( Expert )
03 June 2010
The Finance Act, 2006 inserted section 115BBC, to check loss of revenue, on account of anonymous donations to charitable institutions. This is followed by some amendments to section 2(24), section 10(23C) and section 13.
Legislative intention and the impact of this move can be studied by analysing the provisions of the new section 115BBC.
An Analysis of the New Section 115BBC Income comprising anonymous donation received by an assessee on behalf of the specified fund, institution, or trust shall be included in the total income of such assessee and taxed at the rate of 30%+Surcharge+Edu Cess (Maximum marginal rate).
It is discernible that this section does not bring within its fold the following Trusts, Institutions or Associations:
1) Scientific Research Association referred in section 10(21)
2) University, not for profit, financed by
Government referred to in section 10 (23C)(iiiab)
3) Hospital, not for profit, financed by
Government, referred to in section 10 (23C)
(iii ac)Sub section (2) stipulates that the section shall not apply to anonymous donations received by
a) Trusts or Institutions created or established wholly for religious purposes.
b) Trusts or Institutions created or established wholly for religious and charitable purposes. However, where anonymous donation is made with a direction that it is meant for any university or other educational institution or any hospital or other medical institution run by the trust or institution, the amount thereof becomes taxable and in the hands of the trust or institution.
Definition of Anonymous donation: 115BBC (3):It means any voluntary contribution where the person receiving such contribution does not maintain a record of the identity, indicating the name and address of the person making such contribution and such other particulars as may be prescribed.