TaxSaral

Sections 337 & 334 · was Section 115BBC in the 1961 Act

Tax on Anonymous Donations Received by Charitable Trusts — 30%

Registered charitable trusts and NPOs must pay 30% tax on 'anonymous donations' — contributions where the donor's name and address are not recorded. A basic exemption applies: tax kicks in only beyond the higher of ₹1 lakh or 5% of total anonymous donations. Wholly religious trusts are fully exempt from this provision.

Who it applies to: Charitable trusts and NPOs registered under Section 332. Does NOT apply to purely religious trusts (temples, mosques, churches, gurudwaras serving exclusively religious purposes).

Key points

  • 30% flat tax on anonymous donations exceeding the basic threshold — no slab benefit applies
  • Anonymous donation = any voluntary contribution where the donor's name AND address are not recorded
  • Threshold: tax applies only on amounts above the HIGHER of ₹1 lakh or 5% of total anonymous donations
  • Purely religious trusts (no charitable objects) are completely exempt from this section
  • Mixed trusts with both charitable and religious objects are subject to this provision
  • This prevents charitable trust structures from being used to launder unaccounted cash

Worked example

Education Trust with Donation Boxes

Gyan Charitable Trust (education) receives ₹40 lakh from donation boxes without recording donor details in TY 2026-27. It also receives ₹3 crore in identified donations.

Total anonymous donations:             ₹40,00,000

Basic exemption — higher of:
  ₹1,00,000  OR  5% of ₹40L (= ₹2,00,000)
  → Exemption:                         ₹ 2,00,000

Taxable anonymous donations:           ₹38,00,000
Tax at 30%:                            ₹11,40,000
Add: 4% health & education cess:       ₹   45,600
Total tax on anonymous donations:      ₹11,85,600

Named ₹3 crore donations: Eligible for Section 335 exemption

Result: The trust pays ₹11.86 lakh on anonymous donations. Best practice: always record donor name, address, and PAN for donations above ₹50,000 to avoid this tax entirely.

Related sections

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Section references are based on the Income Tax Act 2025 (Tax Year 2026-27). Examples are illustrative; verify with a Chartered Accountant before filing.