Section 115BBI applies to a person receiving income on behalf of a fund, trust, institution, university, educational institution, hospital or medical institution under sub-clauses (iv), (v), (vi) or (via) of s. 10(23C), or a trust or institution referred to in s. 11. Notwithstanding any other provision, specified income is taxed at thirty per cent and the rest of the total income as if it were the total income.
Specified income has five limbs. The first is income accumulated or set apart in excess of fifteen per cent of the income where no specific provision allows it. The second is deemed income under Explanation 4 to the third proviso to s. 10(23C), or under s. 11(1B) or (3). The third is income not exempt for violation of clause (b) of the third proviso to s. 10(23C), or not excluded under s. 13(1)(d). The fourth is income deemed under the twenty-first proviso to s. 10(23C), or not excluded under s. 13(1)(c). The fifth is income not excluded under s. 11(1)(c).
Operative consequences
No deduction for any expenditure or allowance, and no set-off of any loss, is allowed in computing the specified income (s. 115BBI(2)).
The specified income bears thirty per cent irrespective of the rates that would apply to the rest of the institution's income.
Status
Section 115BBI is operative for AY 2026-27. The Finance Act, 2026 does not amend it.
Under the 2025 Act, a registered non-profit organisation pays 30% on specified income under s. 334(1)(a). The items of specified income, and the tax year of each, are listed in the Table in s. 337.
The 1961 Act governs AY 2026-27 and earlier assessment years; the Income-tax Act, 2025 governs tax year 2026-27 onwards. For this subject the 2025 Act provision is s. 334(1)(a), read with s. 337.
Case Laws & Commentary
SECTION 115BBI — SPECIFIED INCOME OF CERTAIN INSTITUTIONS
Case Laws & Commentary (Income-tax Act, 1961 as amended by Finance Act, 2026)
A. SECTION COMMENTARY
A.1 Structural position & legislative purpose
Section 115BBI taxes the 'specified income' of certain charitable and religious institutions at thirty per cent. Where the total income of an assessee, being a trust or institution registered under section 12AA/12AB or an institution approved/notified under the relevant sub-clauses of section 10(23C), includes any 'specified income', the tax is the aggregate of (i) thirty per cent on the specified income and (ii) tax on the balance income as if it were the total income. No deduction in respect of any expenditure or allowance, and no set-off of loss, is allowed in computing the specified income.
'Specified income' is defined to capture the income that loses its exemption because of particular defaults - broadly, income accumulated or set apart in excess of the permitted limit; income not applied or accumulated as required; income applied for purposes other than the objects of the institution; income that ceases to be exempt by reason of the conditions in the eleventh/twelfth provisos to section 10(23C) or sections 11/13 being breached; and income deemed to be income under the relevant provisions. The provision ensures that, even where a registered institution forfeits exemption on a slice of its income, that slice is taxed at a uniform high rate rather than at the ordinary rates, removing the incentive to commit such defaults.
A.2 Sub-section / clause taxonomy
Sub-section (1): the charge - 30% on the specified income, plus tax on the balance income. Sub-section (2): no deduction of any expenditure/allowance and no set-off of loss against the specified income. Explanation: the definition of 'specified income' (the categories of income that have lost exemption through accumulation/application defaults and breaches of sections 11/13 or the section 10(23C) provisos).
A.3 Core doctrinal themes
Theme (1) - High-rate charge on forfeited-exemption income: income that loses its exempt character through the specified defaults is taxed at a flat 30%, not at ordinary rates, with no deduction or set-off.
Theme (2) - Defined categories of specified income: the charge bites only on the income falling within the Explanation's enumerated defaults (accumulation/application breaches; sections 11/13 and 10(23C)-proviso violations), not on the institution's income generally.
Theme (3) - Integration with the exemption regime: section 115BBI is the rate consequence of the substantive exemption rules; the prior question - whether exemption is lost on a particular slice of income - is decided under sections 11 to 13 and section 10(23C), and only then does section 115BBI fix the rate.
Inserted by the Finance Act, 2022 with effect from assessment year 2023-24, as part of the rationalisation of the taxation of charitable and religious institutions (alongside the tightened registration, accumulation and application rules). It provides a dedicated rate for the income on which exemption is denied for the enumerated defaults.
Finance Act 2026: no amendment to section 115BBI. The 30% charge on the specified income of registered/approved institutions continues for AY 2026-27 onward.
A.5 CA practitioner pointers
(1) The substantive battle is under sections 11-13 / 10(23C) - whether exemption is lost on a particular slice of income; section 115BBI only fixes the 30% rate once a default is established. (2) Monitor the accumulation (15% / section 11(2)) and application requirements and the section 13 prohibitions closely, since a breach now triggers the punitive rate, not merely ordinary taxation. (3) Do not net expenditure or set off losses against the specified income (sub-section (2)). (4) Distinguish specified income (section 115BBI, 30%) from anonymous donations (section 115BBC, 30%) - the two charges address different defaults and can apply in the same assessment.
B. FINANCE ACT, 2026 - IMPACT NOTE
Section 115BBI is NOT amended by the Finance Act, 2026. The 30% charge on the specified income of section 12AA/12AB-registered trusts and section 10(23C)-approved institutions continues for AY 2026-27 onward.
C. CASE LAW - CLUSTERED BY ISSUE
Cluster C-1 : The prior exemption question feeds the rate (cross-reference)
Sections 11 to 13 and 10(23C) - the substantive exemption jurisprudence (cross-reference).
Principle: Section 115BBI is a rate provision triggered only after exemption is lost on a slice of income under the substantive rules - the accumulation and application requirements of section 11, the prohibitions in section 13 (e.g. benefit to specified persons), and the conditions/provisos of section 10(23C). The rich jurisprudence on those provisions (what constitutes application, permissible accumulation, and section 13 violations) decides whether there is any 'specified income' at all; section 115BBI then fixes the 30% rate on it.
Relevance: Directs the practitioner to the substantive exemption authorities as the real battleground; the section 115BBI charge is consequential on the outcome of the sections 11-13 / 10(23C) analysis.
Candid note on the case-law field: Section 115BBI is recent (operative from AY 2023-24) and has effectively no dedicated reported case-law field of its own; the governing jurisprudence is that of the underlying exemption provisions (sections 11-13 and 10(23C)), which determine whether any specified income arises. Consistent with the accuracy discipline of this treatise, the cross-reference is identified as such and no decision has been invented under section 115BBI; the position is stated candidly.
D. PRACTITIONER'S NOTE
Section 115BBI is the punitive rate tail of the charitable-exemption regime: defend the exemption on the merits under sections 11-13 / 10(23C), because once a default is established the forfeited income is taxed at a flat 30% with no deduction or set-off. Keep accumulation and application compliance tight, and treat section 115BBI and section 115BBC (anonymous donations) as distinct charges that may both surface in a trust assessment.
E. SOURCES & CITATIONS
Section 115BBI is not amended by the Finance Act, 2026.
Caveat: Treatise-style commentary for practitioners and academic use; not legal opinion. The definition of specified income is tied to the evolving charitable-taxation provisions; verify the current statutory text of sections 11-13/10(23C), the prescribed conditions and the latest CBDT/appellate position before relying on any proposition.
Function in the statutory architecture
Section 115BBI applies to a person receiving income on behalf of a fund, trust, institution, university, educational institution, hospital or medical institution under sub-clauses (iv), (v), (vi) or (via) of s. 10(23C), or a trust or institution referred to in s. 11. Notwithstanding any other provision, specified income is taxed at thirty per cent and the rest of the total income as if it were the total income.
Specified income has five limbs. The first is income accumulated or set apart in excess of fifteen per cent of the income where no specific provision allows it. The second is deemed income under Explanation 4 to the third proviso to s. 10(23C), or under s. 11(1B) or (3). The third is income not exempt for violation of clause (b) of the third proviso to s. 10(23C), or not excluded under s. 13(1)(d). The fourth is income deemed under the twenty-first proviso to s. 10(23C), or not excluded under s. 13(1)(c). The fifth is income not excluded under s. 11(1)(c).
Operative consequences
Status
Section 115BBI is operative for AY 2026-27. The Finance Act, 2026 does not amend it.
Under the 2025 Act, a registered non-profit organisation pays 30% on specified income under s. 334(1)(a). The items of specified income, and the tax year of each, are listed in the Table in s. 337.
The 1961 Act governs AY 2026-27 and earlier assessment years; the Income-tax Act, 2025 governs tax year 2026-27 onwards. For this subject the 2025 Act provision is s. 334(1)(a), read with s. 337.
Case Laws & Commentary
SECTION 115BBI — SPECIFIED INCOME OF CERTAIN INSTITUTIONS
Case Laws & Commentary (Income-tax Act, 1961 as amended by Finance Act, 2026)
A. SECTION COMMENTARY
A.1 Structural position & legislative purpose
Section 115BBI taxes the 'specified income' of certain charitable and religious institutions at thirty per cent. Where the total income of an assessee, being a trust or institution registered under section 12AA/12AB or an institution approved/notified under the relevant sub-clauses of section 10(23C), includes any 'specified income', the tax is the aggregate of (i) thirty per cent on the specified income and (ii) tax on the balance income as if it were the total income. No deduction in respect of any expenditure or allowance, and no set-off of loss, is allowed in computing the specified income.
'Specified income' is defined to capture the income that loses its exemption because of particular defaults - broadly, income accumulated or set apart in excess of the permitted limit; income not applied or accumulated as required; income applied for purposes other than the objects of the institution; income that ceases to be exempt by reason of the conditions in the eleventh/twelfth provisos to section 10(23C) or sections 11/13 being breached; and income deemed to be income under the relevant provisions. The provision ensures that, even where a registered institution forfeits exemption on a slice of its income, that slice is taxed at a uniform high rate rather than at the ordinary rates, removing the incentive to commit such defaults.
A.2 Sub-section / clause taxonomy
Sub-section (1): the charge - 30% on the specified income, plus tax on the balance income. Sub-section (2): no deduction of any expenditure/allowance and no set-off of loss against the specified income. Explanation: the definition of 'specified income' (the categories of income that have lost exemption through accumulation/application defaults and breaches of sections 11/13 or the section 10(23C) provisos).
A.3 Core doctrinal themes
Theme (1) - High-rate charge on forfeited-exemption income: income that loses its exempt character through the specified defaults is taxed at a flat 30%, not at ordinary rates, with no deduction or set-off.
Theme (2) - Defined categories of specified income: the charge bites only on the income falling within the Explanation's enumerated defaults (accumulation/application breaches; sections 11/13 and 10(23C)-proviso violations), not on the institution's income generally.
Theme (3) - Integration with the exemption regime: section 115BBI is the rate consequence of the substantive exemption rules; the prior question - whether exemption is lost on a particular slice of income - is decided under sections 11 to 13 and section 10(23C), and only then does section 115BBI fix the rate.
A.4 Legislative evolution / Finance Act amendment trail
Inserted by the Finance Act, 2022 with effect from assessment year 2023-24, as part of the rationalisation of the taxation of charitable and religious institutions (alongside the tightened registration, accumulation and application rules). It provides a dedicated rate for the income on which exemption is denied for the enumerated defaults.
Finance Act 2026: no amendment to section 115BBI. The 30% charge on the specified income of registered/approved institutions continues for AY 2026-27 onward.
A.5 CA practitioner pointers
(1) The substantive battle is under sections 11-13 / 10(23C) - whether exemption is lost on a particular slice of income; section 115BBI only fixes the 30% rate once a default is established. (2) Monitor the accumulation (15% / section 11(2)) and application requirements and the section 13 prohibitions closely, since a breach now triggers the punitive rate, not merely ordinary taxation. (3) Do not net expenditure or set off losses against the specified income (sub-section (2)). (4) Distinguish specified income (section 115BBI, 30%) from anonymous donations (section 115BBC, 30%) - the two charges address different defaults and can apply in the same assessment.
B. FINANCE ACT, 2026 - IMPACT NOTE
Section 115BBI is NOT amended by the Finance Act, 2026. The 30% charge on the specified income of section 12AA/12AB-registered trusts and section 10(23C)-approved institutions continues for AY 2026-27 onward.
C. CASE LAW - CLUSTERED BY ISSUE
Cluster C-1 : The prior exemption question feeds the rate (cross-reference)
Sections 11 to 13 and 10(23C) - the substantive exemption jurisprudence (cross-reference).
Principle: Section 115BBI is a rate provision triggered only after exemption is lost on a slice of income under the substantive rules - the accumulation and application requirements of section 11, the prohibitions in section 13 (e.g. benefit to specified persons), and the conditions/provisos of section 10(23C). The rich jurisprudence on those provisions (what constitutes application, permissible accumulation, and section 13 violations) decides whether there is any 'specified income' at all; section 115BBI then fixes the 30% rate on it.
Relevance: Directs the practitioner to the substantive exemption authorities as the real battleground; the section 115BBI charge is consequential on the outcome of the sections 11-13 / 10(23C) analysis.
Candid note on the case-law field: Section 115BBI is recent (operative from AY 2023-24) and has effectively no dedicated reported case-law field of its own; the governing jurisprudence is that of the underlying exemption provisions (sections 11-13 and 10(23C)), which determine whether any specified income arises. Consistent with the accuracy discipline of this treatise, the cross-reference is identified as such and no decision has been invented under section 115BBI; the position is stated candidly.
D. PRACTITIONER'S NOTE
Section 115BBI is the punitive rate tail of the charitable-exemption regime: defend the exemption on the merits under sections 11-13 / 10(23C), because once a default is established the forfeited income is taxed at a flat 30% with no deduction or set-off. Keep accumulation and application compliance tight, and treat section 115BBI and section 115BBC (anonymous donations) as distinct charges that may both surface in a trust assessment.
E. SOURCES & CITATIONS
Section 115BBI is not amended by the Finance Act, 2026.
Caveat: Treatise-style commentary for practitioners and academic use; not legal opinion. The definition of specified income is tied to the evolving charitable-taxation provisions; verify the current statutory text of sections 11-13/10(23C), the prescribed conditions and the latest CBDT/appellate position before relying on any proposition.