So, you want to start a public charitable trust to do social work. Well, it is indeed a noble thought. Go ahead and let me help you with information on how to register a trust in India. Lately, I have done some research about Trust Registration process and how to register Non-Government Organizations (NGO) in India. Today, I thought that I should summarily present my findings in this article so that others on the same quest can be benefited. In India, Non Profit Organizations (NPOs) are often called the Non Government Organizations (NGOs). An NGO could be registered in one of the following ways:
- Society (See how to register a society)
- Section 25 Company
SEE ALSO: Difference between trust and society
A Trust can either be a private trust or a public charitable trust. Private trusts are governed by the Indian Trusts Act (1882) and are used for private purposes, such as running a private estate or institution. Privates trusts are not given any tax benefits by the Government of India. If you want to do some charitable work for public –you can set up a public charitable trust. India does not have a national level law to govern charitable trusts. However, a few of the states have enacted Public Charitable Trusts Act (Like Bombay Public Trusts Act, 1950)
- Trusts are registered using a document called TRUST DEED. This document contains all the information about the Trust and is printed/written/typed on plain A4 size papers. Along with these papers you would need to attach a Rs. 100 Non-Judicial stamp paper (which you can get from a notary). All the Trustees and witnesses will have to give thumb impressions and signatures on these papers. All in all, you will need help of a notary to prepare the papers.
- You may also need a No-Objection Certificate (NOC) from the owner of the property where the registered office of the trust is to be situated. If you’re the owner of the property, then you don’t need to worry about NOC
- Following elements must be mentioned in the Trust Deed document:
- Name and address of the Settler (Settler is the person who is setting up trust)
- Name(s) and address(es) of the other trustees
- Name of the trust
- Minimum and maximum number of trustees your trust can have
- Address of the registered office of the trust
- Objectives of the trust
- Rules and Regulations of the trust
- For registering a trust you need minimum two trustees (i.e. one settler and another person). You can decide the maximum number of trustees and this number must be mentioned in the trust deed. All the trustees together are called Board of Trustees. This board collectively governs the trust.
- Unlike societies, in case of trusts all or some of the trustees can be related persons (i.e. they may belong to the same family)
- All the trusts are allowed to work on all India level
- Trusts are irrevocable –unless it is mentioned in the trust deed. This means that the trust cannot be wound up
- Trustees are usually life-long members or their tenure is specified in the deed. Electoral process is not involved in the appointment of trustees.
- Board of Trustees can also have various designations for trustees. Common designations are Chairperson and Managing Trustee.
- Trustees cannot draw any remuneration from the trust fund. However, they may take reasonable compensation for the professional services they provide to the Trust.
- There no difference between a trust and a foundation.
- Profits earned by the Trust (e.g. interest gained from bank) cannot be distributed among the trustees.
- Trust Deed can be amended through a Supplementary Trust Deed.
- Most important part of the Trust Deed that you should pay special attention to is objectives of the trust. You should be as thorough as possible in writing down trust objectives so that you can function smoothly without any problems.
- At the time of registration, only the Settlor and two witnesses are required to be present in front of the Sub-registrar under whose jurisdiction the registered office address comes. Sub-registrar will check IDs of these people. After that the Trust Deed will go to the counter where data entry takes place. In the end, Settlor and two witnesses will be photographed. You will need to pay a fee of Rs. 1100 for this process. Of this amount, Rs. 100 will be the registration fee and Rs. 1000 will be the charges of keeping a copy of the Trust Deed with the sub-registrar.
- After about one week of submitting the papers, you can go back to the registrar’s office to receive a certified copy of the Trust Deed.
- Trust income is exempted from income tax. Bu to avail this facility, after registration, you need to acquire a certificate from the Income Tax Department. This certificate is called u/s 12A
- Donations to the public charitable trusts are also exempted from tax (i.e. the donor will not have to pay tax on the amount he donates to the trust). For this, you need to acquire 80G certificate from Income Tax Department.
- Usually lawyers and practicing CAs can help you in registration of trust –but I guess a lawyer is better person if you need help in formulating your Trust Deed. CAs don’t know the nitty-gritty of legal stuff.
- If you can write your own trust deed –and sure that you have done a good job –then all you need is the help of a notary who will take your Trust Deed and prepare it for presentation before the Registrar.
- After registration of the Trust, for acquiring 12A and 80G certificates, you may need to take services of a practicing CA. They charge hefty fee for these services.
SEE ALSO: An important update on this article on registering a trust NGO If you need more information regarding this matter, you may comment on this article.
Please do ask questions like:
- I want to do so and so work… what is better for me, a trust or a society? [it’s a matter of your personal choice, you can read my article on the difference between trust and society.]
- How to collect funds for my NGO? [I am sorry, I don’t know! NGOs get donations from public, institutions, other NGOs and governments. You need to do your own research on it.]
UPDATE: There are now more than 400 comments on this page. So, I am closing comments on this page. You can ask your questions on my other NGO related articles. Thanks.
Please feel free to ask if you have a specific question about the process of registering an NGO. Although I try to answer questions as much as possible, but I will suggest that you do research on your own as well. Also I request readers to reply to questions, if you know the answers. Let’s help each other by sharing knowledge!