Section 352 — Tax on accreted income. Successor to s.12AC, s.115TD, s.115TE, s.115TF of the 1961 Act.
Section 352 is in Chapter XVII — Special Provisions Relating to Certain Persons, which runs from section 302 to section 355.
Sub-section (1) charges a specified person, in addition to income-tax on total income, with additional income-tax on accreted income at the maximum marginal rate in any of the cases in column B(i) and (ii) of the Table in sub-section (4). Sub-section (2) computes accreted income as A = B – C, where B is the aggregate fair market value of the total assets of the specified person as on the date in column C of that Table and C is its total liability on that date, each computed by a prescribed method of valuation. Sub-section (3) reduces the result by so much of the accreted income as is attributable to specified assets and to liabilities related to them.
Sub-section (4) makes the specified person and its principal officer or trustee liable to pay the tax within fourteen days from the due date in column D of the Table, which sets out nine cases. Entries 1 and 2 cover cancellation or withdrawal of registration under a specified provision, with the due date turning on whether an appeal was preferred — the date of receipt of the appellate order confirming cancellation, or the date the period for filing an appeal under section 362 expires. Entries 3 to 5 cover modification of objects during a tax year where the modified objects do not conform to the conditions of registration, with the due date depending on whether a fresh registration application was made and, if rejected, whether an appeal was preferred. Entry 6 covers failure to apply for registration within the periods in the first proviso to section 10(23C) or section 12A(1)(ac) of the Income-tax Act, 1961, or in section 332(3) (Table: Sl. Nos. 3, 4, 5 or 7). Entry 7 covers conversion into a form not eligible for registration. Entry 8, substituted by Act No. 4 of 2026 with effect from 1 April 2026, covers a merger with any entity other than a registered non-profit organisation, with a registered non-profit organisation having the same or similar objects where the merger does not fulfil the prescribed conditions, or with a registered non-profit organisation that does not have the same or similar objects — the specified date and the due date both being the date of merger. Entry 9 covers failure on dissolution to transfer all assets to another registered non-profit organisation within twelve months from the end of the month of dissolution, the due date being the expiry of those twelve months.
Sub-section (5) makes the payment final: no credit may be claimed and no deduction allowed for it, by the specified person or anyone else, under any other provision. Sub-section (6) charges simple interest computed as I = 1% of (T × P), where T is the tax on accreted income and P the number of months, including part of a month, from the day after the last date for payment to the date of actual payment. Sub-section (7) applies the Act's collection and recovery provisions and deems two classes to be assessee in default: the specified person together with its principal officer or trustee, and, in an entry 9 case, the person to whom an asset forming part of the accreted income computation was transferred. Sub-section (8) limits that transferee's liability to the extent the asset he received is capable of meeting it.
A body that has built up assets out of exempt income is not allowed to walk away from the regime with those assets intact. The section values the accumulated wealth at the moment the body leaves — by cancellation, by changing its objects, by converting, by merging, or by dissolving without passing its assets on — and taxes the net accretion at the maximum marginal rate. The interest in sub-section (6) and the transferee liability in sub-section (7) exist because by then the entity may have no assets left to collect from.
| What | Figure | The condition on it | Where |
|---|---|---|---|
| Rate of additional income-tax on accreted income | The maximum marginal rate | Charged in addition to income-tax on total income, in any of the cases in the Table in sub-section (4) | Sub-section (1) |
| Time to pay the tax | Within fourteen days from the due date | The due date is the one specified in column D of the Table against the applicable case, not the date of the triggering event | Sub-section (4) |
| Interest for late payment | 1% for every month or part of a month | I = 1% of (T × P), running from the day after the last date for payment to the date of actual payment | Sub-section (6) |
| Period allowed to transfer assets on dissolution | Twelve months from the end of the month in which the dissolution takes place | Assets must go to another registered non-profit organisation; the due date for tax is the expiry of that period | Sub-section (4), Table Sl. No. 9 |
Two dates govern and they are different: column C fixes the date on which assets and liabilities are valued, and column D fixes the due date from which the fourteen days in sub-section (4) run. In several entries those are years apart — on a cancellation that is appealed, valuation is at the date of the cancellation order but payment is not due until fourteen days after the appellate order confirming it is received. Liability is personal as well as institutional: sub-section (7) deems the principal officer or trustee to be an assessee in default alongside the entity, and in a dissolution case reaches the transferee of an asset, though sub-section (8) caps him at the value of what he received. The tax is terminal — sub-section (5) allows no credit and no deduction for it anywhere in the Act. The merger entry is now wider than before: Table Sl. No. 8 was substituted by Act No. 4 of 2026 with effect from 1 April 2026 and covers not only a merger with a non-qualifying entity but also a merger with a registered non-profit organisation whose objects differ, or one whose objects are the same or similar where the prescribed conditions are not met.
A specified person's registration is cancelled by an order in one tax year and it appeals. Accreted income is computed under sub-section (2) as the fair market value of its total assets less total liabilities as on the date of the cancellation order, reduced under sub-section (3) by the part attributable to specified assets. If the appellate order confirming the cancellation is received two years later, the tax at the maximum marginal rate falls due on that date of receipt and must be paid within fourteen days; paying three months late attracts simple interest at 1% for each of those months under sub-section (6), and the trustee is an assessee in default for it alongside the entity.
A specified person meets this section immediately after an order cancelling or refusing registration, or on merger or dissolution — the demand for tax on accreted income follows the triggering order rather than any return, and a trustee or principal officer meets it as a recovery notice addressed to him personally under sub-section (7).
be liable to pay additional income-tax on accreted income at the maximum marginal rate
shall be liable to pay the tax on accreted income to the credit of the Central Government within fourteen days from the due date specified in column D of the Table below
The specified person has failed to transfer upon dissolution, all its assets to any other registered non-profit organisation within twelve months from the end of the month in which the dissolution takes place.
See the full 1961 to 2025 concordance.
All of them are in the Rules 2026 index.
See the notifications index.