As per the Indian Trust Act 1882, a Trust is an arrangement where the owner (trustor) transfers the property to someone else (trustee) for the benefit of a third person (beneficiary).
Such a property is transferred by the trustor to the trustee along with a proclamation that the trustee should hold the property for the beneficiaries of the Trust.
Thus, Trusts can be classified into two categories:
It is a trust whose beneficiaries include the public at large. Further, a Public Trust can be further subdivided into Public Charitable Trust and Public Religious Trust.
A private Trust is the one whose beneficiaries include families or individuals. Further, a Private Trust can be subdivided into:
Private Trusts whose beneficiaries and their requisite shares both can be determined
The Private Trusts whose both or either the beneficiaries and their requisite shares cannot be determined
A Trust or an NGO can acquire 12A certificate from the Income Tax Department. Thus, a Trust acquiring such a certificate is exempted to pay income tax for the entire lifetime on its surplus income.
Also, an NGO must obtain 80G certificate. This certificate allows donors, that is persons or organizations making donations to an 80G certified NGO, to avail deduction. Thus, such a deduction is given to the donors under section 80G of the Income Tax Act.
A Trust is governed by Indian Trusts Act, 1882 across India. However, each state can formulate its own Trusts Act to govern such non – profit organizations in its own state.
Further, a Trust can receive funds and projects much like a Society. However, its quite challenging to get funds or projects immediately after a Trust gets registered.
Therefore, to obtain funds or acquire projects, a Trust needs to meet certain eligibility criteria. Such criteria may include relevant experience, performance of a Trust, its age and such other parameters.
Furthermore, a Public Charitable Trust has to be registered with the office of the charity commissioner who has jurisdiction over the Trust. Hence, following is the procedure for its registration.