Anonymous Donation to Trust

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This discussion explores the rules surrounding anonymous cash donations to religious and charitable trusts registered under Section 12A of the Income Tax Act. It clarifies whether receiving large cash donations (over Rs. 2 lacs) in a single day or in instalments is permissible under Section 269ST. The queries also delve into how these rules might differ for corpus fund donations, religious-cum-charitable trusts, and the potential tax liability for anonymous donations under Section 115BBC.

PARAS CHHAJED

PARAS CHHAJED

(Querist)
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09 May 2023 A religious trust is registered u/s 12A of the Income Tax Act. My queries are as follows:

1. Can it receive donation from a single person in a day in cash of Rs.2 lacs or more, whether provisions of s. 269ST of the Income Tax Act, 1961

2. If a person makes a commitment to the trust that he shall donate a sum of Rs.10 lacs for construction of a shed in the premises of the temple managed by the religious trust and then against the commitment pays the donation to the trust in 10 instalments of Rs.1 lac each over the period of 10 months. Whether the same shall fall within the purview of s. 269ST of the Income Tax Act, 1961 ?

3. Will the answer to the above queries be different if the donation is received towards corpus fund of the trust?

4. Will the answer to the above queries be different if the donation is received by a trust which is a Religious cum Charitable Trust?

5. If the trust, which is a Religious cum Charitable Trust, will be liable to tax u/s 115BBC treating the donation received in Cash without disclosing identity of the donor as anonymous donation?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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10 May 2023 1 and 2 Donation in cash for such trust can't exceed 2000.
3 yes, but should be through bank.
4 No.
5 yes.

PARAS CHHAJED

PARAS CHHAJED

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10 May 2023 Rs.2,000 limit for donation made in cash applies vis a vis claim of deduction by the donor u/s 80G of the Income Tax Act, 1961 and in general Religious Trusts are not given registration u/s 80G so in my opinion receipt of donation by any trust in cash exceeding Rs.2,000 from a donor is not barred. My question is with regard to applicability of provisions of s. 269ST. Kindly guide.

With respect to donation towards corpus, I understand that there should be specific direction from the donor that such donation shall form part of corpus and details f identity of the donor should be available with the trust.