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The most convenient way to start a non-governmental organisation (NGO) is through public trust. Apart from the generic goal of supporting arts, science, and literature, a trust functions with the goal of reducing poverty, providing education to the needy, and providing medical help. It’s worth noting that trusts are irrevocable, meaning they can’t be changed or terminated without the court’s permission. We can assist you in obtaining a trust registration certificate along with a few supporting documents such as a deed of trust, rental agreement, and so on.
There are no particular laws governing public trust in India, but certain states, such as Maharashtra and Tamil Nadu, have their own.
Involvement in Charitable activities
Charitable trusts are established with the common goal of engaging in charitable activities while collecting benefits for the donor, his heirs, and successors.
Provides benefits to poor people
By conducting charitable activities fairly, the registered trustbenefits the underprivileged and the public.
Family Wealth Preservation
Trusts can be established to own specific assets that would be improper or impractical for the settlor to distribute between individuals, such as property or an interest in a family business. These individuals can benefit from the assets even though they do not own them because of the usage of trust. A trust can also help to preserve the capital value of such assets for future generations.
Tax exemptions for registered trusts
The other primary reason for establishing a registered trust is to take advantage of tax exemptions. These charitable trusts are not-for-profit organisations, and in order to take advantage of all of these benefits, the charitable trust must have a legal entity.
Avoid probate court
Because legal title to the assets passes from the settlor to the Trustee when they are “settled,” there is no change in ownership when the settlor dies, removing the need for a will probate.
Furthermore, while probate grants are public papers, trusts are private agreements that do not require registration. Furthermore, the use of a trust could help a surviving spouse avoid financial hardship while waiting for probate to be granted.
Family immigration/Emigration
When a person and his or her family move to another country, it is often the best/only time to set up a trust in order to avoid paying taxes in the destination country, thus conserving the family wealth and allowing for organisational flexibility.
This form of organisation necessitates extensive expert assistance and counsel.
Forced Heirship
Residents of countries with rigid legacy laws may be able to benefit from trusts’ flexibility in dispersing a portion or all of their assets to beneficiaries who would not be allowed to benefit under their native country’s requirements. Such preparation should be done with the help of legal professionals in their country of residence/nationality.
Tax mitigation
Trusts can help you save money on capital and income taxes. For the settlor, the beneficiaries, and the trust assets, the trust may provide effective protection against punitive taxes. A common use of trusts is to reduce or eliminate inheritance tax in the settlor’s country, although this requires the settlor to have sound tax counsel.
Asset Management
Trusts can be quite effective at reducing capital and income taxes. The trustmay provide effective protection against punitive taxes for the settlor, the beneficiaries, and thetrust asset company
Under the 1961 Income Tax Act, an individual or organisation donating to a Trust is exempt from paying tax on the donation (Fully or partially).
It is a one-time registration under the Income Tax Act, 1961, given by the Income Tax Department. This certificate exempts a non-governmental organisation from paying income tax on surplus income.
Organizations seeking foreign contributions to promote the activities/work indicated in their company's mission statement must register with the FCRA. It is prohibited by regulation from receiving foreign contributions without the approval of the Government
It is a general belief that trust need not have to pay tax as its main aim is to work for the benefit of the people, but it’s not true. Trust is a legal entity like others and is liable to pay tax. In case if trust wants tax exemption, it has to obtain certification from income tax authorities for tax exemptions such as section 12A, 80G etc.
The Board of trustees forms the trust and comprises of the following persons –
Founder or author of the trust
Managing trustees
Other trustees
A Quorum of the Board of trustees should not exceed a maximum of 21 members.
As per the public trust act, trust registration is mandatory in all states if its main motive is a charity or a transfer of immovable property in the name of the trust.
Tax exemptions are also provided to the registered trust under sections 12A & 80G of the income tax act. Registration adds more credibility to the trust as it involves public money in the form of donations.
A Public trust is one whose beneficiaries include the general public at large. Additionally, in India, a public trust might be classified as
In India, a Private Trust is one that has individuals or families as beneficiaries. Additionally, a Private Trust in India might be classified as follows
The Trustees do not have the right to sell the property, however, the trust properties can be sold after obtaining prior permission from the appropriate civil court.
There is no specific certificate for a trust registration. On the other hand, getting the trust deed registered with the appropriate authorities would suffice.
The trust is usually irrevocable in nature. For reasons like disqualification of trustees, absence of trustees, mismanagement of the trust, the trust can be merged with a trust having similar objective with the permission of the court.
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