As per section 3 of Indian Trust Act 1882 “A Trust is an obligation annexed to the ownership of the property, and arising out of a confidence reposed in and accepted by the owner, or declared and accepted by him, for the benefit of another, or of another and the owner.” A trust is an agreement between people (called trustees) to manage property over which they have control either to benefit other people (called beneficiaries) or for charitable purposes. A group of trustees may be incorporated as a board under the Charitable Trusts Act 1957 if the objects are charitable.
Different states in India have different Trusts Acts in force, which govern the trusts in the state; in the absence of a Trusts Act in any particular state or territory the general principles of the Indian Trusts Act 1882 are applied.
The main instrument of any public charitable trust is the trust deed, wherein the aims and objects and mode of management (of the trust) should be enshrined. In every trust deed, the minimum and maximum number of trustees has to be specified. The trust deed should clearly spell out the aims and objects of the trust, how the trust should be managed, how other trustees may be appointed or removed, etc. The trust deed should be signed by both the settlor/s and trustee/s in the presence of two witnesses. The trust deed should be executed on non-judicial stamp paper, the value of which would depend on the valuation of the trust property.
A trust needs a minimum of two trustees; there is no upper limit to the number of trustees. The Board of Management comprises the trustees.
the Income Tax Act gives all categories equal treatment, in terms of exempting their income and granting 80G certificates, whereby donors to non-profit organisations may claim a rebate against donations made. Foreign contributions to non-profits are governed by FC(R)A regulations and the Home Ministry.
In India non profit organisations/ public charitable organisations (NGO) can be registered as a trust. A public charitable trust is usually floated when there is property involved, especially in terms of land and building.
Non-profit organisations in India:
- Exist independently of the state;
- Are self-governed by a board of trustees or ‘managing committee’/ governing council, comprising individuals who generally serve in a fiduciary capacity;
- Produce benefits for others, generally outside the membership of the organisation; and
- Are ‘non-profit-making’, in as much as they are prohibited from distributing a monetary residual to their own members.
Obtain help of Professionals & Subject matter experts at CFO Affairs to understand the intricacies involved in the registration. We are more than happy to educate you and make your entity registration a hassle free process.
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