Section 354A — Merger of registered non-profit organisation in certain cases.
Section 354A is in Chapter XVII — Special Provisions Relating to Certain Persons, which runs from section 302 to section 355.
The section was inserted by Act No. 4 of 2026 with effect from 1 April 2026. It applies where a registered non-profit organisation merges with another registered non-profit organisation, and it disapplies section 352 — the charge of additional income-tax on accreted income — in that case, on two conditions: the other registered non-profit organisation has the same or similar objects, and the merger fulfils such conditions as may be prescribed.
A merger moves the whole of one organisation's property out of its hands, which would otherwise engage the accreted income charge in section 352 as though the organisation had left the regime. Where the property simply passes to another registered organisation pursuing the same or similar objects, nothing has left the charitable stream, and the section removes the charge — but only on conditions the rules will set, so that the relief cannot be used to move assets to a body with unrelated purposes.
Both conditions must be met, and each cuts differently. Clause (a) is about the transferee: it must itself be a registered non-profit organisation and it must have the same or similar objects, so a merger into an unregistered body, or into one with unrelated objects, leaves section 352 in play. Clause (b) is about the merger: the relief depends on conditions still to be prescribed, and the section states none of them, so the exemption cannot be worked out from the section alone. The relief is also negative in form — it says section 352 shall not apply. It confers no exemption or deduction of its own, and it does not touch the operation of any other provision on the merger.
Two registered non-profit organisations running educational institutions merge, one into the other. Because the transferee is itself registered and has the same objects, the section 352 charge on accreted income does not attach to the merging organisation — provided the merger also satisfies the conditions to be prescribed under clause (b). A merger into a body that is not a registered non-profit organisation, or one whose objects are unrelated, gets no relief from this section.
In the merging organisation's assessment for the year of the merger, where the Assessing Officer would otherwise raise the section 352 charge on accreted income, and in the papers put up for the merger itself, where the prescribed conditions have to be shown to be met.
Where any registered non-profit organisation merges with any other registered non-profit organisation, the provisions of section 352 shall not apply
the other registered non-profit organisation has same or similar objects