Chapter XVII - Special Provisions Relating to Certain Persons
Section 337
Section 337: specified income
Section 337 lists the specific categories of income of a registered non-profit organisation that are treated as "specified income" - the portion taxed at the flat 30% rate under Section 334(1)(a) - and fixes exactly which tax year each category is taxable in.
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This article is for general information. Refer to the Income-tax Act, 2025 as amended by the Finance Act, 2026 and the Taxation and Other Laws (Amendment) Act, 2026 for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
The specified income of a registered non-profit organisation shall mean the income as specified in column B of the Table below and shall be taxable in the year provided in the column C thereof:––
| Sl. No. | Specified income | Tax year |
|---|---|---|
| 1 | Any anonymous donation received by a registered non-profit organisation other than a registered non-profit organisation created or established,— (i) wholly for religious purposes, or (ii) wholly for charitable and religious purposes (excluding anonymous donation made with a specific direction that such donation is for any university or other educational institution or any hospital; or other medical institution run by such registered non-profit organisation), excluding the anonymous donations up to ₹ 100000 or 5% of the total donations received by it during the tax year, whichever is higher. | Tax year in which such anonymous donation is received. |
| 2 | Any portion of income applied by it, directly or indirectly, for the benefit of any related person, computed in the manner, as may be prescribed. | Tax year in which such application is made. |
| 3 | Any portion of income applied by it outside India in contravention to the provisions of section 338(a). | Tax year in which such application of income is made. |
| 4 | Any investment or deposit made in contravention to the provisions of section 350 out of any income, accumulated income, deemed accumulated income, corpus, deemed corpus, or any other fund. | Tax year in which such investment or deposit is made. |
| 5 | Any deemed corpus donation in respect of which any of the conditions specified in the section 340 is violated. | Tax year in which such violation is made. |
| 6 | Any portion of accumulated income, if it is applied to purposes other than charitable or religious purposes for which it is accumulated or set apart. | Tax year in which it is so applied. |
| 7 | Any portion of accumulated income, if it ceases to be accumulated or set apart for application to such purposes as specified under section 342(1). | Tax year in which it ceases to be so accumulated or set apart. |
| 8 | Any portion of accumulated income, if it is not applied as per the provisions of section 341(1) to (4) for which it is accumulated or set apart within the period for which it was accumulated or set apart as specified in section 342(1). | Last of the tax years for which income was so accumulated or set apart. |
| 9 | Any portion of accumulated income, if it is credited or paid to any other registered non-profit organisation. | Tax year in which it is so credited or paid. |
| 10 | Any income applied to purposes other than charitable or religious purposes for which it is registered. | Tax year in which it is so applied. |
| 11 | Any income determined by the Assessing Officer under section 344 in excess of income shown in the books of account of such business undertaking. | Tax year to which such income relates. |
| 12 | Fair market value of any asset, where it is not held in forms or modes specified in paragraph 1(1) to (30) of Schedule XVI even after the expiry of one year from the end of the tax year in which such asset is acquired. | Tax year immediately following the expiry of limitation period mentioned in Column B. |
| 13 | Any deemed application under section 341(5) not actually applied by the registered non-profit organization for its objects in India within the period specified in section 341(6). | Tax year specified in section 341(6) by which such application is required to be made. |
Introduction
Specified income is the set of non-profit receipts or applications that section 334 taxes at 30%. Section 337 pairs each category with the tax year in which it becomes taxable.
The table includes anonymous donations, related-person benefits, disallowed outside-India use, impermissible investments and failures involving corpus or accumulated income.
Key takeaways
Specified income is itemised
The statutory table identifies each type of income treated as specified income for a registered non-profit organisation.
Tax year depends on the item
The table specifies when each item becomes taxable; check the row before treating a receipt or application as specified income.
Read with charge provision
Section 334 sets the rate for specified income; section 337 identifies what enters that category.
Items of specified income and when they are taxed
The table below sets out each type of specified income and the tax year in which it becomes taxable, as listed in Section 337:
| Specified income | Taxable in |
|---|---|
| Anonymous donation received by a registered non-profit organisation other than one created wholly for religious purposes or wholly for charitable and religious purposes; for the latter category, the exclusion does not cover a donation specifically directed to a university, educational institution, hospital or other medical institution run by it. Anonymous donations up to the higher of ₹1,00,000 or 5% of total donations are excluded. | The tax year the anonymous donation is received |
| Income applied, directly or indirectly, for the benefit of a related person | The tax year the application is made |
| Income applied outside India in contravention of Section 338(a) | The tax year the application is made |
| Investment or deposit made in contravention of Section 350 | The tax year the investment or deposit is made |
| Deemed corpus donation where a condition in Section 340 is violated | The tax year the violation occurs |
| Accumulated income applied to purposes other than those it was accumulated for | The tax year it is so applied |
| Accumulated income that ceases to be accumulated or set apart for the specified purpose | The tax year it ceases to be so accumulated or set apart |
| Accumulated income not applied within the accumulation period under Section 342(1) | The last of the tax years for which the income was accumulated or set apart |
| Accumulated income credited or paid to any other registered non-profit organisation | The tax year it is so credited or paid |
| Income applied to purposes other than the charitable or religious purposes for which the organisation is registered | The tax year it is so applied |
| Income determined by the Assessing Officer under Section 344 in excess of the income shown in the books of account of a business undertaking | The tax year to which such income relates |
| Fair market value of an asset not held in a form or mode specified in paragraph 1(1) to (30) of Schedule XVI, even after expiry of one year from the end of the tax year of acquisition | The tax year immediately following expiry of that one-year period |
| Deemed application under Section 341(5) not actually applied for the organisation's objects in India within the period under Section 341(6) | The tax year specified in Section 341(6) by which such application is required |
Identify the event that fixes the tax year
The statutory table pairs each specified-income category with a tax year. Some items are taxed when received; others become taxable on application, investment, loss of accumulation status or violation of a condition.
Anonymous donation threshold and religious exception
The anonymous-donation row excludes amounts up to the higher of ₹1,00,000 or 5% of total donations. It also excludes specified wholly religious or mixed charitable-and-religious organisations, subject to the row’s exception for donations directed to their educational or medical institution.
Step-by-step flow for identifying specified income under Section 337
- 1
Go through each item in the Table to Section 337
The Table lists 13 kinds of specified income (Sl. Nos. 1 to 13), for example anonymous donations, income applied for related persons, prohibited investments, violations of deemed corpus conditions and unapplied accumulated income.
- 2
For anonymous donations (Sl. No. 1), is the organisation created wholly for religious purposes?
- Yes: Sl. No. 1 does not apply to it. Go to the next step.
- Wholly for charitable and religious purposes: Sl. No. 1 does not apply, except for anonymous donations made with a specific direction for a university, educational institution, hospital or medical institution run by it. Go to the next step.
- No (other organisations): Anonymous donations above the higher of ₹1,00,000 or 5% of total donations for the year are specified income. Go to the next step.
- 3
For other items, has the triggering event occurred?
For example, income applied outside India in breach of Section 338(a) (Sl. No. 3), an investment in breach of Section 350 (Sl. No. 4), or accumulated income not applied within the period under Section 342(1) (Sl. No. 8). The related-person amount (Sl. No. 2) is computed in the prescribed manner.
- 4
Fix the tax year from column C
Each item has its own year, for example the year the anonymous donation is received, the year of violation, or for Sl. No. 8 the last of the tax years for which income was accumulated.
- 5
Carry the total to Section 334
Specified income is taxed at 30% under Section 334(1)(a).
Practical checklist
Do
- Identify the exact statutory table row for an item before applying the 30% rate.
- Record the tax year assigned by column C, which may be the year of receipt, application, investment or later violation.
Avoid
- Assume all specified-income categories become taxable in the year the underlying donation was received.
Illustrative example
Worked example: anonymous donations above the limit
Hypothetical facts (illustration only, not a real taxpayer): A registered non-profit organisation set up wholly for charitable purposes receives total donations of an assumed ₹50,00,000 in a tax year. Of these, an assumed ₹3,00,000 are anonymous donations.
Does Sl. No. 1 apply?
The organisation is not created wholly for religious purposes or wholly for charitable and religious purposes, so Sl. No. 1 applies.
Find the excluded amount
5% of total donations = 5% × ₹50,00,000 = ₹2,50,000. This is higher than ₹1,00,000, so anonymous donations up to ₹2,50,000 are excluded.
Specified income
₹3,00,000 − ₹2,50,000 = ₹50,000 is specified income, taxable in the tax year in which the anonymous donations were received.
Tax under Section 334
At 30% under Section 334(1)(a): 30% × ₹50,000 = ₹15,000.
Outcome
- ₹50,000 of the anonymous donations is specified income, giving tax of ₹15,000 at 30%.
- The other ₹2,50,000 of anonymous donations is not specified income under Sl. No. 1.
Frequently asked questions
Is every anonymous donation treated as specified income?
No. The table excludes donations to organisations created wholly for religious purposes, or wholly for charitable and religious purposes, subject to its exception for a donation specifically directed to a university, educational institution, hospital or other medical institution run by the latter organisation. It also excludes anonymous donations up to the higher of ₹1,00,000 or 5% of total donations received during the tax year.
What rate applies to specified income?
30%, under Section 334(1)(a).
If accumulated income is not applied within its accumulation period, when is it taxed?
In the last of the tax years for which the income was accumulated or set apart under Section 342(1), per item 8 of the Section 337 table.
Need help applying this provision to your situation?
Check what counts as specified income for your organisationLast updated 10 October 2026