Section 54 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
This article explains the Maharashtra Public Trusts Act, 1950 as it applies in the State of Maharashtra, formerly the Bombay Public Trusts Act, 1950. Section 54 deals with dharmada, the small sums that traders add to a transaction for a charitable or religious purpose: the sum vests in the person who charges or collects it as a trustee, and he must submit an account to the Deputy or Assistant Charity Commissioner.
This article explains section 54 as amended up to Maharashtra Act No. XXXVI of 2018 (in force 21 May 2018), per the official text of the Law and Judiciary Department modified up to 19 December 2018. Maharashtra amended the Act again in 2019, 2020, 2024 and 2025; the amending texts consulted do not change this section, but the current text should be checked on the Charity Commissioner's website before relying on it.
Where, by the custom or usage of a business or trade, or by agreement between the parties, an amount is charged or collected under any name as being intended for a charitable or religious purpose, that amount is called dharmada and vests in the person charging or collecting it as a trustee. He must submit an account within three months from the end of the year for which his accounts are ordinarily kept. The Deputy or Assistant Charity Commissioner may inquire into the account and order how the sum is disposed of. Chapter IV does not apply to dharmada.
Where the section comes from
The brackets and words defining "dharmada" in sub-section (1) were inserted by Bom. 14 of 1951, s. 14(i), and sub-section (4) was added by Bom. 14 of 1951, s. 14(ii), as the footnotes print. The rest of the section dates from the original Act. Dharmada also appears in other places of the Act: the cy-pres section lets the Charity Commissioner give directions on the appropriation of dharmada sums held in trust under section 54 (see Section 55), and the contribution section fixes the contribution on dharmada by a rate on the gross annual collection or receipts (see Section 58).
Sub-section (1): what dharmada is and who holds it
"Where according to the custom or usage of any business or trade or the agreement between the parties relating to any transaction any amount is charged to any party to the said transaction or collected under whatever name, as being intended to be used for a charitable or religious purpose the amount so charged or collected (in this Act called—'dharmada') shall vest in the person charging or collecting the same as a trustee."
Break the sentence into parts.
| Part | What the text says |
|---|---|
| Source of the charge | The "custom or usage of any business or trade" or "the agreement between the parties relating to any transaction" |
| What is charged | "any amount ... charged to any party to the said transaction or collected under whatever name" |
| Purpose | "as being intended to be used for a charitable or religious purpose" |
| Name | The amount is called "dharmada" in the Act |
| Effect | It "shall vest in the person charging or collecting the same as a trustee" |
Two features of this sub-section need care. The name of the charge does not matter, because the words are "under whatever name". A line on a bill called "charity", "dharma" or "gaushala" may fit if it is intended for a charitable or religious purpose. And the trusteeship is created by the section itself: the trader, merchant or commission agent need not sign a deed or sign up as a trustee. He becomes a trustee of the sums by operation of the text.
The section speaks only of "the person charging or collecting" and names no class of trader.
Sub-section (2): the account
"Any person charging or collecting such sums shall within three months from the expiration of the year for which his accounts are ordinarily kept submit an account in such form as may be prescribed to the Deputy or Assistant Charity Commissioner."
The period is three months and it runs from the end of the year for which his accounts are ordinarily kept; for a trader on an April to March year, that year ends at the end of March. The text does not say that the account must be audited. The form is "prescribed", in rules that are not described here and that should be checked. A person who keeps proper books of account will already have the figures to hand; for the books themselves, our books of accounts compliance support helps traders set up the dharmada ledger and the annual account.
The section does not itself print a penalty for failing to submit the account. Section 59 speaks of the person charging or collecting dharmada who fails to pay the contribution; it refers to the penalties in section 66, a section that is not described here.
Sub-section (3): inquiry and disposal
"The Deputy or Assistant Charity Commissioner shall have power to make such inquiry as he thinks fit to verify the correctness of the account submitted and may pass order for the disposal of the amount in the manner prescribed."
There are two powers: to inquire, as he thinks fit, to check the account; and to order the disposal of the amount in the prescribed manner. The Act does not say in the section where the money must go; it leaves that to the prescribed manner. The officer's orders would be open to appeal under the Act's appeal provisions, discussed in Section 70.
Sub-section (4): Chapter IV does not apply
"The provisions of Chapter IV shall not apply to dharmada." Chapter IV is the chapter of the Act headed by the registration provisions (sections 14 to 31). So dharmada does not go through registration as a public trust in the way an ordinary trust does, even though the sum is held in trust and accounts are due. The Rajasthan Act has its own provision on dharmada, and the comparison can be read in Section 66 of the Rajasthan Public Trusts Act, 1959; the two State laws should not be mixed.
Illustration. A grain merchants' association in Latur has a custom that every buyer pays a small sum per bag under the name "dharma" for a gaushala. The firm that collects the sums is the person charging or collecting, and the sums vest in it as a trustee. The firm keeps accounts for April to March. It submits the account to the Deputy or Assistant Charity Commissioner within three months of the end of March, in the form prescribed, and the officer may verify the account and pass an order on how the amount is to be disposed of.
Need help with dharmada accounts?
Traders and associations that collect dharmada need a clean ledger and a timely account. Our team can set up the records and prepare the annual account through books of accounts compliance support.
Key takeaways
- Dharmada is an amount charged or collected, under any name, by custom or agreement in a trade, for a charitable or religious purpose.
- It vests in the person charging or collecting it as a trustee.
- An account is due within three months from the end of the year for which his accounts are ordinarily kept.
- The Deputy or Assistant Charity Commissioner may inquire and order disposal in the prescribed manner.
- Chapter IV does not apply to dharmada.
Read next
- Section 55: cy-pres application of trust property
- Section 58: contribution by public trusts to the Administration Fund
- Section 66 of the Rajasthan Public Trusts Act, 1959: dharmada
Disclaimer: Based on the Maharashtra Public Trusts Act, 1950 as modified up to 19 December 2018 in the official text of the Law and Judiciary Department, Government of Maharashtra, as consulted on 3 October 2026. Maharashtra amended the Act again in 2019, 2020, 2024 and 2025; the current text, the Maharashtra Public Trusts Rules and the Charity Commissioner's circulars should be checked. This article is general information, not legal advice; check the official text before acting.