Our Services : Charitable Trusts

Appointment for incorporating a Trust

Kindly contact us:
M/s Anbalagan & Muthukumarasamy
Chartered Accountants

A charitable organisation may be registered under various legal identities:

(i) Society registered under Societies Registration Act.
(ii) Trust registered under the Indian Trust Act.
(iii) Limited company incorporated under section 8 of the Companies Act, 2013

Procedures for Registration:

The first step is to seek an appointment with us by phone or email and to have a consultation with our Senior Partner of the firm.

We provide the following services:

  1. Advising Statutory obligations for Trusts and Trustees.
  2. Drafting the MOA u0026amp; AOA
  3. Registering the Company U/S 8.
  4. Getting PAN u0026amp; TAN Allotment
  5. Bank A/c Opening Support
  6. FCR Registration
  7. Guidance for the maintenance of vouchers u0026amp; books of accounts.
  8. Guidance for maintenance of minute books.
  9. 12AA/ 80-GRegistration under the Income tax Act.
  10. Statutory Audit
  11. Filing Income Tax returns

What is a Trust?r

Tust is an obligation annexed to the ownership of 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.
Trusts are classified into two categories:
(i) Public,
(ii) Private.

(i) Public trust: A public trust is the one whose beneficiaries include general public at large or a sizeable portion of it.
A public trust is further categorized into
(a) Public charitable trust, (b) Public religious trust.
Public Trust is known as Not for Profit Charitable Organisation or Non Governemental Organisation (NGO).

(ii) Private trust: A private trust is the one whose beneficiaries are individuals or families.
A Private trust is further categorized into:—
a) Private specific trust/ Private Discretionary Trust: in this case beneficiaries and shares both are determined.
b) Where both or either of the beneficiaries and their share are indeterminate.

Who is the Author?
The person reposing or declaring the confidence is the “author” or “settler” of the trust. According to the Indian Trust Act any person competent to contract, and/ or with the permission of a principal civil court of original jurisdiction, by or on behalf of a minor can create a Trust. But subject in each case to the law for the time being in force as to the circumstances and extent in and to which the author of the trust may dispose of the trust property.

Who is a Trustee?

The person accepting the confidence shown reposed or declared by the author/ settler is called the “trustee”. Unlike societies, all or some of the trustees of the Trust can be closely related (i.e. they may belong to the same family).

According to the Indian Trust Act A person capable of holding property in India and having the capacity to offer and accept contracts as per the Indian Contract Act can become a trustee of the Trust.

There is no Educational qualification needed to become a Trustee. Even an illiterate person can become a Trustee.

A Trustee must be a resident of Republic of India. Foreigners, OCI card holders and NRIs residing abroad for more than six months cannot become a member of a Trust.

Who are the Beneficiaries?

People who are benefited by the confidence reposed by the author/ settler and accepted by the trustee are called the “Beneficiaries”.

What is Trust Property?

“Trust property/ Trust Money” is the subject matter of trust.

What is the instrument of Trust?

“Instrument of Trust” is the instrument (if any) by which the trust is declared.

What is a Trust deed?

A Trust Deed is a deed of memorandum of the Trust. It is the document stating and containing essential things with reasonable certainty.
These are:
1.The intention on the part of the author/ settler to create a trust.
2.Purpose of the trust.
4.Trust property, and
5.Transfer of the property to the trustee.

The Trust Deed contains various Clauses. These are:

1.Name Clause
2.Settler and Trustee Clause
3.Registered Office Clause
4.Object Clause and Beneficiaries
5.General Body Member Clause

A table containing names, address and occupation of all the Members along with their signatures should be formulated under the memorandum of association.

Rules and Regulations section includes the following Clauses:

1.Membership Clause
2.Subscription Clause
3.Meeting Clause
4.Committee/ Governing Body Clause
6.Legal Procedures like appointment, removal or replacement of a trustee, their rights, duties and powers, etc.
Property that shall devolve upon the trustee(s) under the trust for the benefit of the beneficiaries.

Note: According to section 21 of the Indian Registration Act, 1908 a deed of trust relating to immovable property must, for the purposes of registration, contain a description of the property sufficient to identify it. An intention to divest the trust property upon the trustee(s). The intention must be expressed in clear, simple language and with certainty.

Bylaws of the Trust:

Mention each and every rule applicable to the Trust point wise. This includes sections of Income Tax act applicable, Indian Trust act and other laws applicable to run manage and implement the working of the Trust. Clearly mention all the procedures and conditions that should be followed to open and operate a bank account. These bylaws are included in the Trust deed. Proper procedures regarding changes, removal or addition of trustees must be established. Without inclusion of bylaws, the trust deed is incomplete and useless.

What is Registered Office:

Registered office is the address at which the Trust functions. This address is the pprimary address mentioned. This can be used while opening a bank account or opening more branches in future.

Deed of Trust:

It is a very essential instrument and “A Prima Facie” evidence of a trust. It contains declaration of the aims, objectives and modes of the management of the trust.
Some people commit the mistake of duplicating Trust deeds of existing trusts which defeats the purpose of the trust itself; because every Trust is different and the memorandum should be prepared specifically targeting their particular needs.

Thus, it is advisable to avail the Services of Chartered Accountants since they are experienced in preparing Trust deeds that meet specific requirements.

The following details are necessary to prepare a Trust Deed:

1.Name and address of the Settler/ 2.Author of the Trust.
3.Names and addresses of the other trustees.
4.Name of the trust.
5.Minimum and maximum number of trustees. Minimum number is two and there is no limit for Maximum. All the trustees together collectively govern the trust and are called Board of Trustees.
Address of the registered office of the trust.
6.Objectives of the trust.
7.Operating powers for Bank account.
8.Tenure of the Trustees must be specified in the deed. It is not necessary to involve Electoral process in the appointment of trustees.
9.Board of Trustees can also have various designations for trustees like Chairperson and Managing Trustee.
Determine these posts and the responsibilities of each of these in the Trust deed.
10.Date of execution of the Trust Deed.
11.Special rights, duties and limitations if required for any of the Trustees.
Conditions under which a Trustee shall cease to exist.

The Trust Deed shall be prepared on a stamp paper whose value should be of certain percentage of the total value of Trust’s property. This percentage varies from state to state.

To register the Trust Deed with the Local Registrar under the Indian Trusts Act there are certain requirements.

These are:

1.Trust Deed on stamp paper of requisite value (as stated above)
2.Two passport size photograph u0026amp; self attested copy of the proof of identity of the settler
3.Two passport size photograph u0026amp; self attested copy of the proof of identity of each trustee.


  1. Two photos are necessary as one will be pasted on the Trust deed while the other is pasted on the registry detail that is stored in the records.
  2. Aadhar card as identity proof is preferred however, it is not mandatory. Though the Supreme Court ruling has stated clearly that Aadhar card must not be made compulsory but some Registrars do not comply. They might pose obstacle if Aadhar card is not provided with the documents.
  3. Voter ID, Passport, any other such photo ID card with address mentioned on it is applicable till further notification.
  4. Driving License as identity proof is acceptable at some places while some do not consider it.
  5. PAN CARDS of all the Trustees.
  6. Proof of the registered office address of the Trust must be attached with the Trust deed. This can be electricity bill, water bill, registration certificate. You might have to submit a non objection letter signed by the land owner with his identity proof.

All these conditions differ from state to state, for example, in Haryana Aadhar card is necessary and out of the two witness one must be a registered lawyer. Two witnesses are necessary throughout India.


Section 11 of the Income Tax Act, exempts the income of Charitable Societies / Trusts from the charge of tax on the fulfilment of certain conditions.
Apart from this, sections 12, 12A, 12AA and 13 and certain clauses of Section 10 of Income Tax Act also govern the issue of taxation of such organisations.

However NGOs need to apply to the income tax authorities to get this exemption.

For availing exemption under Section 11, the Society / Trust is required to fulfil the following conditions:

a. Registration: For registration under Section 12AA with the Commissioner of Income Tax, the Society or Trust or institutions should apply within one year from the date of creation of Society or establishment of institution, in Form No 10A (in duplicate) along with the memorandum of association or bye-laws of the society in original or the document evidencing creation of the Trust, together with a copy thereof and two copies of the accounts of the society relating to three previous years (or for the year during which the Society or Trust was in existence, in case of a new Society). The Commissioner shall call for documents or information and hold enquiries regarding the genuineness of the Society/ institution. After being satisfied about the charitable or religious nature of its objects and genuineness of its activities, he will pass an order granting registration, and if he is not satisfied, he will pass an order refusing registration, subject to the condition that an opportunity of being heard shall be provided to the applicant before an order of refusal to grant registration is passed and the reasons for refusal of registration shall be mentioned in such order. The order granting or refusing registration has to be passed within six months from the end of the month in which the application for registration is received and a copy of such order shall be sent to the applicant society/institution. If the Commissioner of Income Tax is satisfied that the activities of any institution are not genuine or are not being carried out in accordance with the objects of the institutions, he shall, after giving reasonable opportunity of being heard to the concerned institution, pass an order in writing cancelling the registration granted under Section 12AA.

b. Maintenance of Accounts: The Society / Trust should maintain regular books of account, supported by receipts and vouchers. The accounts shall be made on a cash basis. The Society / Trust should prepare an ‘Income and Expense Account’. Any voluntary contribution received by the Society / Trust shall be deemed to be income derived from the property held under trust. Where contribution have been made with a specific direction that they shall form part of the corpus it should be so specified on the receipt issued as the same shall be exempt under section 11 (1)(d).

c. Compulsory Audit: Where the total income of the Society / Trust /institution exceeds Rs 2,50,000 in any previous year, the accounts of such Society / Trust are required to be audited and the audit report which shall be in Form No 10B is required to be furnished along with the return.

d. Income not to be spent for the benefit of certain persons: No part of the income or property of a Charitable Society / Trust claiming exemption under Section 11 should be used or applied for benefit of any person specified under Section 13/3, subject to certain exceptions.

In the event of refusal to tax exemption, Societies / Trusts need to pay tax on their income, as per the terms laid down in the Income Tax act. Societies / Trusts involved in for-profit activities also pay tax as per the terms in the Income Tax act. These tax paying Societies / Trusts can also make investments in the for-profit ventures or bodies, based on their risk appetite.


Generally, the Trust is registered at the Registrar office of the state/ area under whose jurisdiction the official address of the Trust comes.However, please note that the office address of the Trust is not counted among the Trust’s property.

Office address can be of any place in India, though there are few restrictions at some places. For example, in case of Delhi the registered office premises must be in legally authorized / registered residential or commercial places. Industrial buildings, farm houses and agricultural land cannot be used as office address.

The office address must be registered with the local sub-registrar. Unauthorized addresses cannot be used. There are no clear rules about the office address in the Indian Trust Act or the Registration Act.

The parameters regarding this are left to the judgment of the sub- registrar and the prevalent norms in the particular state.

If you being given an extremely difficult time by the sub-registrar you can definitely challenge this legally in court.

Settler or Trustees can add more than one address as the Trust’s office address. This address shall be added as additional administrative office in case they wish to open another branch of their Trust.

Consent of all members is necessary whether verbal or written. Laws regarding the physical presence of trustees are different for different states.

However, physical presence of settler is compulsory everywhere in India. In some states instead of physical presence of the Trustees, their original photo Ids and self attested photocopy is sufficient.

At the time of registration, only the Settler 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, Settler 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.

The registration process is then undertaken by the office of the sub-registrar, and the registered deed can be collected after a week time.

The next logical step shall be to get the PAN and TAN Number allotted for the trust and open a Bank A/c for the trust.

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