Section 355
Section 355: interpretation clause for registered non-profit organisations
Section 355 opens the definitions used "for the purposes of this Part" - the set of provisions in the Income-tax Act, 2025 that deal with registered charitable and religious non-profit organisations (trusts, institutions and similar bodies registered under section 332 or the corresponding provisions of the Income-tax Act, 1961). It defines terms such as anonymous donation, donation, commercial activity, related person, specified asset, specified person and substantial interest that recur throughout this Part.
This explanation is AI-assisted and pending review by our CA/CS team. It is general information, not professional advice - always cross-check against the bare law text above or talk to our tax team for guidance specific to your situation.
Anonymous donation, approval and cancellation
"Anonymous donation" means a voluntary contribution referred to in section 2(49)(c), where the person receiving it does not maintain a record of the identity (name, address and other prescribed particulars) of the donor.
"Approval" means an approval under the second proviso to section 80G(5) of the Income-tax Act, 1961, or under section 354 of this Act.
"Cancellation" includes withdrawal.
Donation and commercial activity
"Donation" means any voluntary contribution received by a registered non-profit organisation from any person. (This definition was inserted by the Finance Act, 2026, with effect from 1 April 2026.)
"Commercial activity" means any activity in the nature of trade, commerce or business, or any activity of rendering a service in relation to trade, commerce or business, for a cess, fee or other consideration - regardless of how the income from that activity is used, applied or retained.
Registration and registered non-profit organisation
"Registration" includes provisional registration, provisional approval or approval as referred to in the second proviso to section 10(23C) or section 12AB(1) of the Income-tax Act, 1961, and under section 332 of this Act - but it does NOT include an approval under the second proviso to section 80G(5) of the 1961 Act or under section 354 of this Act.
"Registered non-profit organisation" means any person holding a valid registration under a "specified provision" that has not been cancelled.
"Specified provision" means section 12A, 12AA or 12AB, or section 10(23C), of the Income-tax Act, 1961, or section 332 of this Act.
"Specified person" means any person that is (or has been) registered under a specified provision at any time since its incorporation or creation.
Related person and relative
"Related person" of a registered non-profit organisation includes: the author or founder; anyone whose contribution to the organisation exceeds ₹1,00,000 in the relevant tax year, or ₹10,00,000 in aggregate up to the end of that year; a member of the family where the author, founder or such person is a Hindu undivided family; any trustee or manager, by whatever name called; a relative of any of the persons above; and any concern in which any of those persons has a substantial interest.
"Relative", for an individual, means: the individual's spouse; a brother or sister of the individual or of the spouse; any lineal ascendant or descendant (maternal or paternal) of the individual or of the spouse; the spouse of any such brother, sister or lineal ascendant/descendant; and any lineal descendant of a brother or sister of the individual or of the spouse.
Substantial interest and value
"Substantial interest" in a concern means: for a company, beneficial ownership (by the person alone or together with other related persons) of shares carrying not less than 20% of the voting power (excluding fixed-dividend shares); for any other concern, an entitlement (alone or with other related persons) to not less than 20% of the profits of that concern, at any time during the tax year.
"Value" means the value of any benefit or facility granted or provided free of cost, or at a concessional rate, to any related person.
Residual income, specified asset and charitable/religious purposes
"Residual income" means total income computed without giving effect to this Part, reduced by regular income and specified income.
"Specified asset" means an asset that a specified person is established to have directly acquired: out of income of the nature referred to in Schedule II (Table, Sl. No. 1); during the period between its creation/establishment and the date its registration under a specified provision became effective (in the specified circumstances set out in the section); or an asset transferred to another specified person within twelve months from the end of the month of dissolution in a case specified in section 352(4) (Table, Sl. No. 9).
"Wholly for charitable or religious purposes" means wholly for charitable purposes, or wholly for religious purposes, or wholly for both charitable and religious purposes.
Frequently asked questions
Does Section 355 apply to every taxpayer?
No. Section 355 only defines terms "for the purposes of this Part" - the provisions of the Income-tax Act, 2025 dealing with registered charitable and religious non-profit organisations. It is not a general, Act-wide definitions section.
What contribution amount makes someone a 'related person' of a non-profit organisation?
A contributor becomes a related person if their contribution exceeds ₹1,00,000 in the relevant tax year, or exceeds ₹10,00,000 in aggregate up to the end of that tax year, as set out in the definition of "related person".
What voting power or profit share counts as a 'substantial interest'?
Not less than 20% of the voting power (for a company) or not less than 20% of the profits (for any other concern), held by the person alone or together with other related persons, at any time during the tax year.
Related sections
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Talk to our tax team about this sectionLast updated 9 September 2026