Section 115BBC: Tax on Anonymous Donations to Trusts and Institutions
Section 115BBC of the Income-tax Act, 1961 imposes a special 30% tax on specified anonymous donations received by covered charitable, educational and medical institutions. The tax applies only to the amount above a statutory threshold, with important exceptions for religious trusts.
1. Meaning of anonymous donation: Section 115BBC(3)
An anonymous donation is a voluntary contribution of the kind referred to in Section 2(24)(iia) of the 1961 Act where the recipient does not maintain a record identifying the donor by name and address and any other prescribed particulars. The test concerns the recipient's records; a donation is not automatically anonymous merely because it is received in cash.
The donor's identity and supporting documents should be maintained consistently with applicable record-keeping, audit and reporting requirements. A donor's name without an address may be insufficient for this statutory definition.
2. Institutions covered by Section 115BBC(1)
The provision applies to specified recipients of income on behalf of:
- Universities and educational institutions covered by the relevant clauses of Section 10(23C);
- Hospitals and other medical institutions covered by the relevant clauses of Section 10(23C);
- Specified funds, trusts and institutions under Section 10(23C)(iv) and (v); and
- Trusts or institutions whose income is governed by Section 11.
Eligibility, registration or approval, and the institution's actual objects and activities affect the applicable tax treatment. The special charge is not a general tax on every gift received by every person.
3. Rate of tax and threshold under Section 115BBC(1)
| Component | Rule |
|---|---|
| Special rate | 30% on the taxable excess of anonymous donations |
| Threshold A | 5% of total donations received during the relevant period |
| Threshold B | Rs 1,00,000 |
| Permitted threshold | The higher of A or B |
| Remaining income | Taxed according to otherwise applicable provisions, after excluding the amount charged at the special rate |
| Additional levies | Applicable surcharge and health and education cess |
Taxable anonymous donations = max(0, total anonymous donations - max(5% of total donations, Rs 1,00,000)).
Illustration
Suppose an eligible charitable institution receives total donations of Rs 40,00,000, including anonymous donations of Rs 7,00,000.
- 5% of total donations = Rs 2,00,000.
- Higher threshold = Rs 2,00,000 (greater than Rs 1,00,000).
- Anonymous donations subject to special tax = Rs 7,00,000 - Rs 2,00,000 = Rs 5,00,000.
- Tax at 30% = Rs 1,50,000, before applicable surcharge and cess.
The threshold portion is not charged at the special 30% rate merely by virtue of Section 115BBC; its treatment follows the other applicable provisions, including conditions for charitable exemptions.
4. Exceptions for religious trusts: Section 115BBC(2)
Wholly religious trusts or institutions: Section 115BBC(1) does not apply to anonymous donations received by a trust or institution created or established wholly for religious purposes.
Wholly religious and charitable trusts or institutions: The exception also generally applies, except where an anonymous donation carries a specific direction that it is for a university, educational institution, hospital or medical institution run by that trust or institution. Such specifically directed donations must be examined under the charging rule.
A trust describing itself as religious is not enough by itself; its constitutive documents, purposes and activities are material.
5. Computation, exemptions and other tax provisions
Section 115BBC provides for an aggregate tax calculation: the 30% special-rate tax on the excess anonymous donations plus the tax that would otherwise apply to total income reduced by that specially taxed amount. The Income Tax Department's guidance explains that the taxable excess does not qualify for Section 11 exemption or the usual charitable application treatment.
Other provisions may also matter, including Sections 11, 12, 12A, 12AB, 10(23C), 80G and 13 of the 1961 Act, depending on the institution and tax year. Receipt of anonymous donations should not be confused with eligibility of a donor to claim a deduction under Section 80G.
6. Donor records, accounting and return filing
- Maintain a donation register showing the donor's name, address, amount, date, mode of payment and available identification particulars.
- Preserve receipts, bank records and correspondence supporting the donor's identity and the nature of the contribution.
- Distinguish anonymous donations from identifiable donations, corpus contributions and donations with a specific purpose or direction.
- Calculate the statutory threshold from total donations, not merely from anonymous donations.
- For returns under the 1961 Act, check the relevant ITR-7 schedules, audit and reporting requirements, including Schedule VC where applicable.
7. Income-tax Act, 2025: Corresponding provisions from 1 April 2026
The Income-tax Act, 2025 replaces the 1961 Act for tax years beginning on or after 1 April 2026, subject to transitional and savings provisions. The official legislative navigator maps former Section 115BBC to Section 337 (Table, Sl. No. 1) of the 2025 Act. The definition of anonymous donation is found in Section 355; the new framework for registered non-profit organisations must be read together with the applicable provisions on specified income and exemptions.
For a particular filing, verify the law applicable to that tax year rather than applying the 1961 Act section number automatically to a period governed by the 2025 Act.
8. Legislative background
Section 115BBC was introduced by the Finance Act, 2006 with effect from 1 April 2007. The Finance (No. 2) Act, 2009 amended the threshold mechanism with effect from 1 April 2010. The Finance (No. 2) Act, 2014 clarified the aggregate tax computation with effect from 1 April 2015. The 30% rate and statutory exceptions must be read in their applicable historical form for earlier periods.
9. Frequently asked questions
What is an anonymous donation under Section 115BBC?
A voluntary contribution for which the recipient does not maintain the donor name, address and other prescribed identification details.
Are all anonymous donations taxed at 30%?
No. For covered entities, the special 30% rate applies only to anonymous donations above the higher of 5% of all donations or Rs 1 lakh. Religious-purpose exceptions may apply.
Does Section 115BBC apply to wholly religious trusts?
No. The section excludes anonymous donations received by trusts or institutions established wholly for religious purposes.
Which provision applies under the Income-tax Act, 2025?
For tax years governed by the 2025 Act, review Section 337, especially Table Sl. No. 1, with the definition in Section 355 and the relevant non-profit organisation provisions.