Formation of Charitable Trust

STEPS FOR
FORMATION
OF A
CHARITABLE TRUST
INDEX
TRUST ................................................................................................................................. 2
TYPESOFTRUST ................................................................................................................ 3
BENEFITSOFTRUST .......................................................................................................... 4
CREATIONOFTRUST ......................................................................................................... 5
REGISTRATIONOFCHARITABLETRUST........................................................................... 6
TRUST
TRUST
Isanobligationinrespectof
Wheretrusthastobe
TrustProperty
created
ownedbythe
owns the trust
Who
Author
property
takenoverbythe
Who holds the trust
property for the

Trustee
benefitofbeneficiary
forthebenefitof
Beneficiary
Any
person for
whose
benefit the
TrustisCreated
TYPESOFTRUST
PublicTrust
PublicCharitable
PublicReligious
Trust
Trust
Anytrustmade
forthe
advancement,
supportor
Anytrust
propagationofa
madeto
religionandits
promoteany
tenetsiscalled
sports,for
religioustrust.
reliefof
poor,to
provide
educationis
calleda
Charitable
trust
TYPEOFTRUST
Publiccum
PrivateTrust
PrivateTrust
PrivateSpecific
Trust
Where
the
beneficiaries and
their share both
aredetermined
Private
Discretionary
Trust
Where
the
beneficiaries
and
their share are not
determined
Wherethepart
ofincomemay
beincurredfor
public
purposesand
partmaygoto
aprivate
person(s)
BENEFITSOFTRUST
BENEFITSOFTRUST
Theincomederivedfromapropertyheldundercharitableorreligioustrustsis
exempt from tax under section 11 subject to the fulfillment of certain
conditions.
CONDITIONSTOBESATISFIED
Itmustbecreated
forlawfulpurpose
Thepropertyfrom
whichtheincomeis
derivedshouldbe
heldundertrust.
The Trust must get

registered
with
Commissioner
of
Income tax within
theprescribedtime.
The accounts of the trust

should be audited for
such accounting year in
which the total income,
before giving effect to
provisionsofsection11or
12, exceeds the maximum
amount which is not
chargeabletotax
TAXBENEFITS
Exemption of income from

property held in trust or other
legal obligation, for religious or
charitablepurpose.
Exemptionofincomederivedbysuch
atrustfromvoluntarycontribution
notbeingcontributionmadewitha
specificdirection.
CREATIONOFTRUST
CREATIONOFTRUST
Prerequisiteforformationofavalidtrust
ClearIntension
Intension of the
author should be
clear to create a
trust
Purpose
Creation
of
It
should
be
specified,
the
purpose for which
thetrustiscreated
Beneficiary
Who are the

beneficiaries
tothetrust
Trust
Property
Where
Trust
created
the
is
REGISTRATIONOFCHARITABLETRUST
ItshouldbeinFormas
specifiedinScheduleII
under
rule 6 and duly
notarized
REGISTRATIONOFCHARITABLETRUST
Make an application for registration of

thepublictrustwiththefollowing
CoveringLetterfor
registrationofPublic
Trust
Court Stamp of
Rs.2/
CertifiedTrueCopy
oftheTrustdeed
The application to be submitted to the

Deputy
or
Assistant
Charity
Commissioner of the region or sub
regionwithinthelimit
The Trust has the office for

the administration of the
Trust
The Trust or the Trust property

or substantial portion of the
trustpropertyissituated
The application shall be made within 3

months of creation of Trust and shall
interalia contain the full detail as
prescribedinformofScheduleII
Every application made under sub

section(1)shallbesignedbythetrustee
orhis/heragentdulyauthorised
To be submitted to the Deputy or

Assistant Charity Commissioner of the
region, who on receipt of the
application
Return the Application

totheTrustee
In case the application

is
incomplete
in
respect
of
any
particularTrustee
Approve the application and endorse a

certificate containing the word Registered
together with number and page of the book
in which the document has been copied and
forwardthesametothetrustee
Doesnotdisclosefull
particularofthe
PublicTrustTrustee
Issuance of Certificate of Registration in the

prescribedformat
END

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STEPS FOR

property for the

The Trust must get

The accounts of the trust

Exemption of income from

Who are the

Make an application for registration of

The application to be submitted to the

The Trust has the office for

The Trust or the Trust property

The application shall be made within 3

Every application made under sub

To be submitted to the Deputy or

Return the Application

In case the application

Approve the application and endorse a

Issuance of Certificate of Registration in the

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