Section 340 deals with the treatment of donations received by a Registered Non-Profit Organisation (RNPO) for renovation or repair of specified religious places as deemed corpus donations, subject to fulfilment of prescribed statutory conditions.
Text
of Section 340 of the Income Tax Act, 2025
340.
Deemed corpus donation.
Where the property of a registered
non-profit organisation includes any temple, mosque, gurdwara, church or other
place notified under section 133(1)(b)(vi), any sum or sums received by such
registered non-profit organisation as donation for the purpose of renovation or
repair of such temple, mosque, gurdwara, church or other place, may, at its
option, be deemed as forming part of the corpus under section 339, if it -
(a) maintains such
corpus as separate identifiable;
(b) applies such
corpus only for the purpose for which the contribution was made;
(c) invests or
deposits such corpus in any of the modes permitted under section 350; and
(d) does not apply
such corpus for making donation to any person.
Essential conditions under Section
340
|
Condition |
Requirement |
|
1. Eligible organisation |
Registered Non-Profit Organisation
(RNPO). |
|
2. Ownership/property |
The specified religious place must
be included in the property of the RNPO. |
|
3. Nature of donation |
Donation must be received for
renovation or repair. |
|
4. Separate identification |
Corpus must be separately
identifiable. |
|
5. Specific utilisation |
Funds must be applied only for the
specified renovation or repair. |
|
6. Investment |
Funds must be invested or deposited
in permitted modes under Section 350. |
|
7. No onward donation |
Corpus must not be applied towards
making donations to any person. |
The RNPO
must maintain the deemed corpus as separately identifiable. This condition
ensures that the donation does not get mixed indiscriminately with the
organisation’s general funds.
ILLUSTRATION:
A trust
receives ₹ 1 crore for renovation of a temple.
Its
accounting treatment should separately identify:
|
Particulars |
Amount |
|
Donation received for temple
renovation |
₹ 1,00,00,000 |
|
Separately identifiable deemed
corpus |
₹ 1,00,00,000 |
|
General donation fund |
Nil |
The organisation should maintain a separate ledger, supporting bank or investment records and project-wise utilisation details.
Revenue
perspective : If the trust merely credits the donation to a general donation
account and cannot establish its separate identity, the Assessing Officer
should examine whether the condition under Section 340(a) has been fulfilled.
Application only for the specified purpose [Section 340(b)]
The
deemed corpus must be applied only for the purpose for which the donation was
made. This is a purpose-specific restriction.
ILLUSTRATION:
A trust
receives ₹ 80,00,000 for renovation of a temple.
|
Utilisation |
Amount |
Eligibility |
|
Repair of temple roof |
₹ 20,00,000 |
Eligible |
|
Renovation of sanctum |
₹ 15,00,000 |
Eligible |
|
Repair of temple flooring |
₹ 10,00,000 |
Eligible |
|
Construction of school building |
₹ 15,00,000 |
Not eligible |
|
Administrative expenditure unrelated
to renovation |
₹ 5,00,000 |
Not eligible |
|
Balance retained for the same
renovation project |
₹ 15,00,000 |
Retention alone does not establish
violation |
The Assessing Officer should examine invoices, contractor bills, work orders, measurement books, engineer certificates and payment evidence.
The expression “only for the purpose for which the donation was made” makes the actual utilisation particularly important.
Investment or deposit in permitted modes [Section 340(c)]
The
deemed corpus must be invested or deposited in the modes permitted under
Section 350.
This is
an independent statutory condition. The organisation cannot claim deemed corpus
treatment merely by maintaining a separate ledger if the money is invested or
deposited in an impermissible mode.
The Assessing Officer should verify :
- Bank and investment statements.
- Fixed deposit receipts.
- Investment registers.
- Nature of securities and deposits.
- Compliance with the relevant provisions of Section
350.
- Whether the investments are identifiable with
the specific corpus.
Prohibition on onward donation [Section 340(d)]
Section
340(d) expressly prohibits application of the deemed corpus for making a
donation to any person.
This
restriction is important from the Revenue’s perspective because it prevents a
deemed corpus donation from being passed on to another organisation in the form
of a donation.
ILLUSTRATION :
A trust
receives ₹ 1,00,00,000 for renovation of a temple.
It
subsequently transfers ₹ 25,00,000 to another charitable trust, describing the
transfer as a donation towards renovation of the same temple.
Option exercised by the Registered Non-Profit Organisation (RNPO).
The
expression “may, at its option, be deemed” is significant. It indicates that
the treatment under Section 340 is optional and not compulsory. The RNPO may
opt to treat an otherwise qualifying donation as deemed corpus under Section
340, subject to compliance with all statutory conditions.
The Assesssing Officer should verify whether the organisation has consistently and clearly exercised this option in its accounts and supporting records.
Consequences of violation [Section 337 - Table S. No. 5]
Section
340 provides an option to an RNPO to treat donations received for renovation or
repair of specified religious places as deemed corpus donations. This treatment
is conditional, and failure to satisfy the statutory requirements may attract
taxation under Section 337. Section 337 deals with the tax consequences
of specified income, including violation of the conditions governing deemed
corpus donations.
Text of Section 337 – Table S. No. 5
The
specified income of a registered non-profit organisation shall mean the income
as specified in column B of the Table below and shall be taxable in the year
provided in the column C thereof : -
|
S. No. |
Specified
income |
Tax year |
|
A |
B |
C |
|
5. |
Any deemed corpus donation in respect of which any
of the conditions specified in the section 340 is violated. |
Tax year in which such violation is made. |
Notification
No. 166/2025, Dated 02.12.2025
S.O. 5551(E). - In the exercise of the powers conferred by clause (b) of sub-section (2) of section 80G of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby notifies “Shree Balakrishna Lalji & other deities temple” Bhuleshwar, Mumbai managed by Mota Mandir Trust, Mumbai, Maharashtra (PAN: AABTM9049C) to be place of historic importance and a place of public worship of renown throughout the states of Maharashtra and Gujarat for the purposes of the said section.
The Notification will be valid only for the renovation or repair of the “Shree Balakrishna Lalji & other deities temple” Bhuleshwar, Mumbai to the extent of Rs. 50,00,00,000/-(Rupees Fifty Crore only) and will cease to be effective after the said amount has been collected or on 31.03.2030, whichever is earlier.
INDU BALA, Dy. Secy.
Notification : S.O.2221, Date of Issue : 02.061988
In exercise of the powers conferred by clause (b) of sub-section (2) of section 80G of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby notifies the following temples to be places of historical importance and of public worship of renown throughout the States of Andhra Pradesh and Rajasthan respectively for the purposes of the said section :
(i) Sitaramji Temple Situated
at Sitaram Baug,
(ii) Varadaraj Temple Hyderabad,
(iii) Hanuman Temple Andhra
Pradesh.
(iv) Mahadev Temple (v) Shri
Ranganath Temple, Pushkar
The approval is subject to the condition that the temple will maintain separate books of account for this purpose and that the donations received will be utilised exclusively for the renovation of the temple.
[No. 7995/F. No. 176/75/86-IT(AI)
In
exercise of the powers conferred by sub-section (2)(b) of section 80G of the
Income-tax Act, 1961 (43 of 1961), the Central Government hereby notifies the
following temples to be places of public worship of renown throughout the State
of Jammu & Kashmir : -
1. Shri Vaishno Devi Ji situated in the Trikuta
Hill in Jammu.
2. Shri Raghunath Ji Temple Complex, Jammu.
3. Shri Ranbireshwar Temple, Jammu.
4. Shri Amarnath Ji Shrine in Kashmir.
5. Shrine of Bhagwati Khirbhawani situated in
village Tulamulla in Kashmir.
6. Shrine of Bhagwati Sharika near Hari Parbat Fort, Srinagar.
[No. 5723 (F. No. 176/53/83-IT(AI)]
In exercise of the powers conferred
by sub-section of section 88 of the Income-tax Act, 1961 (43 of 1961), the
Central Government hereby notifies the following temples, mosques, gurdwaras
and churches as places of public worship of renown throught the State or States
for the purposes of the said section :
INSTITUTIONS
(1) Church of Bom Jesu, Goa.
(2) Dargah Khwaja Moinuddin Chisti,
Ajmer.
(3) Gurdwara Harmandir Saheb,
Amristar.
(4) Jama Masjid, Delhi.
(5) Jama Masjid, Bombay.
(6) Kali Temple, Kalighat,
Calcutta.
(7) Mount Mary Shrine, Bandra,
Bombay.
(8) Shri Padmanabhaswami Temple,
Trivandrum.
(9) Shri Kashi Vishwanath Temple,
Varanasi.
(10) Shri Dwarkadhish Temple,
Dwarka.
(11) Shri Venkateswara Temple,
Tirupathi.
(12) Shri Ramanatha Swami Temple,
Rameshwaram
