Rule 186: Changing an NPO accumulation purpose
Rule 186 allows a registered non-profit organisation to request a change in the purpose for which income was accumulated or set apart under section 342(1). The request is made in Form 110; the Assessing Officer may allow the specified change through Form 111 subject to the statutory conditions.
Official notified Income-tax Rules, 2026Need advice on Rule 186?
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Rule 186 - Application under section 342(5) for change of purpose for which income has been accumulated or set apart
(1) Where a registered no-profit organisation has accumulated or set apart any part of its regular income in accordance with the provisions of section 342(1), it may request the Assessing Officer for the change of purpose for which such income is accumulated or set apart, by furnishing an application to the Assessing Officer in Form No. 110.
(2) Form No. 110, shall be — (a) furnished electronically — (i) under digital signature, if the return of income is required to be furnished under digital signature; or (ii) through electronic verification code in a case not covered under sub-clause (i); and (b) verified by the person who is authorised to verify the return of income under section 265, as applicable to the applicant.
(3) The Assessing Officer may, on an application received under sub-rule (1) and subject to the provisions of section 342(2), allow the registered non-profit organisation to apply its income for such other charitable or religious purposes in India which are in conformity with its objects, in Form No. 111.
Rule breakdown
Start with the original accumulation
Identify the income accumulated under section 342(1), the original purpose and the proposed replacement purpose. Keep the original statement, amount and utilisation history together.
This procedure concerns a requested change to an existing statutory accumulation; it is not a general authority to divert unrestricted funds.
Submit Form 110 with the correct verification
File electronically under digital signature where the return is required to be digitally signed; otherwise use EVC. The verifier must be authorised under section 265 for the applicant.
Explain the proposed change and provide supporting records under the current official form instructions.
Await the Assessing Officer’s decision
The officer may allow application of the income for other charitable or religious purposes in India that conform to the organisation’s objects, subject to section 342(2). The prescribed decision form is Form 111.
Submitting Form 110 is a request, not automatic permission. Keep the actual decision and its scope with the subsequent expenditure records.
Reconcile subsequent application
After obtaining the applicable permission, trace the relevant income to the authorised purpose and retain payment and project records.
Obtain professional assistance where the proposed activity, location or object clause raises doubt about whether the statutory conditions are satisfied.
Key takeaways
Form 110 request
Apply for the change through the prescribed route.
Conditional permission
The officer may allow qualifying purposes through Form 111.
Objects and location matter
The rule specifies conforming charitable or religious purposes in India.
Practical checklist
- Retain the original accumulation statement.
- Explain and substantiate the proposed new purpose.
- Keep the decision and expenditure trail.
Avoid
- Do not treat an application acknowledgement as permission to change the purpose.
FAQs
Does filing Form 110 itself approve the change?
No. Sub-rule (3) provides for the Assessing Officer’s decision in Form 111.
Can any new purpose be requested without reference to the organisation’s objects?
The allowed purpose must be charitable or religious, in India, in conformity with the organisation’s objects and subject to the cited statutory conditions.
Glossary
- Form 111
- The prescribed form for the Assessing Officer’s decision allowing the stated change of purpose.