Section 345
Section 345: restriction on commercial activities
Section 345 sets the general condition under which a registered non-profit organisation may carry out any commercial activity at all, without that activity disqualifying it from the exemption benefits of this Part.
This explanation is AI-assisted and pending review by our CA/CS team. It is general information, not professional advice - always cross-check against the bare law text above or talk to our tax team for guidance specific to your situation.
What Section 345 says
"A registered non-profit organisation (other than a registered non-profit organisation mentioned in section 346) shall not carry out any commercial activity unless-- (a) such commercial activity is incidental to the attainment of the objectives of the registered non-profit organisation; and (b) separate books of account are maintained for such activities."
The two conditions
- The commercial activity must be incidental to the attainment of the organisation's own objectives - it cannot be a standalone commercial venture unrelated to the charitable or religious purpose
- Separate books of account must be maintained specifically for that commercial activity
A separate rule for "general public utility" organisations
Section 345 excludes organisations covered by Section 346, which sets a different and more specific rule for organisations carrying out advancement of any other object of general public utility - including a cap that aggregate receipts from commercial activity must not exceed 20% of the organisation's total receipts for the relevant tax year, along with its own separate books of account requirement.
Frequently asked questions
Can any registered non-profit organisation run a commercial business alongside its charitable work?
Only if the commercial activity is incidental to the attainment of the organisation's own objectives, and separate books of account are maintained for it - as required by Section 345(a) and (b).
What happens if a registered non-profit organisation carries out commercial activity in contravention of Section 345?
This is listed as a specified violation under Section 351(1)(b), which can lead the Principal Commissioner or Commissioner to cancel the organisation's registration.
Related sections
Want this applied to your actual filing, not just explained?
Structure your non-profit's commercial activities correctlyLast updated 9 September 2026