In India non profit organizations can be
registered in the following forms-(a) Trust (b) Societies and
(c) a private limited company under section 25. All the non
profit organizations in India (a) exists independently (b) are
governed by the Board of Trustees or Managing Committee (c)
produce benefits for members outside the organization and (d)
are non profit making to the extent that they are prohibited
from distributing monitory residual to their own members.
A Trust is defined as an obligation annexed to the ownership of
property arising out of the confidence declared and accepted by
the owner for the benefit of another, or of another and the
owner. A public charitable Trust is usually floated when there
is property involved in m terms of land and building. Different
Trust in different states are governed by the Trust acts in
force. In the absence of Trust act in many state or territory,
the Trust is applied general principles of the Indian Trust Act
Section 2(15) of the Income Tax Act applicable throughout India
defines ‘Charitable Purpose’ to include relief of the poor,
education, medical relief and any advancement of general public
utility. A purpose related exclusively to worship or religious
teachings is not considered as charitable. A public charitable
purpose has to benefit a large section of public as
distinguished from specified individuals.
Whether a Trust, Society or Section -25 company, the Income Tax
Act treats them equally in terms of exempting their income and
granting 80G certificate , whereby donors to non profit
organizations claim a rebate against donations made.
The main instrument of any public charitable trust is the Trust
Deed in which the aims and objectives of the Trust are clearly
spelled out. Every Trust Deed has to furnish the details of
minimum and maximum number of trustees, their mode of
appointment. The deed has to be signed by both settler/s and
trustee/s in the presence of two witnesses. While there is no
limit on the maximum number of trustees, the minimum number of
trustees to form a trust is Two.
A written Trust Deed is always desirable for the following
• It is an evidence of the existence of the Trust.
• It facilitates devolution of trust property to the Trust.
• It clearly specifies the aims and objectives of the Trust to
ascertain whether the trust is a charitable or otherwise.
• It is essential for obtaining registration under Income Tax
Act and claiming exemption from tax.
• It is essential for registration of immovable property in the
name of the Trust.
Benefits of Trust Formation
• Trusts are often used as vehicles to hold property for present
and future needs of dependents and family members.
• Trusts are also used to reduce tax burden.
• Trusts have been widely used as a planning tool to shift
income tax to beneficiaries to lower tax brackets.
• Inheritance can be kept away from heir with trust until they
reach 30 or above.
• Trusts can manage funds for a heir who is handicapped or
unable to handle funds.
• Trusts also make arrangements of finance if the trustee
• Trusts assure that the grandchildren will receive estate after
the death of their fathers and forefathers.
• With Trusts, there is control over the assets.
EFS family office service will assure that the assets will be
well managed in the events of illness, disability or death. We
give complete protection to the family wealth in present as well
as in future. Our trust formation services will help our clients
to plan their estate well. We also offer maximum convenience and
tax efficiency to our clients.