Treatment of Religious institutions

[This article has been submitted online to the Hon’ble Prime Minister and the Cabinet Secretary by E-Mail on 15-09-2026 for their kind consideration.]

What is a religious institution?

1.       In Aranyaka Parva (or Vana Parva) in Vyasa Mahabharata, there is an episode popularly known as “Yaksha Prasnah” in which Yudhishthira gives replies to the questions of Yaksha. To the question “Who is the friend of one about to die?”, Yudhishthira’s reply was “The friend of him about to die is charity”. For another question “What is the root cause of fame?”, the reply given was “Gift or donation or charity or offering is the highest refuge of fame”. When asked “What is man’s chief refuge?”, Yudhishthira replies “Gift or donation or charity or offering is his chief refuge”. To the question “What is charity?”, the reply was “Charity consists in protecting all creatures with compassion”. For the question “What is the grace of the Gods?”, Yudhishthira’s reply was “The grace of the Gods is the fruit of our gifts or donations or charities or offerings”. This thought process has been the same and has been the foundation for all religions in India.

2.       Many Religious Institutions were established by the rulers of ancient and medieval times. In order to provide financial independence to such institutions which is required for protecting religious freedom, the rulers of that period endowed the institutions with huge, landed properties and other donations. In modern times also, several devotees have been donating from time to time, lands, buildings, gold, silver and other precious assets to religious institutions. Thus, religious institutions in India have been functioning since ancient times to promote religion, faith, persuasion and compassion, encompassing public places of worship (like temples, mosques, churches, and gurdwaras etc.) through their associated governing bodies and charitable institutions. Worshipping God (in whatever form conceived and in whatever method found suitable) and consistent to this faith, making donations in different ways to show charity have been manifested and orchestrated through religious institutions. In other words, these institutions have been providing a framework for the public at large, irrespective of their religious belief, to collectively help the poor and the needy, besides following their religious beliefs.

3.       Religious institutions have been the centers for spiritual, cultural, and community activities all over the country. The governance of these institutions has been in the hands of the government or statutory bodies or boards or trusts or committees or societies or families or in some cases even individuals, and hence, it has been very organized and regulated in the case of a few and highly ill-organized in the case of the remaining. In India, religious institutions are intended to serve as vital pillars of community cohesion, social welfare, and spiritual guidance. Besides facilitating daily worship or other religious activities, they act as major providers of charitable services, protectors of cultural heritage, and at times serve also as grassroot centers for education, healthcare, and crisis relief. Activities such as feeding millions daily, running free or subsidized hospitals, and providing disaster relief to the needy are organized on a large scale without any selfish motive by some of the religious institutions. While protecting sacred texts, patronizing classical arts, and upholding traditional values, some of the religious institutions have also established schools, colleges, goshalas and orphanages.

4.       Thus, religious institutions have been an integral part of the Indian society for ages. In ancient times, it was said that these institutions in some way participated in law making and administration of kingdoms as well. Even in the present context, religious beliefs are conceived as having a role in political matters. Hence, religious institutions are very important to be assessed and measured from time to time due to their strong influence on the behaviour of individuals following different beliefs, due to the income and employment they generate directly and indirectly, and due to the catalyzing effect, they have on promoting certain industries and economic activities such as manufacturing, trading and tourism. The phrases “temple city” or “church city” or “mosque city” have become popular in the society because of the development the associated religious institutions have caused in the respective cities / towns. Hence, religious institutions are not a weakness to society, but a great strength if properly understood, nurtured and developed.

Constitutional provisions

5.       The words “socialist” and “secular” were formally added to the Preamble of our Constitution through the Constitution (42^nd Amendment) Act, 1976. Both the words have to be construed and considered together while interpreting and applying the Constitutional intent. The insertion of the word “socialist” has been aimed to emphasize socialism as a goal and philosophy of the Indian State. The inclusion of the word “secular” reiterated the idea of a secular State, treating all religions equally, maintaining neutrality, and not endorsing any particular religion as a State-religion. The phrase “maintaining neutrality” seems to have been interpreted most of the time as non-interference in matters of religion, even to the extent of ignoring the noble goal of socialism.

6.       Religious freedom and secularism are basic features of our Constitution (S. R. Bommai & Ors. Vs. Union of India & Ors AIR 1994 SC 1918). Although there are claims and counter claims regarding our conformity to the tenets of secularism, external eye does not ignore even the slightest departures. The United States Commission on International Religious Freedom (USCIRF) is an independent agency created in 1998 which monitors religious freedom conditions abroad. In its report⁽¹⁾ titled “India 2023 International Religious Freedom Report”, the USCIRF provided an overview of the state of religious freedom, related violence, government actions, and societal issues concerning religious minorities in India in the year 2023. Some of the facts and issues deliberated in the Report are given below:

7.       Responding to the report of USCIRF, the Government of India, Ministry of External Affairs spokesperson said that the commission had presented a distorted and selective picture of India by relying on questionable sources and ideological narratives instead of objective facts. The Ministry categorically rejected the report, calling it “motivated” and biased in its assessment of the country’s religious freedom record. Be that as it may, the USCIRF pointed out deficiencies in the working of the Central and State Governments in India in protecting religious freedom. While it is expected that citizens should practice their faith (religious) in a way that does not adversely affect public order, morality or health, there were instances of communal violence and vandalism, mostly targeting minorities and their institutions in the respective areas. There were forceful religious conversions and there were laws in some States restricting such conversions. Just because religious conversions were reported, it is not enough to bring a new law restricting such conversions. All such situations fall under the category of crimes, for which mens rea (guilty mind) or the actual motive behind committing such crimes is very important. The Government over the years seem to have failed or acted in an insensitive manner in protecting religious freedom.

8.       Why does anyone resort to violence and vandalism? Can it be purely for the reason that the parameters of worship at a place or by an individual or group of individuals are different from what one likes or appreciates? If it is so, then it comes under the category of infringing religious freedom. All other situations fall under a different category, despite being given a communal colour. Somnath Temple in Gujarat was repeatedly attacked by Mahmud of Ghazni in the 11^th Century, not because he was against worshipping Lord Shiva, but because of vast wealth under its possession. In most cases being reported, it may not be religious freedom that was being attacked. There could be other selfish motives behind such incidents. At times, personal animosities arising out of disputes in the neighbourhood are given communal colour if the disputing parties belong to different religions (castes etc.). Accumulation of wealth attracting thefts, misappropriations and corrupt practices has been a big menace in recent times in some of the religious institutions. Lack of appropriate agenda for utilizing or using wealth seems to be main reason for accumulation of wealth.

9.       Thus, religious freedom and its infringement have to be construed very carefully looking at the facts and circumstances of each case. Perhaps, wrong interpretation of the word “secularism” is keeping the Government (s) away from taking appropriate measures to ensure preventing the pampering of religious freedom. Lot of unaccounted wealth is flowing into religious institutions and individuals and associations in the name of arranging worship, ceremonies, processions and religious events. If Government feels that taking account of such situations and the expenditures incurred and incomes generated through such activities is against the tenets of secularism, then who else is going to protect the public against illegal activities? Donations collected by private individuals / associations for organizing religious events go mostly uncontrolled or unaudited or unaccounted or misused. In some cases, such donations are collected forcibly. In such situations, a common citizen has to doubt whether any Government is in place.

10.    Adopting secularism prohibits the use of public funds to support any religion by the Governments. We seem to have totally ignored the spirit of this dictum. Tax exemptions provided for religious institutions in our laws, despite enormous incomes being generated by such institutions, are nothing but support mechanisms. It is this ignorance of its active role by the Governments that is prompting and encouraging individuals and associations to establish private temples, as they would be free from accountability to the Government as well as from taxation.

11.     Unless one sees an advantage in other religions and deprivations in his / her religion, he / she would not venture to convert to other advantageous religion. Conversions by force may be reversible. For example, in case of people having identical living conditions if discriminated on the basis of religion for the purpose of reservations in educational institutions and Government jobs, the natural human reaction would be to undergo religious conversion to an advantageous religion for all official purposes while continuing with their original religion in their family environment. If such cases are reported, the action on the part of the Government is not to bring a law against conversions but to examine whether such discrimination is consistent with the goal of secularism and if not, take corrective measures.

12.    The other Constitutional provisions in respect of religion and religious institutions are briefly indicated below:

Other legal provisions

13.    Usually, religious institutions, if registered, are registered as Trusts (Indian Trusts Act, 1882) or Societies (Societies Registration Act, 1860) or Section 8 Companies (Companies Act, 2013) or Waqf institutions (Wakf Act, 1995). They may also be registered under the Income Tax Act, 1961 or Foreign Contribution (Regulation) Act (FCRA) of 2010 (in case they receive foreign donations) or State-specific Hindu Religious and Charitable Endowments (HR&CE) Acts or State-specific Public Trust Acts. A charitable and religious institution is taxable in accordance with the provisions of Section 11 to Section 13 of the Income Tax Act under certain conditions. Religious institutions are tax-exempt if registered under section 12AB. The exact number of such institutions is not available in the public domain. Income from property held under trust for public religious purposes is exempt under Section 11 of the Income Tax Act. Voluntary offerings and donations are excluded from total income under Section 12 of the Act. Donations are generally tax-free, but commercial business income or unspent funds without proper compliance are usually taxable. Income generated from strictly commercial activities (such as renting out marriage halls or selling parking rights) is taxable, unless the business is incidental to the religious object and separate accounts are maintained. But, how far these provisions are complied with is not clearly known. Usually, statutory authorities keep a principled distance from religious institutions, perhaps because they think it is the only way in which they could be secular or they could be seen as secular.

14.    The Societies Registration Act, 1860 was enacted inter alia for improving the legal condition of societies established for charitable purposes. Charitable purposes include advancement of religion also. The Act in its present form has several deficiencies, such as outdated monetary penalties, weak regulatory oversight, and lack of mandatory internal dispute resolution mechanisms. Due to lack of much interaction between a registered society and the concerned Registrar after registration, the very existence of many societies has become doubtful. Hence, the Ministry of Corporate Affairs in the Government of India constituted an Expert Group to study the legislative and regulatory framework of societies in India registered under the Societies Registration act, 1860. The Expert Group in its report⁽⁵⁾ of June 2012 highlighted the need for modernization due to economic, technological, and governance changes in India, and proposed a new legislative framework, especially for multi-State societies and for covering Inter-State activities, including foreign transactions and receipt of foreign contributions. The Expert Group recommended annual reporting for societies in respect of changes in name, address, activities, and governing body details, financial accountability in the form of mandatory maintenance of books of account in a prescribed form and digital submission and maintenance of records, similar to the MCA-21 platform for companies. Thus, the Expert Group recommended central oversight on all aspects of multi-state societies. These changes, if carried out, could have made the regulatory framework for societies (partly comprising religious institutions) in India more transparent, accountable, and suitable for the modern economic environment.

15.    Another important aspect to be examined is the extent of commercial activities carried out by some of the religious institutions. We are aware that many religious institutions sell food or prasad or books on a large scale, which activity is not much different from a typical manufacturing / trading activity. In some cases, prasad is purchased by devotees through public auction. But most of such activities have been exempted from Goods and Services Tax (GST) and other taxes. It cannot be argued that such activities are religious activities or are incidental to religious activities. This issue was conclusively clarified by the Supreme Court in the late seventies in the Bangalore Water-Supply case.

16.    The word “industry” defined under section 2 (j) of the Industrial Disputes Act, 1947 was interpreted by the apex court in Bangalore Water-Supply & Sewerage Board Etc. vs R. Rajappa & Others 1978 AIR 548. The Hon’ble Supreme Court held that: where (i) systematic activity, (ii) organized by cooperation between employer and employee (the direct and substantial element is chimerical); (iii) for the production and/or distribution of goods and services calculated to satisfy human wants and wishes (not spiritual or religious, but inclusive of material things or services geared to celestial bliss e.g. making, on a large scale prasad or food), prima facie there is an ‘industry’ in that enterprise. Thus, making, on a large scale prasad or food, being “industry” cannot be a religious activity. The Act was amended in 1982 to give effect to some extent to the judgement of the apex court. The definition of “industry” was amended vide clause (c) of section 2 of the Industrial Disputes (Amendment) Act, 1982, but the Central Government did not bring it into force. Finally, the Industrial Relations Code, 2020 (came into effect on 21^st November 2025) repealed the Industrial Disputes Act, 1947 and the definition of “industry” given thereof covered the apex court judgement. The opening paragraph in the definition of “industry” given in the Code states that “industry” means any systematic activity carried on by co-operation between an employer and worker (whether such worker is employed by such employer directly or by or through any agency, including a contractor) for the production, supply or distribution of goods or services with a view to satisfy human wants or wishes (not being wants or wishes which are merely spiritual or religious in nature). Once, it is established that there is an institution which is wholly or partially (by the doctrine of severability) engaged in an industrial activity, it should be subject to the usual provisions of taxation under different statutes. Thus, there could be a religious activity and a commercial activity running side by side in any religious institution. While there is no objection to leaving out the religious activity from taxation, doing so for the commercial activity defies logic and is against the principle of secularism.

17.    Well-organised and regulated religious institutions in India are generally exempt from income and property taxes. However, under the Constitution, State Governments actively regulate and collect administrative fees or a percentage of income from certain religious endowments, while commercial activities by any religious trust attract GST. Religious institutions are also generally exempt from local taxes. Although, there are over 3 million religious institutions (according to internet sources) in India, those paying any tax may not be even one million (although no estimate is available). The attitude of the Government (at all levels) in leaving out such activities of religious institutions under the assumption of following secularism has been facilitating many institutions from not getting into the tax net.

18.    Whether exemption of religious institutions from paying taxes is consistent with the doctrine of secularism is an issue to be deeply examined. Exempting any religious institution from tax is tantamount to indirect contribution of the Government to the revenue of that institution and thereby to that religion. Moreover, the effect of tax exemptions on different religious institutions, although notional, would obviously be different, thus paving the way for indirect discrimination on the basis of religion. Undoubtedly, this is against the secular spirit of the Constitution. Exempting religious institutions from paying taxes may be a popular measure, but it is an infringement of the Constitutional provisions. In fact, such exemptions may be the main cause of private religious institutions (registered or unregistered) growing in number, whose incomes and the avenues of such incomes are not well accounted for. While there is total lack of transparency in the incomes, expenditures, wealth and activities of even well-organised and well-regulated religious institutions in the eyes of the public, rest of the religious institutions depict a totally dark picture.

19.    In the midst of confusion, we find many religious institutions which appear to be public institutions. A family or an individual may establish a private religious institution (registered or unregistered) and it may, as time passes, gain such a reputation that the visitors or devotees may treat it as a public institution. At times, such institutions may bear a deceptive similarity of public institutions, whether or not somebody has intentionally or unintentionally contributed to such a confusion. Such private institutions seem to be plenty in number which although not recognized by law (unregistered) enjoy by default all exemptions and concessions that the law has provided for such entities. Accounting for the donations received every day by most of the religious institutions, unless done under proper surveillance, may result in misuse and misappropriation. Himanshi Malhotra in her Paper⁽¹¹⁾ titled “Need for Governmental Control over Religious Donations in India: A Critical Analysis” examined religious endowments and religious donations in India and the challenges they present. She argued for pragmatic governmental oversight to check potential mismanagement.

20.    Shri Ankit Kumar Singh⁽¹⁰⁾ in his Paper “Hindu Temples as Economic Entities: Examining the Role of Religious Institutions in India’s Capitalist Economy” mentioned about the need to formulate policies towards establishing independent, professional oversight bodies for temples, rather than solely government-appointed officials, to strengthen financial integrity. He also proposed that these bodies would set clear guidelines for financial reporting, auditing, and asset management, ensuring compliance without undue interference in religious rituals. He proposed that mandatory public disclosure of annual financial reports, including income sources, expenditures, and asset portfolios, should be enforced for all temples exceeding a certain revenue threshold. Relevant extracts of his Paper raising other important issues are given below:

“Leveraging temple resources for societal benefit requires policies that promote sustainable development. Temples, with their vast landholdings and funds, can be incentivized or mandated to allocate surplus funds towards community welfare projects like skill development, microenterprise support, or sustainable agriculture on temple lands, expanding on models like the Shirdi Sai Baba Temple Trust’s initiatives (Economic Times, n.d.). Policies should also encourage investment in environmental conservation, including green building practices for new constructions, water harvesting, waste management systems, and afforestation projects on temple lands (e.g., around Vrindavan) (Economic Times, n.d.). This integrates temples into India’s sustainable development agenda.”

“Moving forward, deeper interdisciplinary studies are needed to quantitatively assess the temple economy’s precise contribution to India’s GDP, analyze investment strategies, and compare governance frameworks across faiths, alongside sociological research into the impact of commercialization on devotee perceptions. Ultimately, Hindu temples represent a unique and dynamic interface between tradition and modernity within India’s burgeoning capitalist economy, making it crucial to implement policies that foster transparent governance, promote sustainable and inclusive development, and strike a delicate balance between religious autonomy and public accountability for the nation’s holistic welfare.”

21.    Idol of a temple is treated as a perpetual minor and a legal person. In their article⁽⁷⁾ titled “Temple Economy: Unveiling the Major Contribution to India’s GDP”, Ranjit Kumar Bindhani & Jnana Ranjan Mohanty concluded that temples are vital economic entities contributing around 2.32% of India’s GDP, that they influence local development, tourism, employment, and social welfare, and that recognizing and supporting temple-based economic activities can foster sustainable growth and cultural preservation. In his Working Paper⁽⁸⁾ on Governance and Management of Temples, G. Ramesh analyzed the governance, management, and institutional frameworks of Hindu temples in India, with a focus on Tamil Nadu’s Hindu Religious and Charitable Endowments (HR&CE) system, and proposed reforms for their administration and preservation. In his policy note⁽⁹⁾ on Hindu Religious Endowments of the Government of Tamil Nadu, Shri P. K. Sekarbabu, Hon’ble Minister outlined the functions, administration, schemes, and development initiatives of the Department for 2023-2024. In their article⁽⁶⁾ on “State Expenditure on Religion: A Comparative Constitutional Analysis“, Sohini Chatterjee & H.R. Vasujith Ram have analysed State expenditure on religion, it being a sensitive and contentious subject.  In their opinion, religious subsidies like Haj subsidy and Mansarovar subsidy are violative of Article 15 (1) of the Constitution as they are tantamount to the State discriminating between persons on the basis of religion.

22.    In Commissioner of Police vs. Acharya Jagadishwarananda AIR 2004 SUPREME COURT 2984, the apex Court said that the protection guaranteed under Article 25 (1) is not confined to matters of doctrine or belief only, but extends to acts done in pursuance of religion and, therefore contains a guarantee for rituals, observances, ceremonies and modes of worship which are an essential or form an integral part of a religion. In the landmark case of Seshammal vs. State of Tamil Nadu AIR 1972 SC 1167, the Supreme Court of India established a clear legal distinction between the secular and religious duties of a temple priest (Archaka). The Court held that the appointment of an Archaka is a secular function. Even though a priest performs religious duties after appointment, the act of choosing or appointing them is administrative. Therefore, the state has the constitutional authority to regulate, amend, or abolish the hereditary principle of succession under Article 25 (2) (a) without violating freedom of religion.

23.    No doubt, State interference in religious affairs violates the principle of secularism. In some cases, State interventions have compromised the fundamental character and ethos of temple worship and rituals. Poor conservation efforts have led to the damage and demolition of historically significant temple structures, as highlighted by a UNESCO fact-finding mission in 2017 submitted to the Madras High Court. It was also felt that the diversion of temple funds into other activities by the State may leave little for investment in temple infrastructure.

24.    There may not be any village or town in India without at least one religious institution. The income of these institutions, in most cases, is not in the public domain. In India, while general religious donations and incomes are exempt from standard income tax, government revenue sharing and control apply selectively. Many major Hindu temples are governed by State Government Endowment Boards (such as the Hindu Religious and Charitable Endowments department). Certain State laws require high-earning temples to share a percentage of their net income to fund a common pool used for temple maintenance and priests’ welfare. Karnataka Legislative Assembly passed the Karnataka Hindu Religious Institutions and Charitable Endowments (Amendment) Bill, 2024 to regulate temples in the State. The Bill mandates that the government will collect 10% and 5% of the income from temples that have annual revenue of more than ₹1 crore and ₹10 lakh respectively. The Bill proposed to utilise the money for the welfare of archakas (priests) and the development of temples whose annual income is less than ₹5 lakh.

25.    There is a strong criticism about the disproportionate focus on the regulation of Hindu temples, while other religious institutions remain largely autonomous. Mosques (managed via Waqf boards) and churches (overseen by diocesan trusts) generally manage their own operational revenues and donations independently without direct State revenue appropriation. If any religious institution runs commercial enterprises (like rental properties, guest houses, or amusement operations), those specific commercial earnings can be subject to standard taxation laws like GST or income tax if they exceed charitable thresholds.

26.    The Ministry of Law in the Government of India constituted a Hindu Religious Endowments Commission way back in March 1960 under the Commissions of Inquiry Act, 1952 for the purpose of making an inquiry into certain matters connected with Hindu Public Religious Endowments. Although the recommendations made by the Commission in their report⁽⁴⁾ (1960-62) are in respect of Hindu Public Religious Endowments, most of them apply mutatis mutandis to all kinds of present-day religious institutions. Such recommendations are summarized below:

27.    The enactments that were passed with respect to religious activities and endowments, although very small in number, were to address the complaints of misuse and misappropriation. For example, there is a law about preventing misuse. The Religious Institutions (Prevention of Misuse) Act, 1988 (came into force on the 26th day of May 1988) serves this purpose. Under this law, “religious institution” means an institution for the promotion of any religion or persuasion, and includes any place or premises used as a place of public religious worship, by whatever name or designation known. In order to prevent the use of resources of religious institutions for political purposes, “political party” has been defined to include existing political parties as also the evolving political parties. Under the law, “political party” means an association or body of persons —  (i) which is, or is deemed to be, registered, with the Election Commission of India as a political party under the Election Symbols (Reservation and Allotment) Order, 1968, as in force for the time being; or (ii) which has set up candidates for election to any legislature, but is not registered, or deemed to be registered, as a political party, under the Election Symbols (Reservation and Allotment) Order, 1968; or (iii) organised to carry on any political activity or to acquire or exercise political power through election or otherwise. With regard to the prevention of misuse, the law provides that no religious institution or manager thereof shall use or allow the use of any premises belonging to, or under the control of, the institution — (a) for the promotion or propagation of any political activity; or (b) for the harbouring of any person accused or convicted of an offence under any law for the time being in force; or (c) for the storing of any arms or ammunition; or (d) for keeping any goods or articles in contravention of any law for the time being in force; or (e) for erecting or putting up of any construction or fortification, including basements, bunkers, towers or walls without a valid licence or permission under any law for the time being in force; or (f) for the carrying on of any unlawful or subversive act prohibited under any law for the time being in force or in contravention of any order made by any court; or (g) for the doing of any act which promotes or attempts to promote disharmony or feelings of enmity, hatred or ill-will between different religious, racial, language or regional groups or castes or communities; or (h) for the carrying on of any activity prejudicial to the sovereignty, unity and integrity of India; or (i) for the doing of any act in contravention of the provisions of the Prevention of Insults to National Honour Act, 1971 (69 of1971). The history behind making these provisions is a matter of record. There is another law, which is intended to prohibit conversion of any place of worship and to provide for the maintenance of the religious character of any place of worship, namely, the Places of Worship (Special Provisions) Act, 1991.

28.    Despite knowing fully well the charity and welfare purposes of religious institutions, no law seems to have been enacted so far either at the Centre or in the States about the possible uses of their resources by the various religious institutions. There is an ongoing discourse demanding a uniform legal framework that equally governs all religious institutions across India — whether temples, waqfs, or churches — to ensure transparent auditing, respect for community autonomy, and non-discriminatory State involvement. In fact, a Uniform Code is long overdue for these purposes.

Coverage under National Accounts and State Domestic Product

29.    The religious institutions usually fall under two categories, namely, non-profit and not-for-profit organisations. In India, the terms non-profit and not-for-profit are often used interchangeably, but legally, they serve different purposes. Non-profits focus on benefiting the general public or society at large (charities, NGOs), while not-for-profits exist to serve a specific group of members or special interests (sports clubs, trade unions). The Non-Profit Institutions Serving Households (NPISH) sector which is one of the institutional sectors in the United Nations System of National Accounts, 2008 (2008 SNA) covers both these. NPIs may accumulate surplus in a given year, but any such surplus must be plowed back into the basic mission of the agency and not distributed to the organizations’ owners, members, founders or governing board, as detailed in the UN Handbook on Non-Profit Institutions in the System of National Accounts⁽²⁾. The coverage of NPISHs in the National Accounts and State Domestic Product (SDP) framework is very weak because of incomplete frame of registered units and unknown dimension of unregistered entities, besides lack of regular data flow.

30.    The System of National Accounts 2025 (2025 SNA) was officially adopted (earlier 2008 SNA was adopted) by the United Nations Statistical Commission (UNSC), making it the current active global standard for measuring economies. The Ministry of Statistics and Programme Implementation (MOSPI) in the Government of India is contemplating to fully transition to the 2025 SNA standards (from the present 2008 SNA) during its upcoming GDP base year revision, targeted for the 2029–2030 period. Under the SNA, religious societies and religious institutions are treated as NPISHs, as they provide goods and services free or at economically insignificant prices. While covering such entities, inputs (expenditures) are shown as output to depict a no profit picture. However, if there are activities which fall under the definition of “industry” and if they are severable, such activities are to be covered like any manufacturing / trading or other economic activity. Unfortunately, the coverage of NPSIHs in the National Accounts and State Domestic Products (SDPs) is incomplete and within that the coverage of religious institutions also suffers from the same deficiency. In the MOSPI publication⁽³⁾ of March 2012 on “Final Report on Non Profit Institutions in India: A Profile and Satellite Accounts in the framework of System of National Accounts (including State-wise Comparison of Profiles)”, it was stated that the contribution of NPISHs gets included implicitly in the household sector of national accounts and are not shown explicitly as a separate sector, due to paucity of data.

31.    Thus, the major problems existing in respect of most of the religious institutions include:

Way Forward

32.    Religious institutions have been built over the years with generous contributions in the form of landed properties, jewellery and money from the erstwhile rulers, the Governments in modern times and the public to ensure the regular performance of religious activities and upkeep in addition to charities. It is our sacred duty to protect and nurture religious freedom, whose sole purpose is to promote charity. There should be a clear separation of power in operations relating to the religious domain and the administrative (secular) domain. Accumulating enormous wealth every year exponentially, with very meagre expenditure in relative terms for religious purposes without any or with only namesake social commitments, cannot be treated as conforming to religious purposes by any stretch of imagination. By doing so, we will only be attracting people like Mahmud of Ghazni to loot the institutions in different ways. Thefts, misappropriations and corrupt practices coupled with delayed and protracted criminal proceedings will take away our time only for narrating such incidents as passive observers or listeners. Hence, instead of accumulating wealth, it should be spent in a manner that fulfills charity purposes in all possible ways. A comprehensive law may be formulated by the Central Government for enactment by the Parliament in exercise of its powers under Entry 28 of List III (Concurrent List) as recommended by the Hindu Religious Endowments Commission. In addition to and including the purposes mentioned by the Commission in its report, the law should provide inter alia for –

(1)  mandatory registration of all the religious institutions (private or public) irrespective of the fact that they are registered under any other law for the time being in force;

(2)  establishing a managerial mechanism in each of the religious institutions to exercise secular functions and to ensure performance of religious functions as per applicable customs;

(3) prescribing accounting and audit requirements and disclosure of information to the public;

(4)  prescribing qualifications, standards and tariffs, where necessary for facilitating appropriate religious services to the public;

(5)  planning and executing various development projects or providing financial assistance to the Government at appropriate level in undertaking such projects;

(6)  planning and executing various works of appropriate nature to provide amenities to devotees / followers;

(7)  prescribing the manner in which wealth of religious institutions could be utilized in the localities where devotees / followers stay (or come from) by maintaining effective liaison with the concerned Government(s) at appropriate levels;

(8)  prescribing proactive disclosure requirements in respect of incomes and expenditures, various taxes paid and religious and secular services being rendered by each religious institution;

(9) providing power to the Government at appropriate level to obtain information; and

(10)  making appropriate provisions for conducting worships, celebrating festivals and organising processions and special events, ensuring safety and security of devotees, conservation, repair, renovation and maintenance of properties, safeguarding properties and evicting encroachments, providing amenities to devotees, providing the services of priests (by whatever name they are called), arranging for the performance of dancers, musicians, scholars in ancient knowledge, promoting knowledge relevant to religious activities and establishing and maintaining educational institutions for the purpose, contributing to local development to establish the village / town (where the religious institution is located) as a cultural centre, organising civic amenities, educational and medical facilities to promote charity among the public, maintaining records in respect of activities, appointments and donations (domestic and foreign) in a transparent way, organising regular audit of accounts, and exercising general superintendence and appointment of Committees / Boards for different purposes.

33.    The MOSPI and its counterparts at State level have to establish regular data flow from all the religious institutions (mandatorily registered) and compile appropriate aggregates and performance indicators to reflect on their contribution to the economy and society. The data must be used to compile GDP estimates for the NPISH sector and included in the National Accounts framework. It would always be expected by one and all to know the contribution of the sector of religious institutions and this ambition would be fulfilled if the MOSPI compiles and disseminates satellite accounts for this sector at least once in five years.

34.    At the Centre and at the State level, there should be a separate Department, to be named as “Department of Religious Institutions”. This Department will administer and enforce the aforementioned law in its respective jurisdiction. The Annual Reports and other records of these Departments will provide information to the public and the planners on the status of implementation of secular agenda and protection of religious freedom. It would be appropriate for these Departments to present a separate budget in the appropriate Legislatures, which would facilitate better appreciation of utilization of wealth in different forms for religious and secular purposes. Most importantly, the public would know to what extent their religious beliefs, donations and religious freedom have contributed to charities and overall development. In turn, it would eliminate animosities and hatred and promote compassion and love among the public. This is precisely the path shown by institutions like the Christian missionaries, Muslim Trust Organisations, Shree Saibaba Sansthan Trust, Sri Sathya Sai Central Trust, Ramakrishna Mission and Vivekananda Welfare Foundation.

35.    Till recently (up to 2016), the Railway Department had a separate budget for certain valid reasons such as, its massive scale of operations, the revenue it generated, facilitating independent financial planning including fixing of tariffs, increased efficiency, and above all better transparency. Most important advantage the Railways had at that time was the provision to spend from current receipts to meet current expenditure needs. Because of this, the burden on general budgetary sources was substantially reduced. Moreover, the Railways have been contributing to the budgetary sources. All these attributes will apply mutatis mutandis to the religious institutions sector. But, to bring these into actual application on the ground, there should be separate Departments at the Centre and in the States to facilitate proper accounting of the revenue and its diversification for religious, secular and development purposes. The Departments have to present separate budgets indicating the revenue expected and the manner in which expenditure would be incurred. Apart from the financial and other statements of the Departments, placing relevant details of revenue and expenditure of each religious institution or for a group of such institutions on the internet and providing open access on such details would enhance transparency. Separate budgetary process will also enable one to assess whether the revenue and other assets are being utilized for religious and other incidental purposes apart from promoting secularism.

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