NGO Trust: Purpose and Formation

A Trust can be established by a minimum of two trustees, including members of a family, although in some cases, Government Ministries of India or Funding Agencies may refuse funding to trusts consisting solely of family members. It is formed with a welfare or religious purpose and can operate throughout India. A Trust is sanctioned by a Trust Deed, which serves as an advisory document guiding the trust's operations and functions according to its established objectives.

NGO Trust Formation and Features

Types of Trusts: Public (formed with the participation of the general public for general welfare) or Private (formed with closed groups, such as family members or specific individuals, for a particular welfare purpose).

Law/Act Applied to Register: Indian Trusts Act/Bombay Public Trusts Act (Although no national law governs Public Charitable Trusts in India, states have Public Trust Acts).

Registering Authority of Trust: Sub-Registrar of Registration/Charity Commissioner.

Time of Trust Formation: 2 days to 1 week.

Trust Governing Structure: General Body/Board of Trustees, Executive Committee/One General Body of Trustees.

Registration of NGO Trust

A Trust Deed should be prepared for this purpose, wherein the author of the Trust must mention:

• Intention to create a Trust
• Purpose of the Trust
• Beneficiaries
• Trust Property to transfer to the trustee (unless declared by Will/the author is himself the Trustee)

The final Deed is printed on a non-judicial stamp paper and presented before the Sub-Registrar Office in the concerned jurisdiction area in the presence of all the trustees and two witnesses. A Government Registration Fee is to be deposited for this purpose.

• Provision of Government-approved land
• Grant allowed from the Government
• Recognition/Affiliation from any University/Organization
• Income Tax Benefit
• 80G Benefit
• Benefits of Entertainment Tax
• Benefits of Service Tax
• White money for building construction
• Etc....

Note: A Trust should obtain a 12A Certificate from the Income Tax Department, which exempts the surplus income of the Trust from tax for its lifetime. Additionally, they must register to be included under the 80G tax deduction provision.

NGO Society: Purpose and Formation

A society is established as an association of persons (minimum of 7) joined together by mutual consent to collectively deliberate, determine, and act for a common charitable cause, such as education, religion, art, sports, etc. Foreigners, companies, and other registered societies can also participate in the memorandum of a society. Societies formed in India are governed by the regulations of the Societies Registration Act, 1860.

NGO Society Formation and Features

• Law/Act Applied to Register: Societies Registration Act, 1860
• Registering Authority: Registrar/Deputy Registrar of Societies of the concerned State/Charity Commissioner
• Time of Society Formation: 1-2 Months
• Governing Structure: General Body, Executive Committee

Registration of NGO Society

Society registration is overseen by State Governments. Therefore, an application for the registration of a society must be submitted to the relevant authority of the State where the Registered Office of the Society will be located. The procedure for registration typically involves:

1. Founding members agreeing on the Society’s Name.
2. Formulation of the Memorandum, Rules, and Regulations of the Society.
3. Validation and signing of the Regulations by the founding members.
4. Witnessing of the documents by an Oath Commissioner, Notary Public, Gazetted Officer, Advocate, Chartered Accountant, or Class Magistrate, with their stamp duty and complete address.
5. Submission of the Memorandum to the Office of the concerned Registrar of Societies in the State along with a registration fee for registration purposes.

• Bestowed with a Legal Identity: A society is endowed with a legal identity.
• Regulated Activities: Members of a society must adhere to specific regulations when conducting their activities.
• Limited Liabilities: Liabilities are restricted to the respective shares of the members in accordance with legal norms.
• Income Tax Benefits
• Legal Protection: Societies are provided with legal protection to carry out their activities. Unauthorized use of the society’s name is a legal offense.
• Etc.....