Public (charitable) Trust
Trusts as legal entities can be created for charitable purposes and designated as ‘Public Trusts’*. Such Public Trusts are usually set up where some property (‘Trust Property’) is gifted or bequeathed or transferred by the ‘Settlor’ as a benefactor to such Public Trust, for the same to be used for charitable, philanthropic or other such socially beneficial objects, under the stewardship of a Trustee(s) and with the members of the public (or sections thereof) in general as ‘Beneficiaries’.
*There is no Central Act governing Public Trusts unlike Private Trusts (governed by the Indian Trusts Act 1882) and therefore such Public Trusts rely on general law and/or any applicable State Law (based on jurisdiction/place of registration of the relevant Trust), such as ‘The Maharashtra Public Trusts Act 1950’.
The constitutional and founding legal document or instrument of a Public Trust is the Trust Deed/Instrument. The said Deed is the principal source of powers, duties, obligations and liabilities of the concerned Trust, its office-bearers (Trustees etc.) and various third parties including authorities governing/regulating such Trusts.
Some of the essential powers etc. expressed in such Deed would include the following –
- Intention of the Settlor to create a Public Trust
- Objects/purpose(s) of the Public Trust
- Public members (or identified sections thereof) as ‘Beneficiaries’
- Details of the Trust-Property and its transfer etc. to the Trustee(s) (unless Trust is created/declared by Testamentary Will or the Settlor is also the Trustee in whom such transferred property vests)
- Rights, powers, duties and liabilities of Trustees
- Source and application of Trust Property, donations, grants, income, revenue and other assets etc.
Income Tax Benefits
Public Trusts may be potentially entitled to income tax benefits including complete/partial exemption from income tax obligations and liabilities on any income earned, donations received etc. and/or may be allowed to pass on certain benefits to financial donors, where such Trust applies to and is approved for the same by the relevant Income Tax authorities in accordance with the Income Tax Act 1961.
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General Registration Procedure
Some States have enacted laws governing and regulating Public Trusts registered within their respective territorial jurisdiction, therefore the exact legal and procedural requirements for registering and administering such Public Trusts may vary on the basis of applicable (if any) State law and regulations there under, which may include some of the following —
- Submission of prescribed application/registration form and fees along with relevant Trust Deed to the designated and jurisdictional official (such as ‘Charity Commissioner’ or Sub-Registrar or SDM etc. appointed by the relevant State/Local authority)
- Providing the prescribed details and information (in the said application/registration form)
- Payment of applicable Stamp Duty etc. (if any) where Trust Property involves transfer of immovable property to the concerned Trust
- Consent Letter/Affidavit/Proof of Identity/PAN details of Trustee(s) etc.
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