Section 337 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 337 lists, in a Table of thirteen rows, the receipts and applications that count as the "specified income" of a registered non-profit organisation, and the tax year in which each is taxable. Under section 334(1)(a), specified income is taxed at 30 per cent. It captures anonymous donations above a threshold, income applied for the benefit of related persons, investments outside the permitted modes, misuse of accumulated income and corpus, and certain unapplied or deemed-applied sums. This article reads the section as per the Income-tax Act, 2025 (30 of 2025) as amended by the Finance Act, 2026.
"Specified income" is whatever column B of the Table says, and it is taxable in the year in column C. It is taxed at 30 per cent (section 334(1)(a)), apart from the regular income of the organisation. The thirteen rows cover anonymous donations above a threshold, income applied for related persons, income applied outside India in breach of section 338(a), investments in wrong modes, breaches of corpus and accumulation rules, and unapplied deemed application.
How specified income fits in
Section 334 charges tax on a registered non-profit organisation in two parts: 30 per cent on specified income, and the applicable rate on taxable regular income and residual income. Section 335 defines regular income and section 336 says when it is taxable; see our article on sections 333 to 336. Section 337 is the other half: a closed list. If a receipt or application is not in the Table, it is not specified income. Registration itself is in section 332; see our article on section 332. For help with a registered organisation's compliance, our 12A, 80G and CSR registration team can assist.
The Table
| Serial number | Specified income (column B) | Tax year (column C) |
|---|---|---|
| 1 | Any anonymous donation received by a registered non-profit organisation other than one created or established (i) wholly for religious purposes, or (ii) wholly for charitable and religious purposes (excluding an anonymous donation made with a specific direction that it is for any university or other educational institution, or any hospital or other medical institution, run by the organisation), excluding the anonymous donations up to Rs. 1,00,000 or 5 per cent of the total donations received by it during the tax year, whichever is higher | Tax year in which such anonymous donation is received |
| 2 | 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 | Tax year in which such application is made |
| 3 | Any portion of income applied by it outside India in contravention of section 338(a) | Tax year in which such application of income is made |
| 4 | Any investment or deposit made in contravention of section 350 out of any income, accumulated income, deemed accumulated income, corpus, deemed corpus or any other fund | Tax year in which such investment or deposit is made |
| 5 | Any deemed corpus donation in respect of which any of the conditions specified in section 340 is violated | Tax year in which such violation is made |
| 6 | Any portion of accumulated income, if it is applied to purposes other than charitable or religious purposes for which it is accumulated or set apart | Tax year in which it is so applied |
| 7 | Any portion of accumulated income, if it ceases to be accumulated or set apart for application to such purposes as specified under section 342(1) | Tax year in which it ceases to be so accumulated or set apart |
| 8 | Any portion of accumulated income, if it is not applied as per section 341(1) to (4) for which it is accumulated or set apart within the period for which it was accumulated or set apart as specified in section 342(1) | Last of the tax years for which the income was so accumulated or set apart |
| 9 | Any portion of accumulated income, if it is credited or paid to any other registered non-profit organisation | Tax year in which it is so credited or paid |
| 10 | Any income applied to purposes other than charitable or religious purposes for which it is registered | Tax year in which it is so applied |
| 11 | Any income determined by the Assessing Officer under section 344 in excess of income shown in the books of account of such business undertaking | Tax year to which such income relates |
| 12 | Fair market value of any asset, where it is not held in forms or modes specified in paragraph 1(1) to (30) of Schedule XVI even after the expiry of one year from the end of the tax year in which such asset is acquired | Tax year immediately following the expiry of the limitation period mentioned in column B |
| 13 | Any deemed application under section 341(5) not actually applied by the organisation for its objects in India within the period specified in section 341(6) | Tax year specified in section 341(6) by which such application is required to be made |
Printing note: in row 12 the Table's column C refers to "the limitation period mentioned in Column B". The one-year period is in column B, so the cross-reference is read that way. The copy also prints "organization" in row 13 where the Act elsewhere has "organisation". These are printing points and do not change the meaning.
Reading the rows in groups
Receipts (row 1)
Anonymous donations are specified income unless the organisation is within the two excluded categories, or the donation is within the threshold. The threshold is the higher of Rs. 1,00,000 or 5 per cent of the total donations received during the tax year. A donation made with a specific direction for a university, other educational institution, hospital or other medical institution run by the organisation is also outside the row where the organisation is wholly charitable and religious.
Applications of income (rows 2, 3, 10)
- Row 2: income applied directly or indirectly for the benefit of a related person, computed in the manner prescribed. The manner is left to the Income-tax Rules, 2026.
- Row 3: income applied outside India in contravention of section 338(a), which allows exclusion only where the Board directs by general or special order.
- Row 10: income applied to purposes other than the charitable or religious purposes for which the organisation is registered.
Investment and corpus rules (rows 4, 5, 12)
- Row 4: an investment or deposit that contravenes section 350 out of any income, accumulated income, deemed accumulated income, corpus, deemed corpus or any other fund.
- Row 5: a deemed corpus donation for which a condition in section 340 is violated. See our article on sections 338 to 340.
- Row 12: the fair market value of an asset not held in the forms or modes in paragraph 1(1) to (30) of Schedule XVI even after one year from the end of the tax year of acquisition.
Accumulation rules (rows 6 to 9)
These rows relate to income accumulated or set apart under section 342 (see our article on sections 341 to 343): applied to other purposes (row 6), ceasing to be accumulated (row 7), not applied within the period (row 8, taxed in the last of the tax years of accumulation), or passed to another registered organisation (row 9).
Other rows (11, 13)
- Row 11: income determined by the Assessing Officer under section 344 in excess of the income shown in the books of the business undertaking.
- Row 13: a deemed application under section 341(5) that was not actually applied for the organisation's objects in India within the period in section 341(6).
A worked example
Names and amounts are assumed. The 30 per cent is the rate printed in section 334(1)(a).
The Anand Health Trust is a registered non-profit organisation that is not created wholly for religious purposes or wholly for charitable and religious purposes. In a tax year:
- Row 1. It receives total donations of Rs. 40,00,000, including Rs. 2,50,000 that are anonymous. The threshold is the higher of Rs. 1,00,000 and 5 per cent of Rs. 40,00,000, which is Rs. 2,00,000. The higher is Rs. 2,00,000. The anonymous donations above the threshold are Rs. 2,50,000 - Rs. 2,00,000 = Rs. 50,000, which on this reading is specified income of that tax year.
- Row 10. It applies Rs. 1,20,000 of income to a purpose other than the charitable purposes for which it is registered. That Rs. 1,20,000 is specified income of the tax year in which it is applied.
- Tax. Specified income = Rs. 50,000 + Rs. 1,20,000 = Rs. 1,70,000. At 30 per cent, the tax under section 334(1)(a) = Rs. 1,70,000 x 30 per cent = Rs. 51,000. Tax on its taxable regular income and residual income is separate (section 334(1)(b)).
Need help with a registered organisation?
Because the list in section 337 is closed and each row has its own tax year, errors in records of donations, related-person payments, accumulations and investments show up as 30 per cent tax. If you run a trust, society or section 8 company, our team can help you check records against the Table. See our 12A, 80G and CSR registration service.
Key takeaways
- Specified income is the thirteen items in the Table of section 337, taxable in the year stated against each.
- It is taxed at 30 per cent under section 334(1)(a), separately from regular income.
- Anonymous donations above the higher of Rs. 1,00,000 or 5 per cent of total donations are specified income, subject to the exclusions in row 1.
- Income applied for related persons, applied outside India in breach of section 338(a), or applied to other purposes is specified income.
- Breaches of the investment rules, the corpus rules and the accumulation rules produce specified income in the year of breach, or in the last year of accumulation for row 8.
- Rows 11 and 13 deal with business undertaking income and unapplied deemed application.
Read next
- Sections 333 to 336: switching of regimes and regular income
- Sections 338 to 340: corpus donation and deemed corpus donation
- Sections 341 to 343: application of income and accumulated income
- Section 332: registration of a non-profit organisation
Disclaimer: Based on the Income-tax Act, 2025 (30 of 2025) as amended by the Finance Act, 2026, as consulted on 2 October 2026. It explains the words of the Act only; the Income-tax Rules, 2026, notifications, circulars, later amendments and the way the tax authorities and courts apply these provisions should be checked. This article is general information, not legal advice; check the official text before acting.