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