In India, individuals are taxed on their salaries or professional incomes. For-profit entities are taxed on their business incomes. However, nonprofit organizations (NPOs) that are established for charitable purposes are exempt from the payment of tax. The rationale is that NPOs supplement the gaps in the government’s welfare and development delivery systems. The exemptions granted to NPOs, however, are subject to various conditions and regulations.
This FAQ answers some of the most common questions about income tax in India, with a focus on nonprofits.
More information about income tax law in India can be found in our India Philanthropy Law Report.