Income Tax Act has specific provisions for exempting income of a charitable trust and also giving deduction u/s 80G to persons giving donation to approved charitable trusts.The process of setting up a charitable trust , there fore , has two steps:
- Registering a Trust deed with registering authority.
- Applying before Commissioner of Income Tax for registration of trust for the purpose of exemption.
Registering a trust deed
- Prepare the trust deed on non-judicial stamp paper.
- [Compute value of stamp paper as per the value of the property of the trust deed]
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- Submit it the office of District Registrar .
Important points to incorporate in the trust deed
- Name of the trust deed.
- Name of the authors or settler of the trust.
- Name of the trustees
- Clearly mention if the public at large are beneficiaries.
- Details regarding principal office and other branch office.
- Details regarding the property which devolve on trustees
- Procedure of appointment,replacements and removal of trustees along with their duties , rights and power.
- Rights and duties of beneficiaries.
Procedure of registration with income tax dept.
As per Rule 17A , apply in Form 10A in duplicate to Commissioner of Income tax (Exemption) within whose jurisdiction the trust falls. Following documents should accompany
- Original copy of instrument creating the trust/institution, .
- Documents evidencing the creation of trust/institution, with one copy thereof, where trust/institution is created otherwise than under an instrument.
- If the trust/institution was in existence during any year(s) prior to financial year in which application for registration is made, the application should be accompanied by two copies of accounts of trust/institution relating to prior year or years, not being more than 3 years immediately preceding the year in which application is made.
Time limit for applying for registration
Before the expiry of 1 year from the date of creation of the trust.
