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Outbyte PC Repair FREEClear out junk files and repair common Windows errorsFree Scan →Outbyte Driver Updater FREEScan for outdated or missing drivers - takes under a minuteDriver Scan →A temple in India does not become income-tax exempt merely because it receives donations. The tax result depends on the temple’s legal structure, registration or approval, the character of each receipt, how much qualifying income is applied to religious or charitable purposes, and whether any separately taxable events occurred.
For a qualifying registered non-profit organisation under the Income-tax Act, 2025 (the regime effective from 1 April 2026), section 336 generally makes taxable regular income nil when at least 85% of regular income is applied under section 341 or accumulated under section 342 for permitted religious or charitable purposes. If the 85% test is not met, section 336 taxes the 85% amount after reducing qualifying application or accumulation. Section 337 then requires a separate review of specified income, such as certain anonymous donations, related-person benefits, prohibited overseas use and impermissible investments.
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That is a calculation of taxable regular income, not automatically the temple’s final rupee tax bill. The final liability also depends on the entity’s status, other taxable income, applicable rates, compliance and any transitional rules.
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“Temple income” is not a single legal category. The place of worship may be operated by a public religious trust, a society, a company formed for non-profit purposes, an unregistered committee, or another arrangement. The taxpayer for the return may therefore be the trust, society or other entity rather than the temple building itself.
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First identify:
- the entity that owns or controls the bank accounts and receives the offerings;
- the tax year for which income is being computed;
- the registration, approval or other route to charitable or religious tax relief being claimed; and
- whether the entity is covered by the registered non-profit provisions of the Income-tax Act, 2025 and the Income-tax Rules, 2026.
The 2025 Act applies to the current regime from 1 April 2026. Official trust guidance on the tax department website still contains material framed under the Income-tax Act, 1961, including older section references. Use that guidance for the specific point it explains, but reconcile the provision number and current rule before filing.
Read the current statute at Income-tax Act, 2025 and check the department’s trust guidance at Taxability of income of charitable or religious trusts.
What counts as regular income for the 85% calculation?
Section 336 applies to the qualifying regular income of a registered non-profit organisation. The accounts must therefore classify receipts under the current Act and Rules rather than treating every amount credited to a donation account as one undifferentiated total.
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Depending on the facts, records may need to distinguish ordinary voluntary offerings, donations directed to corpus, rent or licence receipts, interest, investment income, grants, fees for services, sale of goods and other receipts. A receipt’s label in the ledger does not by itself decide its tax treatment. The deed, donor direction, use of funds and supporting documents matter.
Amounts that are not part of the section 336 regular-income computation, or that are covered by a special rule, must not be forced into the 85% formula. In particular, specified income under section 337 is tested separately.
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The section 336 calculation, step by step
1. Establish regular income
Prepare the tax-year figure for regular income using the entity’s books and the classification required by the 2025 Act and Rules. Keep a reconciliation from the financial statements to the tax computation so that restricted corpus receipts, anonymous offerings and investment transactions can be traced.
2. Measure qualifying application and accumulation
Determine which amounts were actually applied under section 341 for religious or charitable purposes during the tax year. Then identify any amount validly accumulated under section 342. Application and accumulation must satisfy the statutory conditions; a cash balance described as “reserved for temple work” is not automatically qualifying accumulation.
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Section 336 states:
“(a) nil, where 85% or more of the regular income of such tax year has been applied as per provisions of section 341 or accumulated under section 342 for charitable or religious purposes, in such tax year as per the provisions of this Part; and (b) in any other case, 85% of the regular income for such tax year as reduced by its application for charitable or religious purposes as per provisions of section 341 or accumulation thereof under section 342 in such tax year as per the provisions of this Part.”
In practical form:
| Test | Section 336 result for regular income |
|---|---|
| Qualifying application plus qualifying accumulation is at least 85% of regular income | Taxable regular income is nil under section 336 |
| Qualifying application plus qualifying accumulation is below 85% | 85% of regular income, reduced by the qualifying application and accumulation, is taxable regular income |
4. Treat the result as taxable income, not as the final tax bill
Section 336 produces the taxable regular-income amount. It does not itself state the final tax payable after considering specified income, other taxable income, losses or the applicable rate provisions. A computation that stops at “15% is taxable” is incomplete unless all other provisions have been checked.
Illustrative calculations
The following examples are hypothetical demonstrations of the statutory mechanics, not an assessment of any particular temple.
Example A: the 85% threshold is met
Assume a qualifying registered religious organisation has regular income of ₹10,00,000 for the tax year. It applies ₹8,50,000 to eligible religious purposes and validly accumulates nothing. Eighty-five per cent of ₹10,00,000 is ₹8,50,000. Because qualifying application reaches the threshold, section 336 taxable regular income is nil.
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Assume regular income is ₹10,00,000 and qualifying application or accumulation totals ₹6,00,000. The section 336 amount is 85% of ₹10,00,000 (₹8,50,000) less ₹6,00,000, producing ₹2,50,000 of taxable regular income. This example does not calculate any section 337 specified income or final tax payable.
Example C: an amount cannot be counted without evidence
Suppose trustees announce that ₹2,00,000 will be spent on a future festival but retain it in an ordinary account without meeting the conditions for section 342 accumulation. The announcement alone does not establish qualifying accumulation. The amount should be counted only after the statutory requirements and records have been satisfied.
Specified income under section 337 is a separate check
A nil section 336 result does not immunise every receipt. Section 337 separately identifies specified-income events that can be taxable even when regular income passes the 85% test. The review should cover:
- anonymous donations for organisations to which the anonymous-donation rule applies;
- benefits or use of trust property involving related or specified persons;
- application of income outside India where the Act does not permit it; and
- investments or deposits made in a manner not permitted by the applicable provisions.
Analyse each event under section 337 and the related provisions, retain the underlying agreements and payment records, and do not net a specified-income amount into the ordinary 85% worksheet.
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Anonymous offerings have a special religious-organisation rule
The 2025 Act does not apply its specified anonymous-donation rule in the same way to every organisation. A wholly religious organisation is excluded from that rule, subject to the stated exception for donations specifically directed to certain educational or medical institutions run by the organisation. The exception must be examined from the donor’s direction and the institution’s facts, not from the temple’s general religious character.
For other covered organisations, the Act provides an exclusion for anonymous donations up to the higher of ₹1,00,000 or 5% of total donations received during the tax year. The amount above the applicable threshold is then considered under the specified-income provisions.
Maintain donation records that identify donors where available, preserve the wording of any direction, and separately flag receipts for which the donor cannot be identified. An older department page on section 115BBC describes a 30% rate under the 1961 Act framework; that historical figure should not be presented as the verified rate under the 2025 Act without checking the current rate provisions and amendments. The older explanation is available at Section 115BBC: anonymous donations.
Corpus donations require a specific direction and traceability
A donation intended to form part of a temple’s corpus is not established merely because the treasurer or receipt book calls it “corpus.” The department’s trust guidance says the donor must give a specific direction that the contribution will form part of the corpus, and the amount must be invested or deposited in specified modes and maintained specifically for the corpus.
For each corpus contribution, retain:
- the donor’s written direction or equivalent contemporaneous evidence;
- the receipt showing the amount, date and purpose;
- separate ledger identification and bank reconciliation; and
- proof that the money was invested or deposited in a permitted mode.
The same guidance describes an optional treatment for qualifying contributions directed to renovation or repair of certain notified places of worship, subject to conditions. Because that material is written with 1961 Act terminology, confirm the corresponding 2025 Act provision and current Rules before relying on it.
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Donations and the donor’s section 80G deduction are different questions
The temple’s tax treatment does not automatically give an individual donor a deduction. Section 80G relief depends on the donee’s eligibility, approval and reporting, as well as the donation method and the donor’s records.
The Income Tax Department’s section 80G FAQs state that a cash donation exceeding ₹2,000 is not eligible for the deduction. A donor should verify the donee’s particulars, use a traceable payment method where appropriate, keep the receipt and obtain Form 10BE when applicable. A direct contribution to a religious institution is not automatically deductible merely because the institution may qualify for income-tax relief.
See the department’s current guidance at FAQs on Section 80G.
Records, returns and reporting obligations
Religious and charitable entities should build the tax file during the year rather than reconstructing it after year-end. At minimum, retain:
- the trust deed, society documents or other constituting instrument;
- registration or approval orders and renewal records;
- daily collection sheets, receipt books, point-of-donation records and bank statements;
- donor identity information where collected and the wording of special directions;
- invoices, vouchers, payroll records and evidence of religious or charitable application;
- investment registers showing permitted modes and related-party transactions; and
- working papers that reconcile regular income, section 341 application, section 342 accumulation and section 337 items.
The department’s AY 2026-27 trust-return help page lists Form 10A for registration or approval applications and Form 10BD for donation particulars. The notified Income-tax Rules, 2026 also contain donation-reporting schedules. Forms, deadlines, audit thresholds and portal procedures can change with the relevant tax year, so confirm them before filing rather than copying an older checklist.
Use the official resources: Trust return guidance, AY 2026-27 and the Income-tax Rules, 2026 notified publication.
Common mistakes that change the calculation
- Assuming every donation is exempt: exemption is conditional on the entity and compliance route.
- Using gross collections as regular income without classification: corpus, anonymous and other special receipts may require separate treatment.
- Counting proposed spending as application: qualifying application requires actual use and supporting evidence under the applicable provisions.
- Ignoring specified income: passing the 85% test does not erase section 337 events.
- Using old section numbers without checking the 2025 Act: much online guidance still describes the 1961 Act.
- Confusing the temple’s exemption with a donor’s deduction: the institution and donor satisfy different tests.
- Reporting before reconciling cash collections: daily collection records, deposits and bank credits should agree, with explanations for timing differences.
What information is needed for a rupee liability?
No reliable tax amount can be calculated from the word “donations” alone. A case-specific computation needs the entity’s legal form, registration or approval, tax year, regular-income schedule, qualifying application, valid accumulation, corpus directions, anonymous-donation analysis, investments, related-person transactions, overseas spending, other taxable income and the applicable rate provisions. A chartered accountant or tax professional experienced with religious or charitable entities can map those facts to the current Act and Rules.
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