Anonymous Donations (Section 115BBC)

Section numbers are from the Income tax Act, 1961, the operative law for the current filing cycle. This is also an actively debated area. This article is for general information and does not constitute tax advice.

The test is your records, not the payment method

Section 115BBC defines an anonymous donation as one where the recipient organisation doesn’t maintain a record of the donor’s identity, meaning name, address and any other prescribed particulars. How the money arrived is beside the point. A donation paid by UPI or bank transfer carries its own digital trail, but if the trust hasn’t separately recorded who the donor actually is, it can still be treated as anonymous.

That is a live tension. A provision written in 2006 to catch untraceable cash now applies, on a literal reading, to KYC-compliant digital payments, purely because the recipient didn’t log a name and address alongside the transaction. For a temple, hospital or school collecting through a QR code at the premises, the bank statement proves the money came in without proving who sent it, and the statement alone is not the record the section asks for.

How much is actually taxed

Anonymous donations are taxed at a flat 30%, but only on the amount exceeding a threshold, and the threshold is the higher of two figures: 5% of the trust’s total donations for the year, or ₹1,00,000. Whichever is larger sets the floor. The taxable excess also doesn’t get the benefit of the trust’s normal 85% application exemption the way ordinary income does.

	Larger trust	Smaller trust
Total donations for the year	₹40,00,000	₹10,00,000
Of which anonymous	₹5,00,000	₹1,50,000
5% of total donations	₹2,00,000	₹50,000
Threshold applied (higher of the two)	₹2,00,000 (the 5% figure)	₹1,00,000 (the fixed floor)
Taxable excess	₹3,00,000	₹50,000
Tax at 30%	₹90,000	₹15,000

The two columns show which limb bites where. For the larger trust the 5% calculation gives the higher threshold, so the fixed ₹1,00,000 never comes into play. For the smaller trust 5% works out below ₹1,00,000, so the fixed floor governs and gives more protection than the percentage would. A trust with ₹50,000 of anonymous donations in a year is below the floor either way and has nothing taxed under this provision at all.

This charge sits alongside the trust’s regular computation rather than replacing it. The taxable excess is taxed separately at the flat rate; the rest of the trust’s income continues to be computed and taxed under the ordinary rules.

What to actually record

Keeping a donation out of the anonymous category means recording the donor’s name and address, plus any other particulars prescribed under the rules, and doing it contemporaneously rather than reconstructing later. For an organisation collecting digitally at scale, that means building capture into the donation flow, a form alongside the QR code, a receipt process that asks before it thanks. Retrofitting names onto a year of bank credits at assessment time is exactly the position the provision leaves you exposed in.

Note also that choosing not to record details a donor was willing to give doesn’t sidestep the charge; that is precisely the behaviour the section is written to tax.

Religious trusts are outside it

Trusts and institutions established wholly for religious purposes are completely exempt from Section 115BBC. A trust that is partly religious and partly charitable retains the exemption too, except where the anonymous donation is specifically directed toward a university, hospital or similar educational or medical institution the trust runs. For a mixed trust it is that narrow carve-out that gets taxed, not anonymous donations generally.

A useful clarification from case law. Holding 80G approval requires a trust not to work primarily for the benefit of one religious community, and that condition was sometimes read as inconsistent with claiming religious character. A High Court has confirmed it isn’t: a trust can be both charitable and religious at once, and 80G approval on its own doesn’t preclude the wholly-religious exemption where the underlying facts genuinely support the dual character.

This area is under active policy discussion, with a parliamentary panel having recommended continued or expanded relief for anonymous donations to religious trusts as part of a broader review. Nothing has changed the position described here, but it is worth watching rather than treating as settled.