Switching Between Tax Regimes under the Income Tax Act 2025: Section 333 for Non-Profits
Section 333 of the Income-tax Act, 2025 is titled "Switching over of regimes", and it applies to registered non-profit organisations (trusts, societies, section 8 companies and similar bodies). It says what happens when such a body moves from the registration route (section 332) to a specific exemption in Schedule III or Schedule VII, and how it can come back. It does not deal with an individual choosing between regimes; that is section 202(4), summarised in the next section.
Can an individual or HUF switch between tax regimes every year?
Under section 202(1) the rate Table applies by default to an individual, HUF, association of persons (other than a co-operative society), body of individuals or artificial juridical person, unless the person exercises the option under section 202(4). Rule 136 (Table Sl. No. 4) says the option, or its withdrawal, for a tax year is made in the return of income furnished under section 263(1) for that year.
| Your income | When the option is exercised | Does it carry forward? | Withdrawal |
|---|---|---|---|
| No business or profession income | Along with the return under section 263(1) (s. 202(4)(b)) | Decided for the tax year in that return | Rule 136 covers withdrawal in the return |
| Business or profession income | On or before the due date under section 263(1) (s. 202(4)(a)(i)) | Yes, applies to later tax years (a)(ii) | Only once, for a year other than the year of exercise (a)(iii); after that, never again while business income continues (a)(iv) |
Example (tax year 2026-27). Meena is a salaried employee with no business income. She decides her option in each year's return, so her choice for 2026-27 does not bind 2027-28. Ravi runs a consulting practice. He exercises the option in his 2026-27 return; it continues automatically. He may withdraw it once; if he later wants it again while still earning business income, section 202(4)(a)(iv) does not allow it.
The Rules text we checked prescribes no separate form for this option, only the return. Slabs and the deductions blocked by section 202(2) are in our new tax regime guide.
The key rules: while registered, a non-profit cannot use the general exclusions of section 11 except a short list of serial numbers; registration ceases on the date of notification (or from 1 April of the tax year for certain claims); and to return, the body applies again under section 332 and gives up the notification-based exemption. The text below is as amended by the Finance Act, 2026 (tax year 2026-27 onwards).
What does "switching over of regimes" mean in section 333?
A non-profit can get relief from tax in two broad ways. One is registration under section 332, after which the special provisions for registered non-profit organisations apply. The other is a direct exemption listed in section 11: Schedule III (income not included in total income) or Schedule VII (persons exempt from tax). Section 333 decides how a body moves between these two routes without claiming both at once.
Section 11(1) and (3) provide that income listed in Schedules II to VI is not included in total income, and that persons in Schedule VII are not chargeable to tax, in both cases subject to the conditions in those Schedules. Section 11(2) and (4) say that if the conditions fail in a tax year, the income is taxed for that year.
Which section 11 exclusions can a registered non-profit still use?
Under section 333(1), nothing in section 11 excludes any income of a registered non-profit organisation from its total income for that tax year, except the entries below.
| Schedule | Table Sl. Nos. still available | What these entries cover |
|---|---|---|
| Schedule II | 1 | Agricultural income (condition: Nil) |
| Schedule III | 27 to 29 and 36 | Investor Protection Funds of stock exchanges, commodity exchanges and depositories (27, 28, 29), and income of notified statutory regulatory bodies (36) |
| Schedule VII | 10 to 19 | Funds such as PM National Relief Fund, PM CARES, Swachh Bharat Kosh, Clean Ganga Fund, CM Relief Fund (10 to 16); government-financed universities and hospitals (17, 18); small universities and hospitals with annual receipts up to Rs 5 crore (19) |
| Schedule VII | 42 to 45 | Notified statutory housing, city-development and regulatory bodies (42); National Credit Guarantee Trustee Company and credit guarantee funds (43, 44, 45) |
Everything else in section 11 stays out of reach for a registered non-profit, which is why choosing the route matters.
When does registration under section 332 cease to operate?
Section 333(2) gives two triggers:
- From the date of notification, when the body is notified under Schedule III (Sl. No. 27, 28, 29 or 36) or Schedule VII (Sl. No. 42).
- From 1 April of the tax year, when the body claims exemption under Schedule VII (Sl. No. 43, 44 or 45).
Can a non-profit come back to registration after it ceases?
Yes. Under section 333(3), a person whose registration has ceased under section 333(2) may apply for registration under section 332, on one condition: the notification granting the exemption under Schedule III (Sl. No. 27, 28, 29 or 36) or Schedule VII (Sl. No. 42) ceases to have effect from the date the new registration is granted. After that, the body is not entitled to exemption under those serial numbers. The sub-section names Schedule III and Schedule VII Sl. No. 42 for the notification-ceases condition; it does not repeat that condition for Sl. No. 43 to 45.
How do you apply, and what time limits apply?
This is case Sl. No. 6 in the table in section 332(3): "registration has become inoperative due to switching over of regime under section 333". Rule 181(1), Table Sl. No. 2 prescribes Form 105, filed with the Principal Commissioner or Commissioner having jurisdiction, electronically under digital signature or with an electronic verification code, and verified by the person authorised to verify the return of income under section 265 (rule 181(3)).
| Item | Rule for Sl. No. 6 | Source |
|---|---|---|
| When to apply | At any time during the tax year beginning from which registration is sought to be made operative | Section 332(3), col. C |
| Order to be passed | Within six months from the end of the quarter in which the application is made | Section 332(3), col. D |
| Validity | Five tax years commencing from the tax year in which the application is made | Section 332(3), col. E |
| Ten-year validity | If total income (without giving effect to this Part) did not exceed Rs 5 crore in each of the two preceding tax years | Section 332(5) |
| Late application | Delay can be condoned for reasonable cause | Section 332(4) |
| Outcome | Order granting registration, or rejecting the application after a hearing | Section 332(7) |
Before granting registration, the Commissioner calls for documents or inquires to be satisfied about the objects, the genuineness of activities and compliance with other laws that matter to achieving those objects (section 332(7)).
Worked example 1: order deadline and validity (tax year 2026-27)
Assumptions: a registered trust has its registration made inoperative by a notification, and it wants registration to operate again from tax year 2026-27. It files Form 105 on 15 August 2026. A quarter is taken as a calendar quarter (July to September).
| Step | Working | Result |
|---|---|---|
| 1. Quarter of application | 15 August 2026 falls in July to September 2026 | Quarter ends 30 September 2026 |
| 2. Order deadline | 30 September 2026 plus six months | 31 March 2027 |
| 3. Validity | Five tax years commencing from 2026-27 | 2026-27, 2027-28, 2028-29, 2029-30, 2030-31 |
Worked example 2: five years or ten years?
Section 332(5) extends the validity to ten years if total income, computed without giving effect to the non-profit provisions of this Part, did not exceed Rs 5 crore in each of the two tax years before the year of application. The trust applies in 2026-27, so the two years tested are 2024-25 and 2025-26.
| Trust | Total income 2024-25 | Total income 2025-26 | Both at or below Rs 5 crore? | Validity |
|---|---|---|---|---|
| Trust A | Rs 3.20 crore | Rs 4.10 crore | Yes | Ten tax years (2026-27 to 2035-36) |
| Trust B | Rs 4.60 crore | Rs 5.40 crore | No (2025-26 is above) | Five tax years (2026-27 to 2030-31) |
One year above the limit is enough to keep the shorter period, because the test applies to each of the two years.
Real-life example 1: the fund that was notified
Meena is the trustee of a fund registered under section 332. The Central Government notifies it under Schedule III, Sl. No. 36, as a statutory body regulating an activity for the general public. Under section 333(2), the fund's registration ceases from the date of that notification, and its income is treated under the notified exemption, subject to that entry's conditions (established under an Act or by the Government, no commercial activity, notified). Later, the fund decides the notified route does not suit it and applies for registration again. If registration is granted, the notification stops having effect from that grant date, and Sl. No. 36 is no longer available to it.
Real-life example 2: the guarantee fund claim from 1 April
Ravi advises a credit guarantee fund, established and wholly financed by the Central Government and managed by the National Credit Guarantee Trustee Company Limited, that already holds a section 332 registration. The fund claims exemption under Schedule VII, Sl. No. 44 (condition: Nil). Section 333(2) provides that its registration ceases from 1 April of the tax year for which it claims that exemption. There is no notification date to wait for; the claim itself moves the body out of the registration route for that whole tax year.
What happens if a registered non-profit does not re-apply on time?
Section 333 does not itself set a penalty. Section 332(6) says that if an application under Sl. No. 3, 4, 5 or 7 of the table is not made within time and the delay is not condoned, the person is liable to pay tax on accreted income under section 352. Sl. No. 6 (the switching-over case) is not in that list of section 332(6), but the condonation power in section 332(4) applies to any application made late. Check section 352 for the accreted-income mechanism if your client's facts involve a cancelled registration or changed objects.
Common mistakes
- Applying the section to individuals. Section 333 is about non-profit organisations. It is not the old versus new regime choice for individuals and HUFs.
- Assuming section 11 exclusions continue. Under section 333(1), a registered non-profit loses section 11 exclusions apart from the listed serial numbers.
- Mixing up the two cessation dates. Notification date for Sch. III (27-29, 36) and Sch. VII (42); 1 April of the tax year for Sch. VII (43-45).
- Re-applying without giving up the notification. Registration under section 333(3) comes with the notification ceasing from the grant date.
- Using the wrong form. Form 105 is for Sl. Nos. 2 to 7 of the section 332(3) table; Form 104 is for provisional registration (Sl. No. 1).
- Missing the application window. The application is made during the tax year beginning from which registration is to be made operative.
Quick reference
| Question | Answer | Where |
|---|---|---|
| Who does it apply to? | Registered non-profit organisations | Section 333(1) |
| Section 11 exclusions kept | Sch. II Sl. 1; Sch. III Sl. 27-29, 36; Sch. VII Sl. 10-19, 42-45 | Section 333(1) |
| Registration ceases | From notification date, or from 1 April of the tax year (Sch. VII Sl. 43-45) | Section 333(2) |
| Re-registration form | Form 105 | Rule 181(1) |
| Order time limit | Six months from end of the quarter of application | Section 332(3) |
| Validity | Five tax years; ten if income at or below Rs 5 crore in each of two preceding years | Section 332(3), (5) |
Where this is in the Act
- Section 333: switching over of regimes
- Section 332: application for registration (sub-sections (3), (4), (5), (6), (7), (8))
- Section 11: incomes not included in total income
- Section 352: tax on accreted income
- Schedule II (Sl. No. 1); Schedule III (Sl. Nos. 27 to 29, 36); Schedule VII (Sl. Nos. 10 to 19, 42 to 45)
- Rule 181 of the Income-tax Rules, 2026: Forms 104 and 105 for registration applications
Keeping track of this for clients
For a firm handling several non-profit clients, tracking registration validity, application dates and order deadlines in one place avoids missed windows; Finexo Practice Management Software for CAs can hold those client deadlines. This article is general information, not tax advice. For a related TDS compliance topic, see TDS on rent under the Income Tax Act 2025.
Frequently Asked Questions
Is section 333 about the old and new tax regime for individuals?
No. Section 333 of the Income-tax Act, 2025 deals with registered non-profit organisations switching between registration under section 332 and specific exemptions in Schedule III or Schedule VII.
Can an individual switch tax regimes every year?
Without business or profession income, the option under section 202(4)(b) is exercised along with each year's return under section 263(1). With business income, section 202(4)(a) lets the option be withdrawn only once.
Where is the regime option made under the Income-tax Rules, 2026?
Rule 136 says the option or its withdrawal under section 202(4) is made in the return of income furnished under section 263(1) for that tax year.
When does a non-profit's registration under section 332 cease?
From the date it is notified under Schedule III (Sl. No. 27, 28, 29 or 36) or Schedule VII (Sl. No. 42), or from 1 April of the tax year if it claims exemption under Schedule VII (Sl. No. 43, 44 or 45).
Can the organisation get registered again?
Yes, it may apply under section 332 (Table Sl. No. 6). If registration is granted, the earlier notification under Schedule III or Schedule VII Sl. No. 42 ceases to have effect from the grant date.
Which form is used to re-apply after switching over?
Form 105, filed electronically with the Principal Commissioner or Commissioner having jurisdiction, under rule 181(1), Table Sl. No. 2.
How long is the new registration valid?
Five tax years from the tax year of application. It is ten years if total income, without giving effect to this Part, was at most Rs 5 crore in each of the two preceding tax years (section 332(5)).