Trust Formation
Charitable Trust & Association
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Registering a Charitable Trust or an Association in India is a structured process governed by specific legal frameworks, depending on the type of organization. Both types of entities are used for philanthropic, cultural, religious, or educational purposes. A Charitable Trust is formed to provide benefits for society and is governed by the Indian Trusts Act, 1882.
Step 1: Decide on Objectives
- Clearly define the purpose of the trust (e.g., education, healthcare, poverty relief).
- Draft a detailed vision and mission statement.
Step 2: Choose Trustees
- Minimum of 2 trustees is required (no limit on maximum trustees).
- Trustees can be individuals or organizations.
Step 3: Draft a Trust Deed
The Trust Deed is the primary legal document and must include:
- Name of the trust.
- Objectives of the trust.
- Details of trustees, including their roles and responsibilities.
- Procedures for adding/removing trustees.
- Details of the registered office.
- Rules for the management of trust properties.
- Method for resolving disputes.
Step 4: Register the Trust Deed
- Submit the trust deed to the local Sub-Registrar Office.
- Documents required:
- Trust Deed (printed on stamp paper of appropriate value).
- Passport-sized photographs of trustees.
- ID proofs of trustees (e.g., PAN, Aadhaar).
- Address proof of the registered office.
- Pay the requisite registration fees and stamp duty.
Step 5: Obtain PAN and Bank Account
- Apply for a PAN card in the trust’s name.
- Open a bank account in the trust’s name.
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2. Association Registration
An Association is a group of people who come together for a common purpose, such as promoting art, culture, or sports. Associations can be registered as Societies or Section 8 Companies.
(a) Society Registration
Societies are governed by the Societies Registration Act, 1860.
Steps for Registration
- Select Members:
- Minimum 7 members (individuals or organizations).
- At least one member must be a resident of India.
- Draft Memorandum of Association (MoA) and Rules:
- MoA must include the society’s name, objectives, registered office address, and member details.
- Rules must outline governance, membership procedures, and dispute resolution mechanisms.
- File Application with the Registrar of Societies:
- Submit the MoA, rules, and the following documents:
- ID and address proofs of members.
- Address proof of the registered office.
- Pay the registration fee.
- Submit the MoA, rules, and the following documents:
- Certificate of Registration:
- Upon approval, the Registrar issues a Certificate of Registration.
(b) Section 8 Company Registration
Section 8 companies are nonprofit organizations governed by the Companies Act, 2013.
Steps for Registration
- Obtain Digital Signature Certificate (DSC):
- All directors need a DSC for online filings.
- Apply for Director Identification Number (DIN):
- Apply through the SPICe+ form during registration.
- Draft MoA and AoA:
- Clearly outline the objectives of the company, governance rules, and activities.
- File Application (SPICe+ Form):
- Submit the following:
- MoA and AoA.
- ID and address proofs of directors and shareholders.
- Declaration for charitable objectives.
- Proof of registered office.
- Submit the following:
- Approval and License:
- Obtain a license from the Registrar to operate as a Section 8 company.
- Receive the Certificate of Incorporation with CIN.
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Key Points to Note
- Tax Benefits:
- Apply for 12A and 80G registration under the Income Tax Act to avail tax exemptions.
- Annual Compliance:
- File annual returns, maintain proper financial records, and submit audit reports.
Comparison Table
| Aspect | Charitable Trust | Society | Section 8 Company |
|---|---|---|---|
| Governing Law | Indian Trusts Act | Societies Registration Act | Companies Act |
| Members | Minimum 2 trustees | Minimum 7 members | Minimum 2 shareholders |
| Legal Identity | Non-separate entity | Separate legal entity | Separate legal entity |
| Governance | Trustees manage | Governed by members | Governed by directors |
| Tax Exemption | 12A, 80G eligibility | 12A, 80G eligibility | 12A, 80G eligibility |
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