The Statutory Brief

IT Act 1961 → 2025 / Section 11

Charitable trusts

Section 11 → Section 336

Exemption for charitable and religious trusts: the 85% application rule

Section 11 of the old Income-tax Act, 1961 · new section 336 under the Income-tax Act, 2025

New reference Sections 335–342 (taxable regular income 336; application 341; accumulation 342)

Income-tax Act, 1961Section 11

  • Income exempt if 85% applied to charitable/religious purposes in India
  • Accumulation of up to 15%; further accumulation for up to 5 years (Form 10)
  • Donations to other trusts: 85% counts as application

Applies to FY 2025-26 (AY 2026-27) and earlier years.

Income-tax Act, 2025Sections 335–342 (taxable regular income 336; application 341; accumulation 342)

  • Trusts are now 'registered non-profit organisations' (Part in sections 332–355)
  • Taxable regular income is nil if 85% is applied or accumulated (section 336)
  • Application rules (section 341) and 5-year accumulation (section 342)
  • 85% of donations to another registered NPO counts as application

Applies from tax year 2026-27 (from 1 April 2026).

What changed

Restructured: the trust provisions are rewritten as a separate Part with new terms ('registered non-profit organisation', 'regular income', 'specified income'). The 85% and 5-year rules continue.

Practice notes

  • Cash payments above ₹10,000 are not application (section 341 applies section 36(4)–(7)).
  • Corpus re-investment within 5 years counts as application.

These are summaries, not the statutory text. Read the bare Act for both sections on the Income Tax Department's official site, which also has a side-by-side comparison utility.

Frequently asked

Where are charitable trust provisions in the new Income Tax Act 2025?

Sections 332 to 355; the 85% application test is in section 336, application in 341 and accumulation in 342.

What is section 11 called in the new Income-tax Act, 2025?

Section 11 of the Income-tax Act, 1961 corresponds to Sections 335–342 (taxable regular income 336; application 341; accumulation 342) of the Income-tax Act, 2025, which applies from 1 April 2026 (tax year 2026-27).

What changed in section 11 under the new Income Tax Act?

Restructured: the trust provisions are rewritten as a separate Part with new terms ('registered non-profit organisation', 'regular income', 'specified income'). The 85% and 5-year rules continue.

Is section 11 still applicable for FY 2025-26?

Yes. Income of FY 2025-26 (AY 2026-27) and earlier years is governed by section 11 of the 1961 Act. Sections 335–342 (taxable regular income 336; application 341; accumulation 342) of the 2025 Act applies from tax year 2026-27.

Related sections

12A / 12AB→332Registration of charitable trusts and institutions13→351When trust exemption is lost: specified violations and benefit to interested persons115BBC→337Tax on anonymous donations to trusts (and other specified income)