Section 115BBC of ITA, 1961 : Section 115Bbc: Anonymous Donations To Be Taxed In Certain Cases

Explanation using Example

Imagine a charitable educational trust, ABC Trust, which is registered under Section 12AA of the Income-tax Act, 1961 and has received various donations throughout the financial year. Among these donations, ABC Trust received an amount of ₹500,000 where the donors chose to remain anonymous. The trust also received other (non-anonymous) donations totaling ₹7,000,000 during the year.

As per Section 115BBC of the Income-tax Act, ABC Trust needs to calculate the tax on the anonymous donations it received. The tax calculation would be as follows:

• The threshold for anonymous donations is the higher of 5% of total donations or ₹100,000. In this case, 5% of ₹7,000,000 is ₹350,000, which is higher than ₹100,000.
• The anonymous donations amounting to ₹500,000 exceed the threshold of ₹350,000 by ₹150,000.
• The tax payable on the excess anonymous donation of ₹150,000 is 30%, which amounts to ₹45,000.

Therefore, ABC Trust must pay an income tax of ₹45,000 on the anonymous donations that exceed the prescribed threshold. This tax is in addition to any other income tax the trust might owe on its total income after considering all applicable deductions and exemptions.