CBDT Notification No. 139/2026, dated 30 October 2026, inserts Rule 189A and Form No. 112A into the Income-tax Rules, 2026. It provides the conditions for a registered non-profit organisation to merge with another registered non-profit having the same or similar objects for the purposes of sections 352(4) and 354A of the Income-tax Act, 2025.
Who is covered?
The rule applies to organisations treated as registered non-profit organisations under the Income-tax Act, 2025. It is not a general merger procedure for every trust, society, section 8 company or NGO: the entities must fall within this tax registration framework and have the same or similar objects.
A fully registered organisation under section 332 cannot merge under this rule with one that is only provisionally registered, and the reverse combination is also barred. Registration certificates and the exact objects in both governing documents should therefore be compared before a merger date is fixed.
The main conditions
| Tax demands | The merging organisation must not have an undisputed outstanding demand. If a demand is under appeal, the merged organisation must pay it when the appeal becomes final. |
|---|---|
| Objects | The merged organisation cannot amend its objects for five years from the end of the financial year in which the merger takes place. |
| Assets and liabilities | All assets and liabilities of the merging organisation become those of the merged organisation from the merger date. |
| Related persons | The merger must not directly or indirectly benefit a related person referred to in section 337(1). |
| Tax obligations | The merged organisation inherits specified obligations covering application and accumulation of income, specified income, permitted investments and additional income-tax. |
| Audit | Both organisations must have their books audited as on the merger date by the prescribed accountant. |
Existing assessments, reassessments and other proceedings against the merging organisation continue against the merged organisation. Proceedings for the merger year up to the merger date and for earlier years can likewise be pursued against the merged organisation.
Form 112A deadline and verification
The merged organisation must electronically furnish Form No. 112A to its jurisdictional Principal Commissioner or Commissioner within one month from the end of the month in which the merger takes effect. The form may be verified using a digital signature or an Electronic Verification Code.
Because the deadline is linked to the legal effective date of the merger—not the later date on which accounts or registration records are updated—the merger agreement, resolution and compliance calendar should all use the same date.
Documents to prepare
Form 112A asks for identifying details of both organisations and requires these annexures:
- Governing documents. Copies of the trust deeds of the merging and merged organisations.
- Tax registrations. Copies of the registrations granted to both organisations.
- Merger approval. The resolution passed by the trustees, governing body or management, highlighting the merger details.
- Audited accounts. Audited books of both organisations as on the merger date and for the financial year immediately preceding the tax year in which the merger occurs.
- Business rationale. Written reasons for undertaking the merger.
The form’s declaration also carries forward important commitments, including no duplicate depreciation where the acquisition cost was already claimed as application of income, continuation of accumulated-income obligations, aggregation of relevant contributions and compliance with permitted investment modes.
What should organisations do before merging?
- Confirm eligibility first. Match the section 332 registration status and compare the objects clause of both organisations.
- Clear the tax ledger. Reconcile all demands, appeals, open assessments, accumulations, deemed application balances and restricted investments.
- Protect the five-year plan. Do not proceed if the surviving organisation expects to amend its objects during the restricted period.
- Create a merger-date balance sheet. Map every asset, liability, grant condition, donor restriction and tax obligation that will transfer.
- Commission both audits. Arrange the cut-off audits before the filing deadline instead of waiting for the annual audit cycle.
- File Form 112A on time. Prepare the five annexures, confirm the jurisdictional authority and retain the DSC or EVC acknowledgement.
Reviewed on 4 November 2026. This note summarises Rule 189A and Form 112A; merger documents should also be reviewed under the entity’s governing law and the Income-tax Act, 2025.