Income not to be included in regular income
[Section-338 as per the Income Tax Act, 2025 (this Act) w.e.f. 1st April, 2026.]
While computing the regular income of a registered non-profit organisation, the following income shall not be included:––
- (a) income applied outside India, where the Board, by general or special order, directs that such income shall not be so included in its total income in case of a registered non-profit organisation––
- (i) created before the 1st April, 1952 for charitable or religious purposes; or
- (ii) created on or after the 1st April, 1952 for charitable purposes where such application of income outside India tends to promote international welfare in which India is interested;
- (b) the corpus donation received by the registered non-profit organisation under section 339.
FAQs on Section 338 of Income Tax Act 2025
What is the main objective of Section 338 of the Income Tax Act, 2025?
Section 338 aims to exclude certain categories of income from the regular income of a registered non-profit organisation while computing its total income.
Which incomes are not included in the regular income of a registered non-profit organisation under Section 338?
The following incomes are excluded:
(a) Income applied outside India under specific conditions approved by the Board.
(b) Corpus donations received under Section 339.
Under what conditions is income applied outside India excluded from regular income?
Income applied outside India is excluded if the Board issues a general or special order in the case of a registered non-profit organisation that:
(i) Was created before April 1, 1952, for charitable or religious purposes, or
(ii) Was created on or after April 1, 1952, for charitable purposes where such application promotes international welfare in which India is interested.
Who decides whether income applied outside India should be excluded from regular income?
The Board decides this through a general or special order.
What kind of organisations are eligible for exemption of income applied outside India?
Only registered non-profit organisations fulfilling either of the two prescribed timelines and purposes are eligible.
Are religious organisations created after April 1, 1952, eligible for exclusion of income applied abroad?
No, only organisations created for charitable purposes on or after April 1, 1952, are eligible, not those created solely for religious purposes.
What is meant by corpus donation under Section 338(b)?
Corpus donation refers to voluntary contributions made with a specific direction that they shall form part of the corpus (capital) of the non-profit organisation, as defined under Section 339.
Is corpus donation taxable under Section 338?
No, corpus donations received under Section 339 are not included in the regular income of a registered non-profit organisation.
Does Section 338 apply to all non-profit organisations?
It applies only to organisations that are registered non-profit entities as recognized under the provisions of the Income Tax Act, 2025.
What is the effective date of implementation for Section 338?
Section 338 is effective from April 1, 2026.
Does Section 338 provide exemption for all foreign application of income?
No, only foreign application of income that is approved by the Board under specified conditions is exempt.
Can the exemption for income applied outside India be withdrawn by the Board?
Yes, since the exemption is granted through a general or special order by the Board, it can be altered or withdrawn by the Board at its discretion.
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