Rule 182 — Manner of computation of gains of commercial activities under sections 335(e), 344, 345 and 346. Made under s.335, s.344, s.345, s.346 of the Income-tax Act, 2025.
Rule 182 gives effect to Section 335, Section 344, Section 345 and Section 346 of the Income-tax Act, 2025. A rule cannot go beyond the section it serves: where the two seem to differ, the section governs.
The rule prescribes how gains of a permissible commercial activity of a registered non-profit organisation are computed for a tax year, for the purposes of section 335(e), where the activity is one permitted under sections 344, 345 and 346. Three requirements make up the method. Clause (a): the commercial activity is treated as if it is an entity separate from the registered non-profit organisation. Clause (b): separate books of account are maintained for such activities. Clause (c): gains from the commercial activity during the tax year are computed as per the provisions of Part D of Chapter IV of the Act.
The rule does not say whether the activity is permissible — that is settled by sections 344, 345 and 346 — nor what is done with the gains once computed, which is section 335(e)'s domain.
A registered non-profit organisation may carry on the commercial activities those three sections permit, and section 335(e) works on the gains of that activity, but the organisation's accounts are kept for its charitable purposes and mix the two. The section does not say how to isolate the commercial result. Rule 182 isolates it by a fiction and a bookkeeping obligation — treat the activity as a separate entity, keep separate books — and then computes the result under the ordinary business rules in Part D of Chapter IV rather than under any special non-profit computation.
The separation is a fiction for computation only: clause (a) says the activity is treated as if it is an entity separate from the organisation, which does not make it a separate person for any other purpose. Clause (c) is the substantive choice — the gains are computed as per Part D of Chapter IV, so the ordinary rules on business income, including what is deductible against it, govern the exercise, and the organisation's general receipts and application of income do not enter it. Clause (b) is the practical precondition: without separate books maintained for the activity, the computation the rule requires cannot be made from the organisation's consolidated accounts. Note that all three clauses are stated together as the manner of computation, not as alternatives.
A registered non-profit organisation runs a permissible commercial activity alongside its objects. It keeps separate books for that activity, and for the tax year those books show receipts of Rs. 40 lakh and expenditure of Rs. 30 lakh attributable to the activity. Its gains for the purposes of section 335(e) are computed on those separate books as if the activity were a separate entity, applying Part D of Chapter IV, giving Rs. 10 lakh. Donations and other receipts of the organisation do not enter that computation.
You meet it in the accounts and computation a registered non-profit organisation files where it carries on a permissible commercial activity, and in any examination of the section 335(e) figure, where the separate books required by clause (b) are what the computation is tested against.
such commercial activity shall be treated as if it is entity separate from the registered non-profit organisation
gains from such commercial activity during the tax year shall be computed as per the provisions of Part D of Chapter IV of the Act
