Section 335 of the Income-tax Act, 2025 — Regular Income of a Registered Non-Profit Organisation (RNPO)

In plain language

What Section 335 actually deals with

Section 335 sits inside Part B of Chapter XVII of the Income-tax Act, 2025 (Sections 332 to 355), which is the self-contained code for Registered Non-Profit Organisations (RNPOs) — what we used to call charitable and religious trusts, societies and Section 8 companies. Section 335 does one specific, foundational job: it defines what counts as the "regular income" of an RNPO. This is the pool of income on which the whole 85% application-and-accumulation exemption machinery then operates.

In the old Income-tax Act, 1961, this concept was buried inside Sections 11 and 12. The 2025 Act pulls it out and names it cleanly. The substance is preserved — the number "85%" is unchanged — but the drafting is far more orderly.

Who it applies to

• Only RNPOs — entities holding a valid, uncancelled registration under Section 332 of the 2025 Act (or migrated from the old Sections 12A / 12AA / 12AB / 10(23C) regime).
• Charitable trusts, religious trusts, societies, and Section 8 companies pursuing relief of the poor, education, medical relief, preservation of environment/monuments, or advancement of any other object of general public utility (GPU).
• It does not apply to a body that has lost or never obtained registration — such a body is taxed as an ordinary assessee.

The heads of "regular income"

Section 335 groups an RNPO's ordinary receipts into distinct heads. Broadly, regular income means:

• (a) Activity income — receipts from the charitable or religious activity for which the RNPO is registered (school fees, hospital charges, etc.).
• (b) Property / investment income — capital and revenue receipts from property, deposits or investments held wholly for charitable or religious purposes.
• (c) Part-held property income — income from property or investment held in part for such purposes.
• (d) Voluntary contributions — donations received during the tax year (other than corpus donations, which are treated separately).
• (e) Commercial-activity gains — gains from a permissible commercial or incidental business activity under Sections 344, 345 and 346, computed as prescribed.

How it interacts with the rest of Part B

• Section 336 — Taxable Regular Income: If the RNPO applies or accumulates at least 85% of its Section 335 regular income for charitable/religious purposes in India, the taxable regular income is nil. If it falls short, only the shortfall is taxed.
• Section 341 — Application: defines when income is treated as "applied" (largely on a payment/cash basis), including deemed application and capital-gains reinvestment.
• Section 342 — Accumulation: lets an RNPO set aside income for a stated purpose for up to 5 years using the prescribed declaration.
• Section 343 — Deemed accumulation: automatically permits up to 15% of regular income to be retained without conditions.
• Section 337 — Specified Income: a separate, tougher basket (impermissible investments, benefits to related persons, misapplied accumulations, excess anonymous donations) taxed at a flat 30% with no 85% cushion.

Practical implications

• Regular income is your starting figure. Get its computation right, because 85% of it is your spending target.
• Only 15% can be freely retained; anything beyond needs a valid Section 342 accumulation, or it becomes taxable.
• Keep separate books for any incidental business (Section 345) and watch the 20% receipts cap for GPU bodies (Section 346).
• Corpus donations and specified income are carved out — do not lump them into regular income.
• File the audit report and return on time; belated returns are now specifically enabled (Section 349) but exemption still depends on meeting the 85% test.