NGOs and charitable trusts in India have specific books of account obligations under the Direct Tax Code (DTC) 2025. Section 62 read with Rule 187 of the Income-tax Rules, 2026 prescribes detailed requirements for maintaining books of account that enable the Assessing Officer to compute total income accurately. This guide analyses the books of account requirements for NGOs and charitable trusts.
The Books of Account Framework
Section 62 — Maintenance of Books of Account
Section 62(1) requires that any person carrying on specified profession or any person carrying on business or profession satisfying the prescribed conditions shall keep and maintain such books of account and other documents to enable the Assessing Officer to compute his total income under the Act.
Section 62(4) — Specified Profession
"Specified profession" includes legal, medical, engineering, architectural, accountancy, technical consultancy, interior decoration, information technology or company secretary.
Rule 187 — Books of Account for Registered Non-Profit Organisations
Rule 187 of the Income-tax Rules, 2026 prescribes the detailed books of account requirements for registered non-profit organisations.
Books of Account Requirements — Rule 187
Rule 187(1) — Books of Account
Every registered non-profit organisation which is required to keep and maintain books of account and other documents under Section 347 shall keep and maintain the following:
(a) Basic Books of Account
- Cashbook
- Ledger
- Journal
- Copies of bills, whether machine numbered or otherwise serially numbered
- Copies or counter foils of machine numbered or otherwise serially numbered receipts issued by the assessee
- Original bills wherever issued to the person and receipts in respect of payments made by the person
- Any other book that may be required to be maintained in order to give a true and fair view of the state of affairs
(b) Business Undertaking Books
Books of account for business undertaking referred in Section 344
(c) Other Business Books
Books of account for business carried on by the assessee other than the business undertaking referred in Section 344
Rule 187(1)(d) — Other Documents
- Record of all the projects and institutions run by the person
- Record of income during the tax year
- Record of application of income
- Record of income accumulated or set apart
- Record of money invested or deposited
- Record of donations made with a specific direction that they shall form part of the corpus
- Record of donations received for renovation or repair
- Record of loans and borrowings
- Record of properties held by the assessee
- Record of related persons
- Any other documents containing any other relevant information
Detailed Record-Keeping Requirements
1. Income Records
Record of income during the tax year in respect of:
- Charitable or religious activity
- Any property, deposit or investment held
- Voluntary contributions received
- Commercial activity permissible under Sections 344, 345 and 346
- Specified income, as referred to in Section 337
- Residual income as referred in Section 355(j)
2. Application of Income Records
Record of:
- Application of income, in India
- Amount credited or paid to any registered non-profit organisation
- Application of income outside India
- Deemed application of income
- Income accumulated or set apart
- Money invested or deposited
3. Corpus Donation Records
Record of donations made with a specific direction that they shall form part of the corpus:
- Donations received during the tax year
- Application out of such donations
- Amount credited or paid towards corpus
- Forms and modes in which such donation is invested or deposited
4. Related Person Records
Record of related person as referred to in Section 355(h):
- Details of their name, address, Permanent Account Number and Aadhaar number
- Transactions undertaken with related persons
Place of Maintenance — Rule 187(3)
Rule 187(3) — Place of Maintenance
The books of account and other documents shall be kept and maintained by the registered non-profit organisation at its registered office.
Rule 187(4) — Alternative Place
All or any of the books of account may be kept at such other place in India as the management may decide by way of a resolution. The registered non-profit organisation shall, within seven days thereof, intimate the jurisdictional Assessing Officer in writing, giving the full address of that other place.
Electronic Records — Rule 187(2)
Rule 187(2) — Electronic Records
The books of account and other documents may be kept in written form or in electronic form or in digital form or as printouts of data stored in electronic form, or in digital form, or any other form of electromagnetic data storage device.
Retention Period — Rule 187(5)
Rule 187(5) — Retention Period
The books of account and other documents shall be kept and maintained for a period of six years from the end of the relevant tax year.
Rule 187(6) — Reassessment
Where the assessment in relation to any tax year has been reopened under Section 279 within the period specified in Section 282, the books of account and other documents which were kept and maintained at the time of reopening of the assessment shall continue to be so kept and maintained till the assessment so reopened has become final.
Practical Compliance
1. Maintain Basic Books
Maintain cashbook, ledger, and journal.
2. Keep Bills and Receipts
Keep copies of bills and receipts for sums of ₹250 or more.
3. Maintain Income Records
Maintain records of all income during the tax year.
4. Maintain Application Records
Maintain records of application of income.
5. Maintain Corpus Records
Maintain records of corpus donations.
6. Maintain Related Person Records
Maintain records of related persons.
7. Retain Records
Retain all books of account and documents for six years.
Consequences of Non-Compliance
Disallowance of Deduction
Failure to maintain proper books of account may result in:
- Disallowance of exemption or deduction
- Income may be recomputed
- Interest and penalty may be levied
Penalty
Non-compliance may result in penalty under Section 439 for under-reporting of income.
Expert Legal Guidance
Anuj Desai & Associates provides comprehensive legal advisory services on books of account compliance for NGOs and charitable trusts. Our direct tax experts help organisations understand their obligations, set up compliant systems, and navigate the regulatory framework. We assist in compliance assessment, system setup, and representation before income-tax authorities.
Disclaimer: This article provides general information and does not constitute legal advice. For specific guidance on books of account compliance or any other direct tax matter, please consult qualified legal professionals.
Need Expert Legal Guidance?
Navigating the books of account compliance framework for NGOs and charitable trusts requires experienced legal counsel. At Anuj Desai & Associates, we provide comprehensive direct tax advisory services, including:
- Compliance Assessment: Evaluation of books of account obligations
- System Setup: Guidance on setting up compliant systems
- Record Maintenance: Assistance with record maintenance
- Representation: Representation before income-tax authorities
Contact us for expert legal guidance on your NGO books of account matters.