Trusts and other registered non-profit organisations (NPOs) now have clear rules for merging with another registered NPO that has the same or similar objects. CBDT notified them through the Income-tax (Eighth Amendment) Rules, 2026 (Notification No. 139/2026 dated 30 October 2026), which insert Rule 189A into the Income-tax Rules, 2026 under the Income-tax Act, 2025. They apply from the date of publication.
Who can merge with whom
- A fully registered NPO (under section 332) cannot merge with a provisionally registered one, and the reverse is also not allowed.
- The two organisations must have the same or similar objects.
Main conditions
- No outstanding demand. The merging NPO must have no unpaid tax, interest, penalty or fine under the Act, except amounts under appeal.
- Demands under appeal must be paid by the merged NPO once the appeal is finally decided.
- Objects locked for five years. The merged NPO cannot change its objects for five years from the end of the financial year of the merger.
- Everything transfers. All assets and liabilities of the merging NPO become those of the merged NPO from the date of merger.
- No benefit to insiders. The merger must not directly or indirectly benefit any related person (as defined in section 337(1)) of either organisation.
- Obligations carry over. The merged NPO takes on the merging NPO's obligations, including:
- applying its income (section 341) and accumulated income (section 342),
- tax on its specified income (section 334),
- staying within section 340,
- investing funds only in the permitted modes (section 350), and
- paying any additional income-tax under section 352 when it becomes due.
Intimation in Form 112A
The merged NPO must inform the jurisdictional authority of the merger. The rules introduce a new Form 112A for this.
What to do
- Check both organisations' registration status (full or provisional) first.
- Clear or document every outstanding demand.
- Have your CA or legal adviser check the merger deed against Rule 189A before you file Form 112A.
