Religious Trust Accounting India: Hundi and 115BBC Rules

A temple trust opens its hundi. Inside is ₹18 lakh in cash, some gold, and a few hundred coins.

Nobody knows who gave any of it. There are no names, no addresses, no receipts.

Is that ₹18 lakh taxable?

Most people assume yes — it is unrecorded cash, so the tax department must want a share. Several assessing officers have assumed the same thing.

Usually, the answer is no. And the rule that decides it is one of the least understood provisions affecting Indian religious institutions.

This guide explains it simply, along with how to actually run the accounts of a temple, church, gurdwara, mosque or math.

The anonymous donation rule

An anonymous donation is one where you do not have a record of the donor's name and address.

Hundi money is the classic example. So are donation boxes, coin trays and cash dropped at a shrine.

Section 115BBC taxes anonymous donations at 30% — but only for some organisations. Which one you are changes everything.

The three categories

Type of trust	Does 115BBC apply?
Wholly religious	No. Anonymous donations are not taxed under this section
Partly religious, partly charitable	No — except for donations specifically directed to a university, school, hospital or medical institution the trust runs
Wholly charitable (no religious purpose)	Yes. Taxed at 30% above the threshold

So a temple, gurdwara, mosque or church receiving hundi money from devotees is generally outside this tax. A purely charitable NGO with a collection box is not.

The threshold, when it does apply

For wholly charitable organisations, tax applies only on anonymous donations exceeding the higher of:

₹1,00,000, or
5% of total donations received during the year

Example: A charitable trust receives ₹40 lakh in total donations, of which ₹5 lakh is anonymous. 5% of ₹40 lakh = ₹2 lakh. That is higher than ₹1 lakh, so the threshold is ₹2 lakh. Taxable anonymous donations = ₹5 lakh − ₹2 lakh = ₹3 lakh, taxed at 30%.

Two things worth knowing: the taxable portion gets no exemption under Sections 11 and 12 even if you spend every rupee of it on your objects. And that taxable portion is not counted in your 85% application requirement.

The 80G misunderstanding — settled by the courts

Here is a dispute that has cost religious trusts real money.

Assessing officers have argued: "You are registered under 80G. 80G is for charitable institutions. Therefore you are a charitable trust, not a religious one, so your hundi money is taxable."

The Bombay High Court rejected this. In a case concerning a well-known temple trust, the court held that Section 80G and Section 115BBC(2)(b) operate independently. Holding 80G registration does not stop a religious-and-charitable trust from claiming the anonymous donation exemption.

The court looked at the trust deed, its objects and its actual activities — temple rituals, festivals, feeding the poor, propagating teachings — and concluded it was genuinely religious and charitable. It also rejected the officer's argument that religious activity formed too small a share of total income to count.

What this means for you: if your trust has both religious and charitable objects, your trust deed and your actual activities are what decide the question. Not your 80G certificate.

Practical takeaway: make sure your trust deed clearly states your religious objects, and keep evidence of religious activity — festival records, ritual expenses, photographs, priest payments. If this is ever questioned, that evidence is your case.

How to actually count hundi money

The tax position may be comfortable, but the governance risk is not. Cash with no donor attached is exactly where trusts get into trouble — with the Charity Commissioner, with their own community, and sometimes with the police.

Build a counting protocol and never deviate from it.

Never open the hundi alone. Minimum two people, ideally three, at least one being a trustee
Fix a schedule — the same day each week or month, announced in advance
Seal the boxes and number the seals. Record the seal number when opening
Count in a fixed place, ideally under camera
Record immediately in a bound, numbered register: date, box, seal number, amounts by denomination, total, and signatures of everyone present
Bank the same day or the next working day. Cash sitting overnight is the highest-risk moment in the whole cycle
Rotate who counts. Never let the same person handle it every time

This costs nothing and prevents almost every problem that arises with hundi collections.

Offerings that are not cash

Temples receive gold, silver, ornaments, sarees, coconuts, grain and food.

Keep a separate register for valuables, with description, weight and date
Get metal valued by an approved valuer and record the valuation
Perishables — record quantity, and record how they were used or distributed
Store valuables under dual custody, never with one person

Foreign currency in a hundi needs care. Money from a foreign source is foreign contribution, and receiving it without FCRA registration creates a problem. Segregate any foreign currency, do not bank it with normal collections, and take advice.

The rest of the accounting

Income to track separately

Hundi and donation box collections
Named donations with receipts
Corpus donations, with the donor's written direction
Pooja, archana and ceremony fees
Hall, room and shop rent
Annadanam and prasadam contributions
Interest and investment income

Keeping these separate is what makes your audit straightforward instead of painful.

The 85% rule still applies

Being religious does not exempt you from the requirement to apply 85% of income towards your objects. Temple maintenance, priest salaries, festival costs, annadanam and building repair all count as application.

The 85% rule explained simply.

Corpus donations

The same rules apply as for any trust: a corpus donation needs the donor's specific written direction, must be kept separately, and must be invested in the permitted modes.

Money from a hundi can never be corpus. You cannot identify the donor, so there is no direction. Writing "Corpus Donation" on the box does not change this.

There is a separate provision for contributions received specifically for the renovation or repair of a notified temple, mosque, gurdwara or church, which can be treated differently. If you are running a renovation appeal, ask your CA about it — the treatment is favourable but conditional.

GST on renting

If your religious place is owned by a registered trust and open to the general public, renting is exempt within limits — broadly rooms below ₹1,000 per day, a hall or open area below ₹10,000 per day, and shops below ₹10,000 per month. Above those figures it becomes taxable.

Income from conducting religious ceremonies is generally exempt.

Keeping 80G alive

Trusts with religious objects can hold 80G registration, but the rules are specific. A trust may spend up to 5% of its total income on religious purposes and retain 80G. And 80G is not available to an institution established for the benefit of a particular religious community or caste.

If you have both religious and charitable objects and hold 80G, review this proportion with your CA each year.

State law

Most states have their own religious and charitable trust legislation — the Charity Commissioner in Maharashtra, endowment departments in several southern states, and separate boards for wakf and other institutions. These carry their own filings, audit rules and permission requirements, especially for selling or mortgaging property.

Never sell, lease or mortgage trust property without checking whether prior permission is required. This is one of the most common serious mistakes religious trusts make.

Common mistakes

Mistake	Fix
One person opening the hundi	Minimum two people, register, signatures
Cash held for days before banking	Bank the same or next working day
Gold and silver in the cash register	Separate valuables register with valuation
Treating hundi money as corpus	It cannot be corpus — no donor direction exists
Assuming 80G makes you "charitable only"	Trust deed and activities decide, not 80G
No record of religious activity	Keep festival, ritual and priest expense records
Foreign currency banked with normal cash	Segregate and take FCRA advice
Selling property without permission	Check state law first, always

Common questions

Our temple trust also runs a school. Does that change anything? It can. For a mixed religious and charitable trust, anonymous donations specifically directed towards a school, college, hospital or medical institution you run are taxable. General hundi money is not. Keep those streams clearly separated in your books.

A devotee gave ₹5 lakh but refused to give their name. Is that anonymous? Yes, if you have no record of name and address. For a wholly religious or mixed trust it is generally outside 115BBC — but it is much better practice to record the donor even if you issue no publicity.

Can devotees claim 80G on hundi donations? No. Without a receipt in their name and their PAN, there is no way to report them in Form 10BD, and no 80G certificate can be issued. Devotees who want the deduction should give by cheque or online and provide their details.

How often should we open the hundi? Frequently enough that large amounts do not accumulate. Weekly or fortnightly for a busy temple, monthly for a small one. Fix the schedule and stick to it.

Are priest and pujari payments allowed as application of income? Yes, where they are for the trust's religious objects. Pay through the bank, deduct TDS where applicable, and keep proper records.

Do we need an audit? The same income tax audit rules apply as to any 12A-registered trust, plus whatever your state law requires. Being religious does not exempt you.

We have never maintained proper hundi records. Where do we start? Start with the next opening. Set the protocol, buy a bound register, and follow it from that day. Do not attempt to reconstruct the past — begin a clean, defensible record now.

The short version

On tax: wholly religious and mixed religious-charitable trusts are generally outside the anonymous donation tax. Wholly charitable organisations are not. Your trust deed and your actual activities decide which you are — not your 80G certificate.

On governance: the real risk in a religious trust is not tax, it is cash. Two people at every hundi opening, a bound register signed by everyone present, and money in the bank the same day. Do those three things consistently and most problems never arise.

Sevastack records hundi collections, named donations, corpus and ceremony income as separate streams, keeps a valuables register alongside your cash book, and produces the reports your auditor and Charity Commissioner ask for. Start free — no credit card needed.

This article is general information, not tax or legal advice. Religious trust taxation is fact-specific and has been litigated extensively. Please confirm your trust's position with your Chartered Accountant.

Related guides

Temple and Religious Trust Accounting: A Practical Guide