Section 188Charitable Trusts & NPOswas Section 115BBC in IT Act 1961

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 this 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

Scenario

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.

Calculation

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

Section 332Registration of Charitable Trusts and NPOs

Section 335Regular Income of Registered NPO — The Exemption Provision

Section 351Specified Violations — When NPO Registration is Cancelled

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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.