Taxation of anonymous donations [Section 115BBC] [W.e.f. A.Y. 2015-16]
The existing provisions of section 115BBC provide for levy of tax at the rate of 30% in case of certain assessees, being university, hospital, charitable organisation, etc. on the amount of aggregate anonymous donations exceeding 5% of the total donations received by the assessee or `1,00,000, whichever is higher.
Due to the mechanism of aggregation of tax provided in section 115BBC, while tax at the rate of 30% is levied on the amount of anonymous donations exceeding the threshold, the remaining tax is chargeable on total income after reducing the full amount of anonymous donations. The proper way of computation is to reduce the income by the amount which has been taxed at the rate of 30% (i.e. anonymous donations exceeding the above limit of 5% of the total donations or ` 1,00,000, whichever is higher).
The existing provision gives the impression that amount of 5% of total donation or `1,00,000 whichever higher is totally exempt and there is no need to apply such amount to claim exemption under section
10(23C) or section 11 and 12.
Therefore, the Finance (No. 2) Act, 2014 has substituted section 115BBC(1)(ii) to provide that the income-tax payable shall be the aggregate of the amount of income-tax calculated at the rate of 30% on the aggregate of anonymous donations received in excess of 5% of the total donations received by the assessee or `1,00,000, whichever is higher, and the amount of income-tax with which the assessee would have been chargeable had his total income been reduced by the aggregate of the anonymous donations which is in excess of the 5% of the total donations received by the assessee or `1,00,000, as the case may be.
Therefore, if such amount of donation which is not treated as anonymous donation is not applied like any other income, it will become taxable.