Chapter XVII - Special Provisions Relating to Certain Persons
Section 340
Section 340: deemed corpus donation
Section 340 gives registered non-profit organisations that hold a temple, mosque, gurudwara, church or other notified religious place an option: donations received specifically for renovating or repairing that place can be treated as if they were corpus donations under Section 339, provided the organisation follows strict conditions.
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This article is for general information. Refer to the Income-tax Act, 2025 as amended by the Finance Act, 2026 and the Taxation and Other Laws (Amendment) Act, 2026 for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
Where the property of a registered non-profit organisation includes any temple, mosque, gurudwara, 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, gurudwara, 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 separately identifiable;
(b) applies such corpus only for the purpose for which the donation 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.
Introduction
A donation for repair or renovation of a qualifying place of worship can be treated as deemed corpus at the registered organisation’s option.
The four statutory conditions continue to govern how the elected fund is identified, invested and used.
Key takeaways
This is an option, not an automatic treatment
A registered non-profit organisation holding a listed or notified religious place may elect corpus treatment for renovation or repair donations.
Four conditions travel with the option
The corpus must be separately identifiable, used only for the donor's renovation or repair purpose, held in a Section 350 mode and not donated onward.
What Section 340 says
Where the property held by a registered non-profit organisation includes a temple, mosque, gurudwara, church or other place notified under Section 133(1)(b)(vi), any sum received as donation for the renovation or repair of that place may, at the organisation's option, be deemed to form part of the corpus under Section 339, if it:
- Maintains such corpus as separately identifiable
- Applies such corpus only for the purpose for which the donation was made
- Invests or deposits such corpus in a mode permitted under Section 350
- Does not apply such corpus for making a donation to any person
Qualifying place and donation purpose
The organisation must hold a temple, mosque, gurudwara, church or other notified religious place. The received sum must be donated for repair or renovation of that place; the deemed-corpus treatment is optional.
Preserving deemed-corpus status
After choosing the treatment, the organisation must keep the corpus separately identifiable, use it only for the donation purpose, hold it in a section 350 mode and avoid onward donation. A breach can also matter under the specified-income rule in section 337.
Step-by-step flow for applying Section 340
- 1
Does the organisation's property include a temple, mosque, gurudwara, church or other place notified under Section 133(1)(b)(vi)?
- No: Section 340 does not apply.
- Yes: Go to the next step.
- 2
Was the sum received as a donation for renovation or repair of that place?
- No: Section 340 does not apply to that sum.
- Yes: Go to the next step.
- 3
Does the organisation opt to treat it as part of the corpus?
Deemed corpus treatment is optional, at the organisation's choice.
- No: The sum is not deemed corpus under Section 340.
- Yes: Go to the next step.
- 4
Are all four conditions met?
(a) the corpus is kept separately identifiable; (b) it is applied only for the purpose of the donation; (c) it is invested or deposited in a mode permitted under Section 350; and (d) it is not used to make a donation to any person.
- Yes: The sum is deemed part of the corpus under Section 339.
- No, a condition is violated: Under Section 337 (Sl. No. 5), the deemed corpus donation in respect of which a condition is violated is specified income in the tax year of the violation.
Practical checklist
Do
- Identify the qualifying religious place and the donation's renovation or repair purpose
- Maintain the elected corpus separately so that it remains identifiable
- Use the corpus only for the stated purpose and keep it in a Section 350-permitted mode
Avoid
- Treat every renovation donation as corpus automatically without electing and meeting the statutory conditions
- Apply the elected corpus as a donation to another person
Illustrative example
Worked example: a donation for temple repairs
Hypothetical facts (illustration only, not a real taxpayer): A registered religious trust owns a temple notified under Section 133(1)(b)(vi). In a tax year it receives an assumed ₹8,00,000 in donations given for repair of the temple. It opts to treat the sum as corpus, keeps it in a separate account, deposits it in a mode permitted under Section 350, and spends an assumed ₹3,00,000 on repairs during the year.
Eligible place and purpose
The temple is notified under Section 133(1)(b)(vi) and the donations are for its repair, so Section 340 can apply.
Option
The trust has opted to treat the ₹8,00,000 as part of the corpus.
Conditions
It is kept separately identifiable, invested in a Section 350 mode, and the ₹3,00,000 spent is used only for repairs. No part is donated to any person.
Balance
₹8,00,000 − ₹3,00,000 = ₹5,00,000 remains in the separate corpus account, to be used only for repair or renovation.
What to avoid
If the trustees later used part of the balance to donate to another organisation, condition (d) would be broken and Section 337 (Sl. No. 5) would apply in the year of that violation.
Outcome
- The ₹8,00,000 is deemed corpus under Section 339 while all four conditions are met.
- ₹5,00,000 remains to be applied for repair or renovation only.
Frequently asked questions
Which religious places qualify for the deemed corpus donation option?
A temple, mosque, gurudwara, church or other place notified under Section 133(1)(b)(vi), where held as property of the registered non-profit organisation.
Is treating the donation as corpus automatic?
No - it is optional for the organisation, but it must be maintained as a separately identifiable corpus, applied only for the renovation/repair purpose, invested under Section 350, and never used to make a donation to any other person.
What happens if any of the four conditions in Section 340 is violated?
Under Section 337 (item 5 of the specified income table), a deemed corpus donation where a Section 340 condition is violated becomes specified income, taxable in the tax year the violation occurs.
Need help applying this provision to your situation?
Get advice on deemed corpus donations for religious placesLast updated 9 October 2026