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Case lawIncome-tax Act 2025Chapter XVII › Section 337
Chapter XVIIwas s.11, s.12, s.13, s.115BBC, s.115BBI

Section 337 of the Income-tax Act, 2025

Section 337 — Specified income. Successor to s.11, s.12, s.13, s.115BBC, s.115BBI of the 1961 Act.

Where this section sits

Section 337 is in Chapter XVII — Special Provisions Relating to Certain Persons, which runs from section 302 to section 355.

← Section 336  ·  Section 338 →

What this section does

The section defines, by a Table, what counts as the specified income of a registered non-profit organisation and fixes the tax year in which each item is taxable. Column B names the income; column C names the year.

Entry 1 is any anonymous donation received, except by an organisation created or established wholly for religious purposes, or wholly for charitable and religious purposes — and in that second case the exception does not extend to an anonymous donation made with a specific direction that it is for a university or other educational institution, or a hospital or other medical institution, run by the organisation. Anonymous donations up to Rs. 1,00,000 or 5% of the total donations received during the tax year, whichever is higher, are excluded. It is taxed in the year of receipt.

Entries 2 to 5 catch misapplication and breach. Income applied, directly or indirectly, for the benefit of a related person, computed as prescribed, is taxed in the year of application; income applied outside India in contravention of section 338(a), in the year of application; any investment or deposit made in contravention of section 350 out of income, accumulated income, deemed accumulated income, corpus, deemed corpus or any other fund, in the year it is made; and any deemed corpus donation where a condition in section 340 is violated, in the year of the violation.

Entries 6 to 9 govern accumulated income. It becomes specified income if applied to purposes other than the charitable or religious purposes for which it was accumulated or set apart (taxed in the year of application); if it ceases to be so accumulated or set apart within section 342(1) (taxed in the year it ceases); if it is not applied as required by section 341(1) to (4) within the period in section 342(1) (taxed in the last of the tax years for which it was accumulated); or if it is credited or paid to any other registered non-profit organisation (taxed in the year of the credit or payment).

Entries 10 to 13 close the list. Income applied to purposes other than the charitable or religious purposes for which the organisation is registered is taxed in the year of application. Income determined by the Assessing Officer under section 344 in excess of the income shown in the books of the business undertaking is taxed in the year to which it relates. The 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 one year from the end of the tax year of acquisition is taxed in the tax year immediately following the expiry of that period. And any deemed application under section 341(5) not actually applied for the organisation's objects in India within the period specified in section 341(6) is taxed in the tax year specified in section 341(6).

Why it is there

A registered non-profit organisation is relieved of tax on income it applies to its objects, so the Act needs a closed list of the departures that pull income back into charge. Each entry pairs a breach with the year in which the tax bites, because for a body whose income is otherwise exempt the timing is the whole of the liability. The anonymous donation entry is the odd one out: it taxes a receipt rather than a misapplication, and it exists because a donation without an identifiable donor cannot be traced back to anyone.

Who it applies to

The figures, and what each one turns on

Read the condition in the same row. A figure quoted without it is a wrong answer with a citation attached.
WhatFigureThe condition on itWhere
Anonymous donations excluded from specified incomeRs. 1,00,000 or 5% of the total donations received during the tax year, whichever is higherApplies only to an organisation within entry 1; the exclusion is the higher of the two, not the lowerTable Sl. No. 1, column B
Time allowed to move an asset into a permitted form or modeOne year from the end of the tax year in which the asset is acquiredForms or modes specified in paragraph 1(1) to (30) of Schedule XVI; on expiry the fair market value of the asset becomes specified incomeTable Sl. No. 12
Year of charge on that assetThe tax year immediately following the expiry of the one-year periodNot the year of acquisition and not the year the breach is discoveredTable Sl. No. 12, column C

What this means in practice

The year in column C is not a formality — it decides which assessment carries the charge, and for several entries it is not the year anyone would guess. Accumulated income not applied within the section 342(1) period is taxed in the last of the tax years for which it was accumulated, not the year the period expired; an asset held outside the Schedule XVI forms is taxed in the tax year immediately following the expiry of the one-year period, not in the year of acquisition; and income determined by the Assessing Officer under section 344 is taxed in the year to which it relates. The anonymous donation exclusion is the higher of Rs. 1,00,000 and 5% of total donations, so a large organisation gets the percentage and a small one gets the fixed sum. The religious exception in entry 1 is also narrower than it reads: for a wholly charitable and religious organisation it does not cover an anonymous donation earmarked for a university, educational institution, hospital or other medical institution that the organisation runs.

An example

Illustrative only, and invented for this page. The figures are chosen to show the rule biting, not taken from any real matter.

A registered non-profit organisation that is not wholly religious receives total donations of Rs. 4 crore in a tax year, of which Rs. 35 lakh are anonymous. The exclusion under entry 1 is the higher of Rs. 1,00,000 and 5% of Rs. 4 crore, that is Rs. 20 lakh, so Rs. 15 lakh is specified income taxable in the year of receipt. If in the same year it acquires an asset held in a form outside paragraph 1(1) to (30) of Schedule XVI and still holds it a year after the end of that tax year, entry 12 brings the asset's fair market value into charge in the following tax year.

Where you meet this section

A registered non-profit organisation meets this section in the specified income schedule of its return and in an assessment order that identifies which of the thirteen entries has been triggered and in which tax year; the entry number and the column C year are usually the whole of the dispute.

The words themselves

excluding the anonymous donations up to Rs. 100000 or 5% of the total donations received by it during the tax year, whichever is higher.
Section 337, Table Sl. No. 1, Income-tax Act, 2025.
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.
Section 337, Table Sl. No. 2, Income-tax Act, 2025.
Last of the tax years for which income was so accumulated or set apart.
Section 337, Table Sl. No. 8, column C, Income-tax Act, 2025.

What people get wrong

What this replaced

The correspondence is the Income Tax Department’s own, from its comparison utility for the 1961 and 2025 Acts. A renumbering is the easy half; whether the words changed is the half that decides cases.

See the full 1961 to 2025 concordance.

Rules that serve this section

Rules of the Income-tax Rules, 2026 that work section 337. Where the rule’s own heading names the section we say so; the rest are marked on reading the rule, which is our derivation and not the department’s. A rule that serves the section silently and that we have missed will not appear here.

All of them are in the Rules 2026 index.

Circulars of the Board on this section

A circular binds the department, not you and not a court. Every one below was written under the 1961 Act; it reaches this section because the department’s own concordance carries the provision it names to this one.

See every circular and notification on this section, or the circulars index.

Notifications that reach this section

A notification is made under a power the Act gives and, within that power, is law. These too were made under the 1961 Act and are placed here by the department’s concordance. We hold 712 in all; the 250 most recent are listed.

See every circular and notification on this section, or the notifications index.

Case law carried across

Read this before you rely on it. Every decision below was decided under the Income-tax Act, 1961. It appears here because it is tagged to a 1961 provision that the department’s own mapping carries to section 337. That is an inference we have drawn, not a holding on the new section: where the words changed in the move, the reasoning may not survive. Treat this as the place to start looking, not as authority on the 2025 Act.

Explainers

Read with

What this page does not tell you. It does not reproduce the section. Everything above was written from the section’s own text as the Income Tax Department publishes it — the text is here, and nothing here is advice on your facts. Where a figure matters, read the sub-section it comes from.