NPO or NGO in India can register either as-
These organizations work with a charitable purpose at large and undertake public welfare activities. The purposes of such organizations may include social contribution in the form of education, medical help or undertaking activities of public utility that promote public welfare.
Thus, the most favorable way to run a NGO or a NPO is to form a Public Charitable Trust. In this blog we will briefly discuss about the Charitable Trust Registration – Process – Documents.
What is a Charitable Trust?
According to the Indian Trust Act 1882, “A Trust is an arrangement where the trustor (owner) transfers the property to trustee for the benefit of a third person i.e. beneficiary. Such transfer of property by the trustor to the trustee along with a declaration that the trustee shall hold the property for the beneficiaries of the Trust.
Thus, Trusts can be classified into 2 categories-
- Public Trust
It is a trust whose beneficiaries includes large public. Further, a Public Trust can be further subdivided into 2 categories-
- Public Charitable Trust
- Public Religious Trust.
- Private Trust
It is a trust whose beneficiaries include families or individuals. Further, a Private Trust can be subdivided into 2 categories-
- Trusts whose beneficiaries and their requisite shares both can be determined
- Trusts whose both beneficiaries and their requisite shares cannot be determined
What are the Legislations pertaining to the Charitable Trust?
Law pertaining to the Charitable Trust are as follows-
- Charitable Trust is governed & managed by the Indian Trusts Act, 1882 across India. But, each state can form its own Trusts Act to govern such non – profit organizations in its own state.
- Trust can also receive funds and projects like a Society. but, it’s quite challenging to get funds or projects immediately after the Trust gets registered. Thus, to acquire funds or projects, a Trust shall meet certain eligibility criteria. Such criteria may includes-
- Minimum of 2 Trustees & Maximum No limit.
- Generally 1 author or settler (subjected to the decision of the sub registrar at the registrar office)
- Trustee shall be an Indian resident.
- Minimum age is 18 years for female Trustee & 19 years for male Trustee.
- Performance of a Trust & such other guidelines.
- Public Charitable Trust has to be registered with the charity commissioner’s office who has jurisdiction over the Trust.
What is the process for Charitable Trust registration?
Process for Charitable Trust registration-
- Selection of Name-
First thing is to Choose a unique name for your trust. The name shall not be similar to the name of a currently registered Trust. It shall not come under the restricted list of names as per the provisions of Emblem & Names Act, 1950.
- Determine Settlers / Authors, Trustees & the beneficiaries of the Trust
- Drafting of MOA & Trust Deed-
Prepare Memorandum Of Association (MOA) which is the charter of the Trust. It defines the relationship between the Trustor & Trustees and specifies the objectives for which such a Trust is formed.
A Trust Deed is an essential document as it is the legal evidence of the Trust’s existence and it contains the rules and regulations of the Trust. Deed also contains the bylaws regarding the changes, removal or addition of the Trustees.
- Trust Registration-
A trust deed with other documents requires mandatory registration before the registrar of the trust having jurisdiction.
- Obtain Registration Certificate-
After the Trust Deed is submitted with the registrar, the registrar keeps the photocopy and returns the original registered copy of the Trust Deed. After completing all the formalities, registration certificate is issued within a minimum of 7 working days.
- Opening a Bank Account-
After registration of the trust, the next step is to open a bank A/c.Apply for Charitable Trust Registration
What are the documents required for Trust Registration?
Mandatory documents to be submitted at the time of Registration-
- Trust Deed
- 2 photographs of partners
- Self attested copy of the ID proof of the settler
- Self attested copy of the ID proof of each trustee.(Aadhar Card, passport, voter ID, driving license or any such photo ID)
- PAN card
- Address proof of each partner & Registered office
- Signed Declaration from Partners.
- NOC from the owner of premises.
Is there any tax benefit under Income Tax Act for Trust or NGO?
A Trust or NGO can obtain 12A certificate from the Income Tax Department. The Trust acquiring such certificate is exempted to pay tax under Income Tax Department for the entire lifetime on their surplus income. Also, the Trust must acquire 80G certificate. As this certificate allows donors, i.e. any person or organization making donations to an 80G certified NPO or NGO, to avail deduction. Thus, such deduction is available to the donors under section 80G of the Income Tax Act.
In case of any Query for Registration of Charitable Trust, then contact Manthan Experts for immediate relief.Seek Assistance for Trust Registration