Interpretation
[Section-355 as per the Income Tax Act, 2025 (this Act) w.e.f. 1st April, 2026.]
In this Part,––
- (a)“anonymous donation” means any voluntary contribution referred toin section 2(49)(c), where a person receiving such contribution does not maintain a record of the identity indicating the name and address of the person making such contribution and such other particulars, as prescribed;
- (b)“approval” means an approval under the second proviso to section 80G(5) of the Income-tax Act, 1961 or section 354;
- (c)“cancellation” includes withdrawal;
- (d)“donation” means any voluntary contribution received by aregistered non-profit organisation from any person;
- (e)“commercial activity” means any activity in the nature of trade, commerceor business, or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity;
- (f)“registration” includes provisional registration, provisional approval or approval, as referred to in the second proviso to sections 10(23C) or 12AB(1) of the Income-tax Act, 1961 and under section 332, but shall not include approval under the second proviso to section 80G(5) of the said Act or section 354;
- (g)“registered non-profit organisation” means any person having avalid registration under any specified provision and such registration has not been cancelled;
- (h)“related person” means any of the following persons:—
- (i)the author or the founder of the registered non-profit organisation;
- (ii)any person whose total contribution to such registerednon-profit organisation, during the relevant tax year exceeds one lakh rupees, or, in aggregate up to the end of the relevant tax year exceeds ten lakh rupees, as the case may be;
- (iii) where such author, founder or person is a Hindu undivided family, a member of the family;
- (iv) any trustee or manager (by whatever name called) of the registered non-profit organisation;
- (v) any relative of any persons referred to in sub-clause (i), (iii) or (iv);
- (vi) any concern in which any of the persons referred to in sub-clauses (i), (iii) or (iv) has a substantial interest;
- (i) “relative”, in relation to an individual, means—
- (i) spouse of the individual;
- (ii) brother or sister of the individual;
- (iii) brother or sister of the spouse of the individual;
- (iv) any lineal ascendant or descendant of the individual;
- (v) any lineal ascendant or descendant of the spouse of the individual;
- (vi) spouse of a person referred to in sub-clause (ii), (iii), (iv) or (v);
- (vii) any lineal descendant of a brother or sister of either the individual or of the spouse of the individual;
- (j) “residual income” means the total income, as reduced by regular income and specified income;
- (k) “specified asset” means any asset which is established to have been directly acquired by the specified person––
- (i) out of its income of the nature referred to in Schedule II (Table: Sl. No. 1);
- (ii) during the period beginning from the date of its creation or establishment and ending on the date from which the registration under specified provision became effective, if the specified person has not been allowed any benefit under this Part or under sections 11 and 12 or section 10(23C)(iv) or (v) or (vi) or (via) of the Income-tax Act, 1961 during the said period, where provisions of the first proviso or the second proviso to sub-section 12A(2) or the eighth proviso to clause 10(23C) of the said Act, are not applicable;
- (iii) during the period beginning from the date of its creation or establishment and ending on the date from which the registration under specified provision became effective due to the provisions of the first proviso or the second proviso to section 12A(2) or the eighth proviso to section 10(23C), where provisions of the first proviso or the second proviso to section 12A(2) or the eighth proviso to section 10(23C), of the Income-tax Act, 1961, are applicable; and
- (iv) which has been transferred to any other specified person within twelve months from the end of the month in which the dissolution takes place in respect of a case specified in section 352(5) (Table: Sl. No. 9);
- (l) “specified person” means any person which is registered under any specified provision at any time since its incorporation or creation;
- (m) “specified provision” means section 12A, 12AA or 12AB or section 10(23C) of the Income-tax Act, 1961 or section 332;
- (n) “substantial interest”, in relation to a person in a concern, means––
- (i) where the concern is a company, its shares (not being shares entitled to a fixed rate of dividend whether with or without a further right to participate in profits) carrying not less than 20% of the voting power are, at any time during the tax year, owned beneficially by such person or partly by such person and partly by one or more of the other related persons; or
- (ii) in the case of any other concern, if such person is entitled, or such person and one or more of the other related persons are entitled in the aggregate at any time during the tax year, to not less than 20% of the profits of such concern; and
- (o) “value” means the value of any benefit or facility granted or provided free of cost or at concessional rate to any related person.
FAQs on Section 355 of Income Tax Act 2025
What is meant by an “anonymous donation” under Section 355?
An anonymous donation is a voluntary contribution where the recipient does not maintain a record of the contributor’s identity, including name, address, and any other prescribed particulars.
What does the term “approval” refer to in this context?
Approval refers to approval granted under the second proviso to section 80G(5) of the Income-tax Act, 1961 or under section 354 of this Act.
Does “cancellation” include withdrawal?
Yes, cancellation includes withdrawal.
How is a “donation” defined in this section?
Donation means any voluntary contribution received by a registered non-profit organisation from any person.
What constitutes a “commercial activity”?
Commercial activity means any activity related to trade, commerce or business, or the rendering of any service connected to these, for a fee or other consideration, regardless of how the income is used or retained.
What does “registration” include under this section?
Registration includes provisional registration, provisional approval, or approval under certain provisions of the Income-tax Act, 1961 and section 332, but excludes approval under the second proviso to section 80G(5) or section 354.
Who is considered a “registered non-profit organisation”?
It is any person with a valid registration under a specified provision, provided such registration has not been cancelled.
Who qualifies as a “related person” in relation to a registered non-profit organisation?
A related person includes the author/founder, major contributors, family members of such individuals, trustees/managers, their relatives, and concerns in which they have substantial interest.
What relationships are covered under the term “relative”?
Relatives include spouse, siblings (including of the spouse), lineal ascendants/descendants (of self or spouse), their spouses, and lineal descendants of siblings (self or spouse).
What does “residual income” refer to?
Residual income is the total income reduced by regular income and specified income.
What qualifies as a “specified asset”?
A specified asset is one acquired by a specified person from certain types of income or during particular time periods, including before registration or during permitted transitional periods, and may also include assets transferred upon dissolution under defined conditions.
Who is a “specified person”?
A specified person is one registered under any specified provision at any time since its creation or incorporation.
What are considered “specified provisions”?
Specified provisions are section 12A, 12AA, 12AB, section 10(23C) of the Income-tax Act, 1961, or section 332.
What does “substantial interest” mean?
Substantial interest exists when a person (alone or with related persons) holds at least 20% voting power in a company, or is entitled to at least 20% of the profits in any other concern during the tax year.
How is “value” defined in this section?
Value means the worth of any benefit or facility provided free of cost or at a concessional rate to a related person.
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