Chapter XVII - Special Provisions Relating to Certain Persons
Section 347
Section 347: books of account
Section 347 is the first of the compliance requirements in this Chapter for registered non-profit organisations - it fixes when the obligation to keep formal books of account kicks in.
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Need advice on Section 347?
This article is for general information. Refer to the Income-tax Act, 2025 as amended by the Finance Act, 2026 and the Taxation and Other Laws (Amendment) Act, 2026 for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
Where the total income of a registered non-profit organisation, without giving effect to the provisions of this Part, exceeds the maximum amount which is not chargeable to income-tax in any tax year, such registered non-profit organisation shall be required to keep and maintain the books of account and other documents in such form and manner and at such place, as may be prescribed.
Introduction
Section 347 requires specified registered non-profit organisations to maintain books of account and other documents in the prescribed form, manner and place.
The obligation supports verification of income, application, accumulation and compliance under this Part.
Key takeaways
Test income before this Part's benefits
The books-of-account requirement turns on total income computed without giving effect to the provisions of this Part.
Threshold is the non-taxable maximum
If that figure exceeds the maximum amount not chargeable to tax for the year, prescribed books and other documents must be maintained.
What Section 347 says
The pre-exemption total income figure controls this duty. Once it exceeds the amount not chargeable to tax, the organisation must maintain books and other documents in the prescribed form, manner and place.
When the obligation applies
The trigger is the organisation's total income computed without giving effect to the exemption provisions of this Part - if that pre-exemption figure exceeds the basic exemption threshold (the maximum amount not chargeable to tax) for the tax year, the organisation must keep and maintain books of account and other documents in the prescribed form, manner and place.
The same threshold test is used to trigger the audit requirement under Section 348 and the return-filing requirement under Section 349.
Record-keeping trigger checklist
Compute total income before applying this Part's non-profit provisions and compare it with the maximum amount not chargeable to income-tax for that tax year. If the former exceeds the latter, maintain books and other documents in the prescribed form, manner and place.
Keep the threshold working with the records. An ultimately reduced taxable amount does not undo the pre-Part comparison. Check the current rules before naming a required record format or retention location.
Step-by-step flow for applying Section 347
- 1
Compute total income without giving effect to this Part
Ignore the benefits of this Part (the special provisions for registered non-profit organisations) when working out total income for this test.
- 2
Does it exceed the maximum amount not chargeable to income-tax for that tax year?
Section 347 does not state that amount.
- No: Section 347 does not require books to be kept for that year.
- Yes: Go to the next step.
- 3
Keep and maintain books of account and other documents
The form, manner and place are to be prescribed. Section 347 itself does not list the books.
- 4
Link to audit and return
The same income test is used in Section 348 (audit) and Section 349 (return). A failure to maintain books under Section 347 is covered by Section 353(1)(a).
Practical checklist
Do
- Check whether the organisation crosses the statutory condition triggering books of account.
- Retain records in the prescribed form, manner and place.
Avoid
- Treat a bank statement alone as satisfying every prescribed books-and-documents obligation.
Illustrative example
Worked example: income above the limit before exemption
Hypothetical facts (illustration only, not a real taxpayer): A registered non-profit organisation receives donations and fees of ₹18,00,000 in a tax year. After applying its income to its objects, its taxable income under this Part is expected to be nil. Assume ₹18,00,000 is well above the maximum amount not chargeable to income-tax for that year.
Test income
Total income without giving effect to this Part is ₹18,00,000. The nil figure after the Part's benefits is not used for this test.
Threshold
₹18,00,000 exceeds the maximum amount not chargeable to income-tax, so Section 347 applies.
Books
The organisation must keep books of account and other documents in the prescribed form and manner and at the prescribed place.
Consequence
If it does not, Section 353(1)(a) applies to that tax year.
Outcome
- Books must be kept even though the organisation's final taxable income is expected to be nil.
- Check the prescribed rules for the exact books, form and place.
Frequently asked questions
When must a registered non-profit organisation maintain books of account?
When its total income, computed without giving effect to the exemptions under this Part, exceeds the maximum amount not chargeable to income-tax for that tax year.
Does the exemption under this Part reduce the income tested against the threshold?
No - the test is applied to the total income before giving effect to the Part's exemption provisions, so organisations cannot avoid the books-of-account requirement simply because their net taxable income (after exemption) is low.
Need help applying this provision to your situation?
Get help with your non-profit's books of accountLast updated 2026-10-10