If you want to start an NGO then starting with a Public Trust is the most convenient and easy way. Trust primarily works on the objective of uplifting underprivileged people by providing them with basic amenities like education and medical facilities. It also works for the promotion of science, arts and literature of the country.
Trusts have not been clearly mentioned in any of the acts, but it doesn’t mean that they have no legal obligations. There may be no specific laws all over India but some states like Maharashtra and Tamil Nadu have made their own Public Trust Act.
We make sure to complete all the legal formalities required to form a trust under the jurisdiction of the state.
Documents depends on whether the trust is on lease or owned, though some basic documents are always required for registering a Trust in India. All the documents must be submitted to Sub-registrar along with the requisite fees.
- A Registered Trust Deed with Draft Guidelines
- Proof of Registered Address of Trust
- ID & Address Proof of Founder & Members of Trust
- Proof of 2 Witnesses
- Private trust: This kind of trust created for Individual identity or a Particular type of Group.
- Public trust: It is created for the general Public. E.g. Charitable or Religious Purpose.
- The Board of Trustees in a trust is maximum of 21 members. You can’t increase members list beyond that.
- Registered Trust only can apply for 12A or 80G registration of income tax. Otherwise trust has to pay income tax according to the slab rates of same FY.
- Shop & Establishment or Labour License is mandatory after registering a Trust in India.
- Trust must file income tax return & maintain book keeping of accounts. Trust must maintain register for donation and members annually.
- Trustees can’t sell trust property without permission of court.
- Society Registration & Section 8 Co. registrations are the other options for starting an NGO in India.
- Trust Is irrevocable in nature. You can’t close Trust.
- Trustees can be Individual, Company and LLP in trust formation.
- The deed clearly stating all the terms related to objectives, closure and dissolution of trust. It must clearly state that after settling all the debts and liabilities, the rest of the funds will not be distributed amongst the trustees or member of the trust. The funds must immediately be transferred to some other trust operating under the same work model.
If an NGO is registered under 80G then the donor can seek tax exemption on their income tax. It is a kind of certificate issued by commissioner to NGO’s who are actually working for the Trust. By verifying many documents & activities of NGO, commissioner issues this certificate. Here are the benefits of registering under the same:
- Deduction from taxable income for donors if he/ she donated to registered NGOs who have 80G Certificates.
- Such benefit can attract more donors that in turn can help to run NGO in a better way.
These exemptions can only be availed by charitable or religious trusts, Societies and Section 8 companies. No family or private trust can avail such exemption.
If a trust is registered under 12A then company can seek tax exemption on their income tax during the year. It is a one-time registration issued by Income tax commissioner of zonal area. It is a very important document if you are planning for Non-Profit NGO in India.
Here are some of the benefits of 12A registration:
- Complete Income Tax exemption for almost lifetime of a Non-Profit NGO.
- It also helps in taking FCRA approval or Foreign fundings.
- Helps in taking grants from Government and other alike bodies.
Registration process of 12A Approval for Trust
- Form 10A has to be filed.
- Below mentioned documents needs to be attached with duly filled 10A:
- Registration Certificate of NGO
- PAN Card of NGO
- Name, Address and PAN details of the members of the trust
- Complete Memorandum of Association
- NOC from the landlord, if applicable
- Proof of welfare activities carried out in the last 3 years
- List of donors along with their PAN card details
- Trust can apply for both (80G & 12A) exemptions immediately after the NGO registration. One can either file these exemptions together or else can file separately as well. Both the applications must be submitted to Income tax Commissioner who has jurisdiction over your NGO.
- It is a one-time process and then Commissioner of Income-tax reviews the same thoroughly. He may ask for additional documents or information to complete the formalities. The process takes around 3 to 4 months.
- Commissioner has power to reject the application over non-satisfaction of documents, thus in this case we recommend seeking the expert services provided by our professionals to ensure that you avail comprehensive tax exemptions without any delay.
- The first step is to prepare a document or a trust deed mentioning the objectives of the trust along with the modus operandi which members of the trust are going to follow to meet the mentioned objectives. This deed has to be prepared by the founder of trust only and must contain all the important details related to the same.
- Once the document has been prepared, it has to be submitted to Registrar of Trusts along with the application for registration, proof of registered office, identity proof of the founder of the trust and at least two witnesses.
- Once the registration is done a trust must obtain a PAN card without any further delay. There must be no negligence on record keeping and annual tax filings. Also, if the trust is offering any employment then it must obtain a shop and establishment license.
- There is one thing that needs to be keep in mind before registering a trust that is once formed, trust can never be terminated or amended without seeking permission from the court.
- With us on board, our clients need not to be worry about the registration process as we will help them with end to end process without any hassle.
- We help you in the entire process of Trust registration with assurance of hassle-free proceedings.
- Having us on board for your Trust registration will help you to complete all the formalities in much lesser time.
- We will assist you on FCRA Approval from day 1, as it is the most crucial approval for Foreign fundings and grants.