Any donation where the recipient (TRUST) does not keep track of the donor is considered an anonymous donation. The Income-tax Act's Section 115BBC is explained in this article. The section discusses whether income related to anonymous donations received by charitable trusts is taxable.
According to Section 115BBC, a "anonymous donation" is defined as any voluntary contribution described in Section 2(24)(iiia) for which the recipient does not keep a record of the identity containing the name and address of the contributor as well as any other information that may be required.
Anonymous donations are contributions made by taxpayers to a location or person where proper records are not kept. Exemptions are permitted up to 5% of total donations or Rs.1,00,000 whichever is greater. Donations made to a trust that is wholly religious or wholly religious & charitable purpose in nature, on the other hand, will be completely exempt. If the donation is for educational purposes and the Trust operates in the same manner, the donation is taxable.
According to sub-section (1) of Section 115BBC, any anonymous donation received in excess of the higher of the following two amounts will be subject to a 30% tax;
5% of the total amount of the donation.
Institutions that are wholly religious are exempt from taxes when they receive anonymous donations.
Anonymous donations to medical or educational institutions run by partly religious, partly charitable organisations are only taxed to the extent that they exceed 5% of all donations received by the trust or organisation, or a sum of Rs. 1 lakh, whichever is higher. Other donations to institutions that are partly religious and partly charitable shall continue to be exempt from taxation.
Anonymous donations to wholly charitable institutions are taxable only to the extent that they exceed 5% of total donations received by such trust or institution, or a sum of Rs. 1 lakh, whichever is higher.
Anonymous donations are acceptable for:
Charitable trusts/institutions as defined in section 11
u/s 10(23C)(iiiad) and 10(23C)(vi) or universities and other educational institutions
Hospitals and other medical institutions are referred to in sections 10(23C)(iiiae) and 10(23C)(iiiae) (via)
Notified funds or institutions as defined in section 10(23C)(iv) or
Notified trusts or institutions established wholly for public religious purposes or wholly for public religious or public charitable purposes are referred to in section 10(23C) (v)
As a result of the above, anonymous donations are taxable at a rate of thirty percent of the anonymous donation in excess of five percent of total donations or one lakh rupees, whichever is greater. This tax shall be calculated without regard to any deduction or set-off.