluntary or automatic switch of exemption regime, not misconduct.
What was the position under the Income-tax Act, 1961?
The 1961 Act handled this through the interplay of Section 11 exemption, Section 10(23C) institutions and the registration provisions (12A/12AA/12AB). The 2025 Act consolidates registration into Section 332 and adds Section 333 as an explicit anti-dual-benefit switching rule.
From when is Section 333 effective?
Section 333 forms part of the Income-tax Act, 2025 (as amended by the Finance Act, 2026) and applies from the tax year beginning 1 April 2026.
C
CA Rajat Agrawal
Chartered Accountant, EaseValue · Reviewed 05 Jul 2026
This explainer is prepared and reviewed by EaseValue's tax team, based on the text of the Income-tax Act, 2025 (as amended by the Finance Act, 2026).
Disclaimer: This page explains the law in general terms for education and is not professional advice. The Income-tax Act, 2025 takes effect from 1 April 2026; provisions, thresholds and interpretations may change. Please confirm your specific position with our team before acting.
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