How to Form a Charitable Trust
Setting up of a Not for profit organization for the purpose of doing charitable activity can be done through Trust, Society, and Sec 8 company under Companies Act 2013.
PROCESS INVOLVED IN FORMING A PUBLIC CHARITABLE TRUST
A Trust needs a Settlor he is the Author of the Trust. He writes the Trust deed and he creates the trust with a corpus defining the purpose for which such trust being created. While declaring his Trust he nominates the other trustees and formulates the Board of Trustees. Therefore for forming a Trust
- One Settlor and
- At least another one Trustee.
There is no restriction of family members are getting in to the trust.
The Trustees cannot claim salary for the service they provide however a nominal honorarium can be paid for the professional service he is rendering to the trust.
The trust can be registered with the Registrar of Trust. He will be available in the sub registrar office of the jurisdiction of the registered office address of the Trust. While registering the Trust the settler along with two witnesses has to appear before the Registrar of Trust for completing the registration process.
Normally the registered office of a Trust can be the address of the Settlor and he gives an NOC to the trust to function from his premises.
Settlor is one who settles the corpus and creates the trust and it’s a permanent one. Once created then he cannot go back from his own words.
In general Trustees are appointed by the Settlor or the Trust can define the method of selecting a Trustee.
The trust is run by its trustees.
After registration the Trust can apply for PAN and can open Bank account by passing necessary Resolution in its Board of Trustees meeting.
Subsequent to this the Trust can apply for 12A registration and 80G exemptions.
12 A is for exempting the income of the Trust from the income Tax and 80G is for exempting and allowing the donors from paying tax for the amount he donates to a trust which is having the 80G exemption and claim deductions.
While drafting the Trust the Settlor has to very clearly specify the purpose and objective of the Trust.
NRI can be a Trustee but not the Foreign nation as Trustee.