Setup, Open and Start a Charitable Trust

NGO in India
November 13, 2011
Learn all the details about setting up a non-profit organization in India in the form of a public
charitable trust. I have registered a Trust myself and all this information is based on my own
experience. I am sharing this researched information with you in order make my contribution
towards encouragement of non-profit and voluntary work in India.
Lately, I have done some research about how to register non profit organizations 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:

Trust
Society (See how to register a society)
Section 25 Company

SEE ALSO: Difference between trust and society

How to Register a Trust NGO
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)

Social work is important for a better society.

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 youre the owner of the
property, then you dont need to worry about NOC
Following elements must be mentioned in the Trust Deed document:
o Name and address of the Settler (Settler is the person who is setting up trust)
o Name(s) and address(es) of the other trustees
o 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.
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 registrars office
to receive a certified copy of the Trust Deed.
o
o
o
o

Other Important Points

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 dont 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.

Formation & Registration Of Trust: How To Start Charitable Trust?

Formation of trust and registration of Trust as per Indian Trust Act. A easy way to
understand how the trust is registered and operated. There is no complicated law words
to drive your brain.
How to register a public charitable trust?
1. Trust is created with a document named Trust deed. ( Trust Deed which may be shaped to
registered with a stamp duty paper in the Registrar office as per the Registration Act.)
2. Trust is created by the Founder (author or settler) with the trust of Trustees (who are the
body of Trust)
3. Trust shall be created under irrevocable nature.
4. Trust deed consists of objects of the trust, Operation of Trust, Trustee information, Trustee
powers, rights, duties and liabilities.
5. There are some procedures in creation of a trust deed. Charted accountants (Auditors) and
Lawyers (Attorney) shall help you for creation of Trust deed. After creation of Trust deed, That
organization TRUST shall be registered with the Registrar or Sub-registrar office as per the
laws relevant to the specific states.
6. After the registration of trust, you shall get the copy of the registration from the Registrar and
you shall apply for PAN card, and you have to apply for proper Income tax registration with
Income tax department ( Here the 12 A plays the role).
7. After you have properly got the Income tax certificate for the Trust (12A), you can also apply
for tax exemption certificates like 80g, 35ac and so many other forms of income tax exemption
as per the objects of your trust and as per the applicable rules.
8. A trust shall be a public charitable trust or Private trust. Public charitable trust is able to raise
funds from public to serve the social causes of the nation.
9. A trust must be registered whether with movable or immovable properties.
10. Trust should be registered with a "Registered office address of the trust" with proper
landmarks.
11. A Trust shall be registered by the founder only with the minimum of 2 members.
So in this way you can understand how to form a trust.
If you like to know more details about the Indian laws and regulations of Trust, you shall buy
the book in any nearby law book stall in your city or town, which is named " Formation &
Management of a Trust along with Tax Planning 1996-97 ", which is a Practical Handbook for
Private, Charitable & Religious Trust which was published by A NABHI PUBLICATION.
The another recent NGO book will also be most useful to know more about trust, which is
published by Universal Law Publishing Co. Pvt. Ltd, which has the book name as "

Formation and Management of NGOs " written by Anita Abraham, Advocate. In all law
book shops these above two books are available.
TRUST Explained once more:
Trust are formed under a Trust deed and registered with Registrar office and Income Tax
Authority. In general a Trust deed will be created (Trust bye-law or instrument of trust) with the
objects of Trust.
Trust deeds are created and declared either by will or inter-vivos by agreement and as
testamentary instrument or a non testamentary instrument. Some type of trust may be created
even verbally. However, it's advisable to have written trust deed. The basic need of a trust
deed is must to be in writing and registered with the Registrar of the Trust ( In local Registrar
office or as per the law related to Trust), which is the only prima facie evidence for the
existence of trust It also simplifies devolution of trust property. The written trust and trust deed
is the essential for registration towards conveyance of Immovable property. It helps to claim
income tax exemption as per Income tax act. It is useful to control, regulate and manage the
works and operations of the trust. It spells several procedures for appointment and removal of
the trustees, and their powers, rights and duties. That is, a Trust is created in written by a will
which is related to movable or immovable property, whether it may be a public or private trust,
duly registered with Registrar of local office and Income tax department.