One of the main benefits of running a NGO is that you have an opportunity to serve the community via funds and volunteer work. It’s also an opportunity to solve an issue, which is not good for the community.
Trust is the most common way of starting a NPO or NGO, with the objectives of demolish poverty, providing education and offering medical relief. It can also promote arts, science and literature.
As per the Indian Trust Act 1882, under in a trust, owner (trustor) can transfer the property to trustee for the benefit of a beneficiary, along with a edict that -the trustee should hold the property for the beneficiaries of the Trust.
The Trusts are irrevocable i.e. they can’t be amended or terminated without the court’s order.
Trust is registered under the state laws. It is recommended for the small charitable activities. A Trust is a organisation registered with limited members. In general, the Trusts are incorporated by offering property for a charitable purpose. However, cash fund might also be grand by the trust or trustees for charitable purpose while incorporating a trust.
Trust can be –
Private trust –
In this, the beneficiaries include families or individuals. It is subdivided into -
whose beneficiaries and their shares both can be determined
whose both or either the beneficiaries and their shares cannot be determined
In this, the beneficiaries include the public.
It can be further subdivided –
Public Charitable Trust
Public Religious Trust
As the trust regulated by State Government, different states in India have different Trusts Acts for their regulation. If by any instance, there is an absence of a Trusts Act in any particular state or territory, the general regulations of the Indian Trusts Act 1882 are applied to the trust registered in that region.
Key Highlights of NGO/Trust
of registering trust is very low in comparatively to other NGO
Annual Returns - There is no requirement of annual return filing
Tax benefits under Income Tax Act
Constitution of the Trust
Author/Founder/Settlor of the trust
The quorum of the Board of Trustees shall not exceed a maximum of 21 members.
A Trust is registered and regulated through Trust Deed. The Trust deed is an official shape of an NGO which includes the support and recognition of law along with the objects, rules and guidelines for the operation of Trust.
The trust deed shall be executed on stamp paper and the value of the stamp paper will be dependent on the value of the capital invested by the members in the Trust.
The trust deed has to be signed by both the settler and trustees in the presence of two witnesses.
Contents of Trust Deed –
The Bible of any charitable trust is the trust deed the aiming the objects and mode of management. A trust Deed shall include -
Number and details of trustees
Name of the trust
The registered office of the trust
Details of the Author of the Trust
Corpus/Assets of the Trust
Plenum of the board with their qualification, terms and tenure
Powers and functions of the Managing Trustee and other Trustees
Closure and amendment of the trust deed and the applicability of the Act
Benefits of Trust/NGO Registration
Various Government benefits
Trust / NGO gets huge tax benefits
There is no requirement of annual return filing
Registration Process of NGO/Trust
Choose an Appropriate Name for the Trust
Formulate Trust Deed
Submit the Trust Deed with The Registrar
Obtain the trust Registration Number
Cons of Trust/NGO
From the point of view of foreign contribution, Trusts are less preferred
Change of registered office is difficult
Compliances of Trust/NGO
Accounts Book Keeping - Monthly
Annual ITR filings
Shops and Establishment License - in case of employment
Professional Tax Registration - if applicable
GST registration - if applicable
Other Certificates Which can be Required in Order to Avail More Benefits
Under Income Tax Act, 1961, it exempts an individual or organization making a donation to a Trust from paying tax (partially or fully) on the donated amount.
Under Income Tax Act, 1961, it is a one-time registration issued by Income Tax Department. This certificate exempts a NGO from paying income tax on the surplus income.
Organizations seeking foreign contributions in order to promote their activities/ work mentioned in their company object have to obtain FCRA registration. According to the regulation, it shall not receive any foreign contribution without the Government’s approval.
Documents Required for NGO / Trust Registration
From the trustees and settler -
Voter's ID/Aadhar Card/Passport/Driver's License
For Proposed Registered office (Residential or commercial)
Any Utility bills
Scan copy of Rent agreement with NOC from owner
Latest Bank Statement/Telephone or Mobile Bill/Electricity or Gas Bill
Passport-sized photograph of all Directors
How to get NGO/Trust Registration?
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