Section 348 Income Tax Act 2025: When Is an Audit Mandatory for a Registered NGO?
Section 348 requires an audit of the accounts of a registered non-profit organisation (NPO) where its total income, calculated without applying the special provisions of the registered-NPO Part, exceeds the maximum amount not chargeable to income-tax in a tax year. The audit must be conducted by an accountant and the prescribed report furnished by the required date.
What does Section 348 of the Income-tax Act, 2025 provide?
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, the accounts of the organisation for that tax year must be audited by an accountant. The person in receipt of the income must furnish an audit report by the required date, in the prescribed form, duly signed and verified by that accountant, setting out prescribed particulars.
The provision forms part of the Compliances subdivision of the special rules for registered non-profit organisations. It states a single income-based audit trigger and a connected audit-report obligation.
When does a registered NGO become liable to audit?
- Registration: The organisation must be a registered non-profit organisation under the applicable provisions.
- Income computation: Determine its total income without giving effect to the provisions of this Part; the test is not necessarily the final taxable amount after the special NPO rules operate.
- Threshold comparison: Compare that amount with the maximum amount not chargeable to income-tax for the relevant tax year.
- Excess over threshold: If the amount exceeds the applicable threshold, Section 348 requires the accounts for that tax year to be audited and the audit report to be furnished.
Who is authorised to conduct the audit?
Section 348 uses the defined statutory term accountant. The audit must be carried out by a person satisfying the Income-tax Act's definition of that term, including applicable eligibility and disqualification requirements. Merely preparing accounts internally is not the same as obtaining the audit mandated by this provision.
The accountant must duly sign and verify the report, which must set forth the particulars prescribed under the relevant rules.
What audit report must be furnished and by what date?
The person in receipt of the organisation's income must furnish a report of the audit by such date, in the prescribed form, duly signed and verified by the accountant. Section 348 delegates the report format and particulars to the prescribed framework rather than setting them out in the section itself.
Before filing, verify the applicable audit-report form, the reporting date, electronic filing requirements and any amendments or extensions for the tax year concerned. The audit-report obligation under Section 348 is distinct from the return-of-income obligation under Section 349.
How do Sections 347, 348 and 349 differ?
| Section | Subject | Core obligation |
|---|---|---|
| 347 | Books of account | Maintain books and other documents in prescribed form, manner and place |
| 348 | Audit | Have accounts audited by an accountant and furnish the prescribed signed and verified audit report |
| 349 | Return of income | Furnish the return in accordance with the specified provisions of Section 263 and applicable time limit |
Each section uses an income-based threshold referring to total income calculated without giving effect to the provisions of this Part. Satisfying one compliance obligation does not automatically satisfy the others.
Relevant statutory definitions and expressions
Practical audit compliance checklist
- Confirm the organisation's registered-NPO status for the relevant tax year.
- Compute total income for the Section 348 threshold test before applying the special provisions of this Part.
- Identify the applicable maximum amount not chargeable to income-tax.
- Maintain books, supporting vouchers, donation and corpus records, investment records and other prescribed documents under Section 347.
- Appoint an eligible accountant and provide complete records for the tax year.
- Ensure the prescribed audit report is signed, verified and furnished by the applicable due date.
- Separately verify the return-of-income requirements under Section 349.
Practical illustrations
Example 1: Income exceeds the applicable limit
A registered NPO's total income, measured without giving effect to the special NPO provisions, exceeds the applicable amount not chargeable to income-tax. Section 348 requires an audit of its accounts and furnishing of the prescribed audit report, even if its final tax liability is reduced by provisions relating to application or accumulation of income.
Example 2: Income is within the applicable limit
If the total income for the Section 348 test does not exceed the applicable threshold, the express income trigger in Section 348 is not met. Other audit requirements under a different applicable law or governing instrument may still need to be considered separately.
Example 3: Books maintained but no audit report filed
Keeping books under Section 347 does not, by itself, meet Section 348 where the audit threshold is crossed. The organisation must also obtain the accountant's audit and furnish the prescribed report.
Frequently asked questions
Is audit mandatory if an NGO's final taxable income is nil?
It can be. Section 348 tests total income without giving effect to the special provisions of this Part, rather than relying solely on the final taxable income.
Does Section 348 itself prescribe a specific audit form?
No. It requires a report in the prescribed form, duly signed and verified by the accountant, containing prescribed particulars.
Does Section 348 specify a fixed audit deadline?
No specific calendar date appears in the text of Section 348. The report must be furnished by the applicable date determined under the statutory and prescribed framework.
Can an NGO file its return instead of furnishing an audit report?
No. Where Section 348 applies, the audit-report obligation is separate from the return-filing requirement addressed in Section 349.
Is the audit threshold always a fixed rupee amount?
Section 348 refers to the maximum amount not chargeable to income-tax and does not state a fixed rupee amount in its own text. Apply the legally relevant threshold for the tax year.
Official statutory source and related provisions
Read the Income-tax Act, 2025, as amended by the Finance Act, 2026 for the full text. Related sections: 347 (books of account), 349 (return of income), and 332 (registration).
Updated: 12 November 2026. General legal information; consult the applicable rules and notifications before completing tax-year-specific compliance.