Section 339 of the Income-tax Act, 2025 — Corpus Donation to a Registered Non-Profit Organisation

In plain language

What Section 339 actually says

Section 339 sits in Part B of Chapter XVII of the Income-tax Act, 2025 (Sections 332 to 355), which is the complete code for taxation of charitable and religious organisations — now called Registered Non-Profit Organisations (RNPOs). Section 339 does one specific job: it defines what a "corpus donation" is.

In plain words, a corpus donation is any donation given to a registered NPO with a clear, specific written direction by the donor that the money must form part of the corpus (the permanent fund) of that organisation — and the donation is invested or deposited in one of the modes permitted under Section 350, in an account maintained specifically for the corpus.

Two conditions must both be satisfied:

• Donor's specific direction: The giver must state, at the time of giving, that this money is towards the corpus. A general donation with no such instruction is not a corpus donation.
• Investment/deposit in Section 350 modes: The corpus amount must be parked only in the permitted investment forms listed under Section 350 (read with the relevant schedule), and kept separately for the corpus.

Why the "corpus" tag matters — the tax effect

A normal (revenue) donation received by an NPO is treated as its income, and the NPO must apply at least 85% of that income towards its charitable/religious objects to stay exempt. A corpus donation is different: because the donor has ring-fenced it as capital, Section 338 keeps a validly-received corpus donation out of the "regular income" of the NPO. It is treated as a capital receipt.

The practical result:

• A genuine corpus donation is not counted as income, so there is no 85% application obligation on it.
• It is not taxed on receipt, provided the money goes into and stays in a Section 350 permitted mode maintained for the corpus.

Who it applies to

Section 339 applies to registered non-profit organisations — trusts, societies, Section 8 companies and other institutions that hold valid registration under the 2025 Act. Only a registered NPO can receive money and treat it as an exempt corpus donation. It equally matters to donors (individuals, companies, other trusts) who want their gift to build an endowment rather than be spent immediately.

The 1961 Act equivalent

This is the modern, renumbered version of Section 11(1)(d) of the Income-tax Act, 1961, which exempted "income in the form of voluntary contributions made with a specific direction that they shall form part of the corpus of the trust or institution." The 2025 Act keeps the same core idea but adds an explicit, hard-coded condition that the corpus must be invested/deposited in Section 350 modes — codifying what earlier came through Explanation and rules.

How it interacts with related sections

• Section 338 excludes the corpus donation from regular income — this is where the exemption actually lands.
• Section 340 covers deemed corpus donations — money given for renovation/repair of a notified temple, gurudwara, church, mosque or other place, treated as corpus if used only for that purpose.
• Section 350 lists the permitted investment/deposit modes; parking corpus outside these modes breaks the exemption.

Important limits and traps

• Corpus donation given by one NPO to another NPO is NOT treated as application of income of the donor NPO. So a trust cannot meet its own 85% spending target by making a corpus gift to a sister trust.
• If the corpus money is not invested/kept in Section 350 modes, or is diverted, the exemption can be lost and the amount can be brought to tax (specified income is generally taxed at 30%).
• Written documentation is everything. Keep the donor's corpus direction (letter, form, receipt notation) and maintain a separate corpus ledger. Without proof of direction, the assessing officer can treat the sum as an ordinary voluntary contribution subject to the 85% rule.

Practical takeaway

Section 339 lets NPOs build a permanent, tax-free endowment — but only if two boxes are ticked: a clear donor direction and correct parking of the funds. Treat corpus receipts as a distinct, audited pool, never mixed with day-to-day donations.