NGO Registration Methods

NGO Registration Methods - 1

1. Trust 2. Society, and 3. Non profit Company

In India non profit / public charitable organisations can be registered as trusts, societies, or a private

limited non profit company, under section-25 companies. Non-profit organisations in India (a) exist

independently of the state; (b) are self-governed by a board of trustees or ‘managing committee’/

governing council, comprising individuals who generally serve in a fiduciary capacity; (c) produce

benefits for others, generally outside the membership of the organisation; and (d), are ‘non-profit-

making’, in as much as they are prohibited from distributing a monetary residual to their own members.

Section 2(15) of the Income Tax Act – which is applicable uniformly throughout the Republic of India

– defines ‘charitable purpose’ to include ‘relief of the poor, education, medical relief and the

advancement of any other object of general public utility’. A purpose that relates exclusively to religious

teaching or worship is not considered as charitable. Thus, in ascertaining whether a purpose is public or

private, one has to see if the class to be benefited, or from which the beneficiaries are to be selected,

constitute a substantial body of the public. A public charitable purpose has to benefit a sufficiently large

section of the public as distinguished from specified individuals. Organisations which lack the public

element – such as trusts for the benefit of workmen or employees of a company, however numerous –

have not been held to be charitable. As long as the beneficiaries of the organisation comprise an

uncertain and fluctuating body of the public answering a particular description, the fact that the

beneficiaries may belong to a certain religious faith, or a sect of persons of a certain religious persuasion,

would not affect the organisation’s ‘public’ character.

Whether a trust, society or section-25 company, the Income Tax Act gives all categories equal

treatment, in terms of exempting their income and granting 80G certificates, whereby donors to non-

profit organisations may claim a rebate against donations made. Foreign contributions to non-profits are

governed by FC(R)A regulations and the Home Ministry.

CAF would like to clarify that this material provides only broad guidelines and it is recommended that

legal and or financial experts be consulted before taking any important legal or financial decision or

arriving at any conclusion.

Formation and Registration of a Non -Profit organisations in India

1)Trust

2)Society

3)Section-25 Company

Additional Licensing/ Registration

I. Trusts

A public charitable trust is usually floated when there is property involved, especially in terms of land

and building.

Legislation : Different states in India have different Trusts Acts in force, which govern the trusts in the

state; in the absence of a Trusts Act in any particular state or territory the general principles of the

Indian Trusts Act 1882 are applied.

Main Instrument : The main instrument of any public charitable trust is the trust deed, wherein the

aims and objects and mode of management (of the trust) should be enshrined. In every trust deed, the

minimum and maximum number of trustees has to be specified. The trust deed should clearly spell out

the aims and objects of the trust, how the trust should be managed, how other trustees may be

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appointed or removed, etc. The trust deed should be signed by both the settlor/s and trustee/s in the

presence of two witnesses. The trust deed should be executed on non-judicial stamp paper, the value of

which would depend on the valuation of the trust property.

Trustees : A trust needs a minimum of two trustees; there is no upper limit to the number of trustees.

The Board of Management comprises the trustees.

Application for Registration :

The application for registration should be made to the official having jurisdiction over the region in which

the trust is sought to be registered.

After providing details (in the form) regarding designation by which the public trust shall be known,

names of trustees, mode of succession, etc., the applicant has to affix a court fee stamp of Rs.2/- to the

form and pay a very nominal registration fee which may range from Rs.3/- to Rs.25/-, depending on the

value of the trust property.

The application form should be signed by the applicant before the regional officer or superintendent of

the regional office of the charity commissioner or a notary. The application form should be submitted,

together with a copy of the trust deed.

Two other documents which should be submitted at the time of making an application for registration are

affidavit and consent letter.

II. Society

According to section 20 of the Societies Registration Act, 1860, the following societies can be registered

under the Act: ‘charitable societies, military orphan funds or societies established at the several

presidencies of India, societies established for the promotion of science, literature, or the fine arts, for

instruction, the diffusion of useful knowledge, the diffusion of political education, the foundation or

maintenance of libraries or reading rooms for general use among the members or open to the public, or

public museums and galleries of paintings and other works of art, collection of natural history,

mechanical and philosophical inventions, instruments or designs.’

Legislation : Societies are registered under the Societies Registration Act, 1860, which is a federal act.

In certain states, which have a charity commissioner, the society must not only be registered under the

Societies Registration Act, but also, additionally, under the Bombay Public Trusts Act.

Main Instrument : The main instrument of any society is the memorandum of association and rules and

regulations (no stamp paper required), wherein the aims and objects and mode of management (of the

society) should be enshrined.

Trustees : A Society needs a minimum of seven managing committee members; there is no upper limit

to the number managing committee members. The Board of Management is in the form of a governing

body or council or a managing or executive committee


Registration can be done either at the state level (i.e., in the office of the Registrar of Societies) or at the

district level (in the office of the District Magistrate or the local office of the Registrar of Societies).(2)

The procedure varies from state to state. However generally the application should be submitted

together with: (a) memorandum of association and rules and regulations; (b) consent letters of all the

members of the managing committee; (c) authority letter duly signed by all the members of the

managing committee; (d) an affidavit sworn by the president or secretary of the society on non-judicial

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stamp paper of Rs.20-/, together with a court fee stamp; and (e) a declaration by the members of the

managing committee that the funds of the society will be used only for the purpose of furthering the

aims and objects of the society.

All the aforesaid documents which are required for the application for registration should be submitted in

duplicate, together with the required registration fee. Unlike the trust deed, the memorandum of

association and rules and regulations need not be executed on stamp paper.

III. Section-25 Company

According to section 25(1)(a) and (b) of the Indian Companies Act, 1956, a section-25 company can be

established ‘for promoting commerce, art, science, religion, charity or any other useful object’, provided

the profits, if any, or other income is applied for promoting only the objects of the company and no

dividend is paid to its members.

Legislation : Section-25 companies are registered under section-25 of the Indian Companies Act. 1956.

Main Instrument : For a section-25 company, the main instrument is a Memorandum and articles of

association (no stamp paper required)

Trustees : A section-25 Company needs a minimum of three trustees; there is no upper limit to the

number of trustees. The Board of Management is in the form of a Board of directors or managing

committee.


1.An application has to be made for availability of name to the registrar of companies, which must be

made in the prescribed form no. 1A, together with a fee of Rs.500/-. It is advisable to suggest a choice of

three other names by which the company will be called, in case the first name which is proposed is not

found acceptable by the registrar.

2.Once the availability of name is confirmed, an application should be made in writing to the regional

director of the company law board. The application should be accompanied by the following documents:

Three printed or typewritten copies of the memorandum and articles of association of the proposed

company, duly signed by all the promoters with full name, address and occupation.

A declaration by an advocate or a chartered accountant that the memorandum and articles of

association have been drawn up in conformity with the provisions of the Act and that all the

requirements of the Act and the rules made thereunder have been duly complied with, in respect of

registration or matters incidental or supplementary thereto.

Three copies of a list of the names, addresses and occupations of the promoters (and where a firm is a

promoter, of each partner in the firm), as well as of the members of the proposed board of directors,

together with the names of companies, associations and other institutions in which such promoters,

partners and members of the proposed board of directors are directors or hold responsible positions, if

any, with description of the positions so held.

A statement showing in detail the assets (with the estimated values thereof) and the liabilities of the

association, as on the date of the application or within seven days of that date.

An estimate of the future annual income and expenditure of the proposed company, specifying the

sources of the income and the objects of the expenditure.

A statement giving a brief description of the work, if any, already done by the association and of the

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work proposed to be done by it after registration, in pursuance of section-25.

A statement specifying briefly the grounds on which the application is made.

A declaration by each of the persons making the application that he/she is of sound mind, not an

undischarged insolvent, not convicted by a court for any offence and does not stand disqualified under

section 203 of the Companies Act 1956, for appointment as a director.

3.The applicants must also furnish to the registrar of companies (of the state in which the registered

office of the proposed company is to be, or is situate) a copy of the application and each of the other

documents that had been filed before the regional director of the company law board.

4.The applicants should also, within a week from the date of making the application to the regional

director of the company law board, publish a notice in the prescribed manner at least once in a

newspaper in a principal language of the district in which the registered office of the proposed company

is to be situated or is situated and circulating in that district, and at least once in an English newspaper

circulating in that district.

5.The regional director may, after considering the objections, if any, received within 30 days from the

date of publication of the notice in the newspapers, and after consulting any authority, department or

ministry, as he may, in his discretion, decide, determine whether the licence should or should not be

granted.

6.The regional director may also direct the company to insert in its memorandum, or in its articles, or in

both, such conditions of the licence as may be specified by him in this behalf.

IV. Special Licensing

In addition to registration, a non-profit engaged in certain activities might also require special

license/permission. Some of these include (but are not limited to):

A place of work in a restricted area (like a tribal area or a border area requires a special permit – the

Inner Line Permit – usually issues either by the Ministry of Home Affairs or by the relevant local authority

(i.e., district magistrate).

To open an office and employ people, the NGO should be registered under the Shop and Establishment

Act.

To employ foreign staff, an Indian non-profit needs to be registered as a trust/society/company, have

FCRA registration and also obtain a No Objection Certificate. The intended employee also needs a work

visa.

A foreign non-profit setting up an office in India and wanting staff from abroad needs to be registered as

a trust/society/company, needs permission from the Reserve Bank of India and also a No Objection

Certificate from the Ministry of External Affairs.

Comparision among Trust, Society and Non profit Company

Trust Society Section-25

Comapny

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Statute/Legislation Relevant State Trust Act

or Bombay Public Trusts

Act, 1950

Societies Registration Act,

1860

Indian Companies

Act, 1956

Jurisdiction Deputy Registrar/Charity

commissioner

Registrar of societies

(charity commissioner in

Maharashtra).

Registrar of

companies

Registration As trust As Society

In Maharashtra, both as a

society and as a trust

As a company u/s 25

of the Indian

Companies Act.

Registration

Document

Trust deed Memorandum of

association and rules and

regulations

Memorandum and

articles of

association. and

regulations

Stamp Duty Trust deed to be

executed on non-judicial

stamp paper, vary from

state to state

No stamp paper required

for memorandum of

association and rules and

regulations.

No stamp paper

required for

memorandum and

articles of

association.

Members Required Minimum – two trustees.

No upper limit.

Minimum – seven

managing committee

members. No upper limit.

Minimum three

trustees. No upper

limit.

Board of Management Trustees / Board of

Trustees

Governing body or

council/managing or

executive committee

Board of directors/

Managing committee

Mode of Succession on

Board of Management

Appointment or Election Appointment or Election

by members of the

general body

Election by members

of the general body

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NGO Registration Methods - 2

1. Trust 2. Society, and 3. Non profit Company

I. Summary

A. Types of Organizations:

1. Trusts

The public charitable trust is a possible form of not-for-profit entity in India. Typically, public

charitable trusts can be established for a number of purposes, including the relief of poverty,

education, medical relief, provision of facilities for recreation, and any other object of general public

utility. Indian public trusts are generally irrevocable. No national law governs public charitable

trusts in India, although many states (particularly Maharashtra, Gujarat, Rajasthan, and Madhya

Pradesh) have Public Trusts Acts.

2. Societies

Societies are membership organizations that may be registered for charitable purposes. Societies

are usually managed by a governing council or a managing committee. Societies are governed by the

Societies Registration Act 1860, which has been adapted by various states. Unlike trusts, societies

may be dissolved.

3. Sec. 25 Companies

A section 25 company is a company with limited liability that may be formed for "promoting

commerce, art, science, religion, charity or any other useful object," provided that no profits, if any,

or other income derived through promoting the company's objects may be distributed in any form

to its members.

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B. Tax Laws

India ’s tax laws affecting NGOs are similar to the tax laws of other Commonwealth nations. These

laws may have some impact on U.S. grantmakers, and thus are summarized here.

India provides for exemption from corporate income taxes of the income of certain NGOs carrying

out specific types of activities, with unrelated business income being subject to tax under certain

circumstances.

India also subjects certain sales of goods and services to VAT, with a fairly broad range of exempt

activities. The rates range from 4 percent to 12 percent, with most goods and services taxed at 8

percent.

The income tax law and the corporate tax law provide tax benefits for donors, and these may be

relevant to an American corporation doing business in India in deciding whether to engage in direct

corporate grantmaking in India. The existence of a double taxation treaty between India and the

United States may also affect gift planning decisions of U.S. corporate grantmakers doing business in

India.

Finally, not-for-profit organizations involved in relief work and in the distribution of relief supplies to

the needy are 100% exempt from Indian customs duty on the import of items such as food,

medicine, clothing and blankets. Other exemptions may also be available.

II. Applicable Laws

Constitution of India Articles 19(1)(c) and 30;

Income Tax Act, 1961;

Public Trusts Acts of various states;

Societies Registration Act, 1860;

Indian Companies Act, 1956, section 25;

Foreign Contribution (Regulation) Act, 1976;

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Maharashtra Value Added

III. Relevant Legal Forms

The right of all citizens to form associations or unions is guaranteed by the Constitution of India,

Article 19(1)(c).

There are three pertinent legal forms of not-for-profit entities under Indian law: trusts, societies,

and section 25 companies (as well as cooperatives and trade unions, which, as mutual benefit

organizations, are not discussed in this note). Many state and central government agencies have

regulatory authority over these not-for-profit entities. For example, all not-for-profit organizations

are required to file annual tax returns and audited account statements with various agencies. At the

state level, these agencies include the Charity Commissioner (for trusts), the Registrar of Societies

(referred to in some states by different titles, including the Registrar of Joint Stock Companies), and

the Registrar of Companies (for section 25 companies). At the national or federal level, the

regulatory bodies include the income tax department and Ministry of Home Affairs (only for not-for-

profit organizations receiving foreign contributions).

1. Trusts

Public charitable trusts, as distinguished from private trusts, are designed to benefit members of an

uncertain and fluctuating class. In determining whether a trust is public or private, the key question

is whether the class to be benefited constitutes a substantial segment of the public. There is no

central law governing public charitable trusts, although most states have "Public Trusts Acts."

Typically, a public charitable trust must register with the office of the Charity Commissioner having

jurisdiction over the trust (generally the Charity Commissioner of the state in which the trustees

register the trust) in order to be eligible to apply for tax-exemption.

In general, trusts may register for one or more of the following purposes:

Relief of Poverty or Distress;

Education;

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Medical Relief;

Provision for facilities for recreation or other leisure -time occupation (including assistance for such

provision), if the facilities are provided in the interest of social welfare and public benefit; and

The advancement of any other object of general public utility, excluding purposes which relate

exclusively to religious teaching or worship.

At least two trustees are required to register a public charitable trust. In general, Indian citizens

serve as trustees, although there is no prohibition against non-natural legal persons or foreigners

serving in this capacity.

Legal title of the property of a public charitable trust vests in the trustees. Trustees of a public

charitable trust may not, however, in any way use trust property or their position for their own

interest or private advantage. Trustees may not enter into agreements in which they may have a

personal interest that conflicts or may possibly conflict with the interests of the beneficiaries of the

trust (whose interests the trustees are bound to protect). Trustees may not delegate any of their

duties, functions or powers to a co-trustee or any other person, except that trustees may delegate

ministerial acts. In essence, trustees may not delegate authority with respect to duties requiring the

exercise of discretion.

Trustees of religious or charitable trusts are charged with discharging their duties with the degree of

care that an ordinarily prudent person would exercise with respect to his personal property. This is a

slight variant on the duty of care applicable in many U.S. jurisdictions, which requires directors and

officers to act with the degree of diligence, care and skill that ordinarily prudent persons would

exercise under similar circumstances in like positions (as opposed to in the management of their

personal affairs). Public charitable trusts are highly regulated. For instance, in many states,

purchases or sales of property by a trust must be approved in advance by the Charity Commissioner.

Indian public charitable trusts are generally irrevocable. If a trust becomes inactive due to the

negligence of its trustees, the Charity Commissioner may take steps to revive the trust.

Furthermore, if it becomes too difficult to carry out the objects of a trust, the doctrine of cy pres,

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meaning "as near as possible," may be applied to change the objects of the trust. Thus, it appears

that grantors can feel fairly secure that the charitable nature of a trust will be honored, even if the

original, specific purposes of the trust cannot be carried out.

2. Societies

Societies are governed by the Societies Registration Act 1860, which is an all-India Act. Many states,

however, have variants on the Act.

Societies are similar in character to trusts, although there a few essential differences. While only

two individuals are required to form a trust, a minimum of seven individuals are required to form a

society. The applicants must register the society with the state Registrar of Societies having

jurisdiction in order to be eligible to apply for tax-exempt status. A registration application includes

the society's memorandum of association and rules and regulations. In general, Indian citizens serve

as members of the managing committee or governing council of societies, although there is no

prohibition in the Societies Registration Act against non-natural legal persons or foreigners serving in

this capacity.

According to section 20 of the Act, the types of societies that may be registered under the Act

include, but are not limited to, the following:

Charitable societies;

Societies established for the promotion of science, literature, or the fine arts,

For education; and

Public art museums and galleries, and certain other types of museums.

The governance of societies also differs from that of trusts; societies are usually managed by a

governing council or managing committee, whereas trusts are governed by their trustees.

Individuals or institutions or both may be members of a society. The general body of members

delegates the management of day-to-day affairs to the managing committee, which is usually

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elected by the membership. Members of the general body of the society have voting rights and can

demand the submission of accounts and the annual report of the society for inspection. Members of

the managing committee may hold office for such period of time as may be specified under the

bylaws of the society.

Societies, unlike trusts, must file annually, with the Register of Societies, a list of the names,

addresses and occupations of their managing committee members. Furthermore, in a society, all

property is held in the name of the society, whereas all of the property of a trust legally vests in the

trustees.

Unlike trusts, societies may be dissolved. Dissolution must be approved by at least three-fifths of the

society's members. Upon dissolution, and after settlement of all debts and liabilities, the funds and

property of the society may not be distributed among the members of the society. Rather, the

remaining funds and property must be given or transferred to some other society, preferably one

with similar objects as the dissolved entity.

3. Companies

The Indian Companies Act, 1956, which principally governs for-profit entities, permits certain

companies to obtain not-for-profit status as "section 25 companies." A section 25 company may be

formed for "promoting commerce, art, science, religion, charity or any other useful object." A

section 25 company must apply its profits, if any, or other income to the promotion of its objects,

and may not pay a dividend to its members. At least three individuals are required to form a section

25 company. The founders or promoters of a section 25 company must submit application materials

to the Regional Director of the Company Law Board. The application must include copies of the

memorandum and articles of association of the proposed company, as well as a number of other

documents, including a statement of assets and a brief description of the work proposed to be done

upon registration.

The internal governance of a section 25 company is similar to that of a society. It generally has

members and is governed by directors or a managing committee or a governing council elected by

its members.

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Like a society (but unlike a trust), a section 25 company may be dissolved. Upon dissolution and

after settlement of all debts and liabilities, the funds and property of the company may not be

distributed among the members of the company. Rather, the remaining funds and property must be

given or transferred to some other section 25 company, preferably one having similar objects as the

dissolved entity.

Public Benefit Status

To be eligible for tax-exemption under the Income Tax Act, 1961, a not-for-profit entity must be

organized for religious or charitable purposes. Charitable purposes include "relief of the poor,

education, medical relief and the advancement of any other object of general public utility."

Public charitable trusts, by definition, must be created for the benefit of the public. Societies

likewise may be registered for charitable purposes. Section 25 companies are formed for the limited

purposes of "promoting commerce, art, science, religion, charity or any other useful object."

IV. Specific Questions Regarding Local Law

The following discussion addresses the extent to which Indian not-for-profit entities satisfy the

requirements for a charitable equivalency determination under section 501(c)(3) of the U.S. Internal

Revenue Code of 1986, as amended (hereinafter the "Code"). The discussion is limited to the

minimum requirements under Indian law; the governing documents of charitable entities may of

course choose to include further provisions, which may satisfy the requirements of an equivalency

determination. U.S. private foundation donors should, therefore, also review a potential grantee's

governing documents for provisions relevant to an equivalency determination.

A. Inurement

Public charitable trusts must benefit a large class of beneficiaries and must be for the public benefit.

Moreover, trustees of public charitable trusts may not engage in self-dealing. Despite the clear

charitable intent of a public charitable trust, absent a provision in the trust deed specifically

prohibiting private inurement, it is unclear whether public charitable trusts satisfy the prohibition on

private inurement in Code section 501(c)(3).

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The Societies Registration Act 1860 does not prohibit the inurement of any earnings of the society to

any private shareholder or individual.

The Indian Companies Act, 1956, section 25 specifically provides that no profits, if any, or other

income may be distributed by way of dividends to its members.

B. Proprietary Interest

Whether an individual may have a proprietary interest in a not-for-profit entity relates to the issue

of inurement. Trustees of a public charitable trust hold trust assets on behalf of the trust. Thus,

although trustees have legal title to the trust's assets, they hold these assets for the beneficiaries of

the trust, not for themselves. Members of the managing committee or governing council of a

society or section 25 company hold the assets of a society or section 25 company.

C. Dissolution

Indian public charitable trusts are generally irrevocable. If a trust becomes inactive due to the

negligence of its trustees, the Charity Commissioner may take steps to revive the trust.

Furthermore, if it becomes too difficult to carry out the objects of a trust, the doctrine of cy pres,

meaning "as near as possible," may be applied to change the objects of the trust. Thus, it appears

donors could feel fairly secure in the event the trust can no longer accomplish its initial purposes;

the trust's purposes would be changed to another similar public charitable purpose, or in the

unlikely event of a distribution or winding up of a trust due to changed circumstances, the trust

assets would be used for similar charitable purposes.

Unlike trusts, societies and section 25 companies may be dissolved. Upon dissolution and after

settlement of all debts and liabilities, the funds and property of the society or company may not be

distributed among the members. Instead, the remaining funds and property must be given or

transferred to some other society or section 25 company, preferably one with similar objects.

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D. Activities

Economic Activities

There are no restrictions on Indian NPOs’ business/commercial/economic activities. However, the

profits must be applied fully towards charitable objects. If this is not done, then the NPO will lose its

income tax exemption and its income will be liable to tax at the maximum marginal rate (35.1%).

Further the NPO must maintain separate books of account for the business/commercial/economic

activities. [Income Tax Act, 1961 (seventh proviso to section 10(23C); section 11, subsection 4 and

4A)].

Investment Activities

State and national laws limit the types of investments Indian not-for-profit organizations may make.

For example, Indian not-for-profit organizations may not invest in shares of public or private limited

companies. Furthermore, not-for-profit organizations registered in India may not invest abroad.

E. Political Activities

Not-for-profit organizations in India may not engage in political campaign activities or legislative

activities. Indian not-for-profit entities may "lobby" for non-political causes, however, provided that

such activity promotes the "general public utility" and is incidental to the attainment of the charity's

objects.

F. Discrimination

Article 30 of the Constitution of India gives all "minorities," whether based on religion or language,

the right to establish and administer educational institutions of their choice. "Minority" is defined as

those groups that wish to preserve stable ethnic, religious or linguistic traditions or characteristics

markedly different from those of the rest of the population. Accordingly, special inquiry should be

made when donors are considering providing grants to educational institutions.

G. Control of Organization

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With regard to charities in general, trustees are expected to be independent. It is, however,

ordinarily possible for another legal person to influence the selection of directors, officers, or

trustees – for example, by making a donation contingent on the donor's right to appoint a member

of the board.

A for-profit company that creates a public charitable trust can exert more direct control. The for-

profit company could, in the process of founding the public charitable trust, reserve the authority to

appoint and remove trustees and to influence major policy decisions. This is typical of a form of

public charitable trust known as a "corporate foundation," which is essentially controlled by its for-

profit founder, or "settlor."

In the case of a Section 25 company or a society, members always have the right to remove directors

and thus to influence policy. These members can include for-profit entities.

Therefore, it is possible that an Indian charity may be controlled, perhaps indirectly, by a for-profit

entity (which will lead to additional IRS scrutiny) or by an American grantor charity (which requires

that the charity specifically so provide in the affidavit).

V. Tax Laws

A. Tax Exemptions

1. General Scheme

The Income Tax Act, 1961, which is a national all-India Act, governs tax exemption of not-for-profit

entities. Organizations may qualify for tax-exempt status if the following conditions are met:

The organization must be organized for religious or charitable purposes;

The organization must spend 85% of its income in any financial year (April 1st to March 31st) on the

objects of the organization. The organization has until 12 months following the end of the financial

year to comply with this requirement. Surplus income may be accumulated for specific projects for a

period ranging from 1 to 5 years;

The funds of the organization must be deposited as specified in section 11(5) of the Income Tax Act;

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No part of the income or property of the organization may be used or applied directly or indirectly

for the benefit of the founder, trustee, relative of the founder or trustee or a person who has

contributed in excess of Rs. 50,000 to the organization in a financial year;

The organization must timely file its annual income return; and

The income must be applied or accumulated in India. However, trust income may be applied outside

India to promote international causes in which India has an interest, without being subject to income

tax.

2. Corpus Donations

Corpus donations or donations to endowment are capital contributions and should not be included

to compute the total income of the organization.

3. Business Income

Under amendments to Section 11(4A) of the Income Tax Act 1961, a not-for-profit organization is

not taxed on income from a business that it operates that is incidental to the attainment of the

objects of the not-for-profit organization, provided the entity maintains separate books and

accounts with respect to the business. Furthermore, certain activities resulting in profit, such as

renting out auditoriums, are not treated as income from a business.

4. Disqualification from Exemption

The following groups are ineligible for tax exemption: all private religious trusts; and charitable

trusts or organizations created after April 1, 1962, and established for the benefit of any particular

religious community or caste. But note that a trust or organization established for the benefit of

"Scheduled Castes, backward classes, Scheduled Tribes or women and children" is an exception;

such a trust or organization is not disqualified, and its income is exempt from taxation.

B. Value Added Tax

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India subjects certain sales of goods and services to VAT, with a fairly broad range of exempt

activities. The rates range from 4 percent to 12 percent, with most goods and services taxed at 8

percent.

An entity (including a public charitable trust) is liable under the VAT Act if its sales/purchase turnover

in the previous year exceeded Rs.500,000. The threshold is lower, Rs.100,000, for importers.

Several other tax laws have now merged into VAT, including Sales Tax Act, Motor Spirit Taxation Act,

Purchase Tax on Sugarcane Act, and Transfer of Right to Use Act.

C. Tax Deduction for Donors

The Income Tax Act, section 80G, sets forth the types of donations that are tax-deductible. The Act

permits donors to deduct contributions to trusts, societies and section 25 companies. Many

institutions listed under 80G are government-related; donors are entitled to a 100% deduction for

donations to some of these government funds. Donors are generally entitled to a 50% deduction for

donations to non-governmental charities. Total deductions taken may not exceed 10% of the

donor's total gross income.

The following are examples of governmental charities listed in section 80G, contributions to which

entitle the donor to a 100% deduction: the Prime Minister's National Relief Fund; the Prime

Minister's Armenia Earthquake Relief Fund; the Africa (Public Contributions – India) Fund; and the

National Foundation for Communal Harmony.

As to those entities not specifically enumerated in section 80G, donors may deduct 50% of their

contributions to such organizations, provided the following conditions are met:

the institution or fund was created for charitable purposes in India;

the institution or fund is tax-exempt;

the institution's governing documents do not permit the use of income or assets for any purpose

other than a charitable purpose;

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the institution or fund is not expressed to be for the benefit of any particular religious community or

caste; and

the institution or fund maintains regular accounts of its receipts and expenditure.

Note that donations to institutions or funds "for the benefit of any particular religious community or

caste" are not tax-deductible. A not-for-profit organization created exclusively for the benefit of a

particular religious community or caste may, however, create a separate fund for the benefit of

"Scheduled castes, backward classes, Scheduled Tribes or women and children." Donations to these

funds may qualify for deduction under section 80G, even though the organization, as a whole, may

be for the exclusive benefit of only a particular religious community or caste. The organization must

maintain a separate account of the monies received and disbursed through such a fund.

In-kind donations are not tax-deductible under Section 80G. Receipts issued to donors by not-for-

profit organizations must bear the number and date of the 80G certificate and indicate the period

for which the certificate is valid.

The Income Tax Act contains a number of other provisions permitting donors to deduct

contributions. Under section 35AC of the Act, donors may deduct 100% of contributions to various

projects, including 1) construction and maintenance of drinking water projects in rural areas and in

urban slums; 2) construction of dwelling units for the economically disadvantaged; and 3)

construction of school buildings, primarily for economically disadvantaged children. Furthermore,

under section 35CCA of the Act, donors may deduct 100% of their contributions to associations and

institutions carrying out rural development programs and, under Section 35CCB of the Act, 100% of

their donations to associations and institutions carrying out programs of conservation of natural

resources. A weighted deduction of 125% is also allowed for contributions to organizations

approved under section 35(1)(ii) (a scientific research institute or a university, college or other

institution) specifically for "scientific research," and for contributions made under section 35(1)(iii)

specifically for "research in social science or statistical research."

D. Reporting Foreign Contributions

Under the Foreign Contribution (Regulation) Act, 1976 (FCRA), all not-for-profit organizations in India

(e.g., public charitable trusts, societies and section 25 companies) wishing to accept foreign

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contributions must a) register with the Central Government; and b) agree to accept contributions

through designated banks. Furthermore, not-for-profit entities must report to the Central

Government regarding foreign contributions received, within 30 days of their receipt, and must file

annual reports with the Home Ministry. The entity must report the amount of the foreign

contribution, its source, the manner in which it was received, the purpose for which it was intended,

and the manner in which it was used. Foreign contributions include currency, securities, and

articles, except personal gifts under Rs. 1,000 (approximately $20). Funds collected by an Indian

citizen in a foreign country on behalf of a not-for-profit entity registered in India are considered

foreign contributions. Moreover, funds received in India, in Indian currency, if from a foreign source,

are considered foreign contributions.

According to FC(R)A guidelines if 50% or more of the “office bearers” (not members of the board of

management) of a trust/society or section 25 Company change, the organization must apply to the

Home Ministry for approving the change. This approval could take as long as three to four months.

However, in the interim period, the FC(R)A registration granted to the organization would stand

“suspended”.

FC(R)A guidelines require that an organization allowed to receive funds from a foreign source, may

provide funds from its FC(R)A account to another organization, only if the other organization also has

clearance from the Home Ministry to receive funds from a foreign source.

If the foreign donor agency specifies in writing that the whole or part of the grant may be taken to

“corpus”, the recipient organization may do so. Such corpus fund may be invested in an approved

security.

The “interest” or “dividend” generated should be accounted for as amount received by way of

interest on deposit drawn out of funds received from a foreign source.

In other words, even the interest/dividend received in India in Indian rupees must be disclosed in the

Return Form FC-3.

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E. Customs Duty

Not-for-profit organizations involved in relief work and in the distribution of relief supplies to the

needy are 100% exempt from customs duty on the import of items such as food, medicine, clothing

and blankets. Moreover, other exemptions may be available, such as an exemption from customs

duty for scientific/technical equipment and components intended for research institutes. Donors

should investigate whether an exemption from customs duty is available before shipping articles to

not-for-profit entities in India.

F. Double Tax Treaty

India and the United States signed a double-tax treaty on September 12, 1989. The treaty does not

address issues related to charitable giving or not-for-profit entities.

(Source: http://www.usig.org/countryinfo/india.asp)

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http://www.usig.org/countryinfo/india.asp

Formation of Charitable Trust

1. Introduction

A public charitable or religious institution can be formed either as a Trust or as a

Society or as a Company registered u/s 25 of the Companies Act.

It generally takes the form of a trust when it is formed primarily by one or more

persons.

To form a Society at least seven persons are required. Institutions engaged in

promotion of art, culture, commerce etc. are often registered as non-profit

companies.

These forms are enumerated as under :

1. Charitable Trust settled by a settlor by a Trust Deed or under a Will.

2. Charitable or religious institution / association can be formed as a society.

3. Charitable institution can be formed by registering as a company u/s. 25 of

the Companies Act, 1956, as non profit company (without addition to their

name, the word "Limited" or "Private Limited").

2. Who can form a Charitable or Religious Trust

As per section 7 of the Indian Trusts Act, a trust can be formed –

a. by every person competent to contract, and

b. by or on behalf of a minor, with the permission of a principal civil court of

original jurisdiction.

but subject in each case to the law for the time being in force as to the

circumstances and extent in and to which the Author of the Trust may dispose of

the Trust property.

A person competent to contract is defined in section 11 of the Indian Contract Act

as a person who is of the age of majority according to the law to which he is

subject and who is of sound mind and is not disqualified from contracting by any

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law to which he is subject. Thus, generally speaking, any person competent to

contract and competent to deal with property can form a trust.

Besides individuals, a body of individuals or an artificial person such as an

association of persons, an institution, a limited company, a Hindu undivided family

through it's karta, can also form a trust.

It may, however, be noted that the Indian Trusts Act does not apply to public

trusts which can be formed by any person under general law. Under the Hindu

Law, any Hindu can create a Hindu endowment and under the Muslim law, any

Muslim can create a public wakf. Public Trusts are essentially of charitable or

religious nature, and can be constituted by any person.

Capacity to create a Trust

As a general rule, any person, who has power of disposition over a property, has capacity

to create a trust of such property. According to section 7 of the Transfer of Property Act,

1882, a person who is competent to contract and entitled to transfer the property or

authorized to dispose of transferable property not his own, either wholly or in part and

either absolutely or conditionally, has 'power of disposition of property'.

Thus, two basic things are required for being capable of forming a trust –

a. power of disposition over property; and

b. competence to contract.

Who can be a Trustee

Every person capable of holding property can become a trustee. However, where the

trust involves the exercise of discretion, he can accept or act as a trustee only if he is

competent to contract. No one is bound to accept trusteeship. Any number of persons

may be appointed as trustees. However, no trust is defeated for want of a trustee. Where

there is no trustee in existence, an official trustee may be appointed by the court and the

trust can be administered. An executor of a Will may become a trustee by his dealing

with the assets under the provisions of the Will. When an executor is functus officio to

any of the assets and yet retains them, he becomes a trustee in respect of those assets.

Who can be a Beneficiary

In a private trust the beneficiaries are one or more ascertainable individuals. In a public

trust the beneficiaries are a body of uncertain or fluctuating individuals and may consist

22

of a class of the public or the whole public. Generally, a private trust is not a permanent

one. But a public trust is of a permanent nature. If properties are dedicated to temples

and mosques or gifts are made to religious or charitable institutions they create a trust.

Subject matter of Trust

Any property capable of being transferred can be a subject matter of a trust.

Section 8 of the Indian Trust Act, however, provides that mere beneficial interest

under a subsisting trust cannot be made the subject matter of another trust.

In the case of J.K. Trust vs. CIT (1957) 32 ITR 535 (S.C.), the Supreme Court had

held that the word " property" under the Trusts Act is of the widest import and a

business undertaking will undoubtedly be a property so that a running business

can be made a subject matter of trust. This view has been followed in the case of

in CIT vs. P. Krishna Warriar (1964) 53 ITR 176 (SC).

Business may be a taboo for charitable institution from the point of view of

exemption for income tax purposes. From time to time, the law has undergone a

change as to what business is permitted and under what circumstances. The

present law permits only such business which is incidental to attainment of the

objects of the trust or the institution, subject to the condition that separate

account books are maintained for such business as prescribed under sub-section

4A of section 11 of I.T. Act.

Requisites of a Trust

1. The existence of the author/settlor of the trust or someone at whose

instance the trust comes into existence.

2. Clear intention of the author/settlor to create a trust.

3. Purpose of the Trust.

4. The Trust property

5. Beneficiaries of the Trust.

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6. There must be divesting of the ownership by the author / settlor of the

trust in favour of the beneficiary or the trustee.

Unless all these requisites are fulfilled a trust cannot be said to have come into

existence.

Essentials of a valid Charitable or Religious Trust

There are four essential elements of a valid charitable or religious trust –

i. Charitable or Religious Object : The object or purpose of the trust must

be a valid religious or charitable purpose according to law ;

ii. Capacity to create Trust : The founder or settlor should be capable of

creating a trust and dedicating his property to that trust;

iii. Certainty of Object and Dedication thereto : The settlor should

indicate precisely the object of the trust and the property in respect of

which it is made. The property should be dedicated to the trust and the

owner must divest himself of the ownership of that property.

iv. Concurrence with the law : The trust or its objects must not be opposed

to the provisions of any law for the time being in force.

Instrument of trust – i.e., trust deed

The instrument by which the trust is declared is called instrument of Trust, and is

generally known as Trust Deed.

It is well settled that no formal document is necessary to create a Trust as held

in Radha Soami Satsung vs. CIT- (1992) 193 ITR 321 (SC). But for many practical

purposes a written instrument becomes necessary under following cases –

1. When the trust is created by a will irrespective of whether the trust is

public or private or it relates to movable or immovable property. This is

because as per Indian Succession Act, a will has to be in writing

2. When the trust is created in relation to an immovable property of the value

of Rs.100 and upwards, in case of a private trust. In case of public trusts, a

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written trust deed is not mandatory, even in respect of immovable

property, but is optional.

3. Where the trust/association is being formed as a society or company, the

instrument of trust; i.e., the memorandum of association, and Rules and

Regulations has to be in writing.

A written trust-deed is always desirable, even if not required statutorily, due to

following benefits :

a. a written trust deed is a prima facie evidence of existence of a trust ;

b. it facilitates devolution of trust property to the trust;

c. it clearly specifies the trust-objectives which enables one to ascertain

whether the trust is charitable or otherwise;

d. it is essential for registration of conveyance of immovable property in

name of the Trust;

e. it is essential for obtaining registration under the Income-tax Act and

claiming exemption from tax;

f. it helps to control, regulate and manage the working and operations of the

trust;

g. it lays down the procedure for appointment and removal of the trustee(s),

his/their powers, rights and duties; and

h. it prescribes the course of action to be followed under any eventuality

including dissolution of the trust.

Types of Instrument of Trust

1. Trust deed, where a trust is declared intervivos; i.e., by settling property

under Trust.

2. A will, where a trust is declared under a will;

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3. A memorandum of association along with rules and regulations, when the

association/institution is being formed as a society under the Societies

Registration Act, 1860.

4. A memorandum and articles of association where the association

/institution is desired to be formed as a Company.

Trust Deed-Clauses

A person drafting the deed of a public charitable trust has to bear in mind several

enactments, particularly the Indian Trusts Act, any local enactment relating to trusts, like

the Bombay Public Trusts Act for the State of Maharashtra and the Income tax Act. Such

a person has also to keep in mind the relevant judicial pronouncements dealing with the

scope of "charitable purpose" and accordingly decide whether a particular purpose is

charitable or not. An instrument of Trust

or association/institution created or established should contain inter alia the following

clauses:

1. Nothing contained in this deed shall be deemed to authorise the trustees

to do any act which may in any way be construed as statutory

modifications thereof and all activities of the trust shall be carried out with

a view to benefit the public at large, without any profit motive and in

accordance with the provisions of the Income-tax Act, 1961 or any

statutory modification thereof.

2. The trust is hereby expressly declared to be a public charitable trust and

all the provisions of this deed are to be construed accordingly.

The Trust Deed, generally contains the following clauses :

3. Preamble

4. Trust name by which Trust shall be known

5. Place were its office shall be situated

6. Author or settlor of the trust

7. Names of the Trustees

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8. Beneficiaries

9. The property settled, for Trust – In case of immovable property, it should

contain full description of the property sufficient to identify it

10. An express intention to direct the trust property from the trustees

11. The objects of the Trust

12. Minimum and maximum number of Trustees

13. The procedure for appointment, removal, replacement of trustees

14. Trustees rights, duties and powers

15. Administration of trust

16. Provision for maintenance of accounts, auditing etc.

17. Clause enabling, spending and utilization of the Trust funds or corpus.

18. Bank Account operations

19. Borrowing money on security for the purpose of the Trust

20. Investment of the Trust funds and dealing with Trust properties

21. Alienation of immovable property of the Trust

22. Amalgamation clause

23. Dissolution of Trust

24. Irrevocable nature of the trust.

Registration of Charitable Trust

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1. Registration of Public Trust (Sec. 18 of Bombay Public

Trust Act)

1.It shall be the duty of the trustee of a public trust to which this Act has

been applied to make an application for the registration of the public

trust.

2.Such application shall be made to the Deputy or Assistant Charity

Commissioner of the region or sub-region within the limits of which the

trust has an office for the administration of the trust or the trust

property or substantial portion of the trust property is situated, as the

case may be.

3.Such application shall be in writing, shall be in such form and

accompanied by such fee as may be prescribed.

4.The application shall be made within 3 months of creation of the Public

Trust.

5.The application shall inter alia contain the full detail as prescribed in

the form of Schedule II – (under Rule-6).

6.Every application made under sub-section (1) shall be signed and

verified in the prescribed manner by the trustee or his agent specially

authorized by him in this behalf. It shall be accompanied by a copy of

an instrument of trust, if such instrument has been executed and is in

existence.

6A.Where on receipt of such application, it is noticed that the application

is incomplete in respect of any particulars, or does not disclose full

particulars of the public trust, the Deputy or Assistant Charity

Commissioner may return the application to the trustee, and direct the

trustee to complete the application in all respects or disclose therein

the full particulars of the trust, and resubmit it within the period

specified in such direction; and it shall be the duty of the trustee to

comply with the direction.

7.It shall also be the duty of the trustee of the public trust to send

memorandum in the prescribed form containing the particulars,

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including the name and description of the public trust, relating to the

immovable property of such public trust, to the Sub-Registrar of the

sub-district appointed under the Indian Registration Act, 1908, in which

such immoveable property is situated for the purpose of filing in Book

No.I under section 89 of that Act.

2. Such memorandum shall be sent within three months from the date of

creation of the public trust and shall be signed and verified in the

prescribed manner by the trustee or his agent specially authorized by him

in this behalf.

3. When the Registering Officer is satisfied that the provisions of the Act as

applicable to the document presented for registration have been complied

with, he shall endorse thereon a certificate containing the word

"registered", together with the number and page of the book in which the

document has been copied. Such certificate shall be signed, sealed and

dated by the Registering Officer, and shall then be the conclusive evidence

that the Trust has been duly registered. A registered trust deed shall

become operative (retrospectively) from the date of its execution.

4. Procedure for registration

The following documents are required to be filed for registration of a

Charitable Trust.

1. Covering Letter

2. Application Form in Form –Schedule II under rule 6 duly notarised

3. Court fee stamp of Rs. 2/- to be affixed on application form

4. Certified copy of the Trust Deed

5. Consent letter of Trustees. (Blank Form enclosed)

The office of the Charity Commissioner maintains a register containing all

details of the Trust; viz., Reg.No., name and address of the Trust, names of

all the Trustees (Past & Present), mode of succession of Trusteeship

objects of the Trust, particulars of documents creating a Trust, description

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of movable and immovable properties, particulars of encumbrances on

trust property etc. This register is known as P.T.Register. A certified copy

of the P.T. Registrar in Schedule-I (vide Rule 5) can be obtained by

applying in simple application with Rs.10/- Court fee stamp by paying

prescribed fees for the same. It is advisable for all the trusts to have a

certified copy of P.T. Register entry.

Registration under the Societies Registration Act

Society as a form of charitable institution will be suitable, where a large number of

contributors making regular contributions would require some kind of indirect controls by

the office bearers. The best examples are professional organizations.

The Charity Commissioner is also an authority to register such organizations as a

society. When a trust is constituted as a society, it is required to be registered

under the Societies Registration Act, 1860.

After the Memorandum and Rules and Regulations of the Society have been

drafted, signed and witnessed in the prescribed manner, the members should

obtain the registration of the society. For the purpose of registration as society,

following documents are required to be filed :

a. Letter requesting for registration stating in the body of the letter various

documents annexed to it. The letter is to be signed by all the subscribers

to the Memorandum or by a person duly authorised by all of them to sign

on their behalf.

b. Memorandum of Association, in duplicate, neatly typed and pages serially

numbered.

c. Rules and Regulations in duplicate.

d. Where there is a reference to any particular existing places of worship like

temple, mosque, church, etc., sufficient documentary proof establishing

legal competence and control of applicant society over such places should

be filed.

e. An affidavit of the President or Secretary of the society, on a non-judicial

stamp paper of prescribed value, stating the relationship between the

subscribers, duly attested by an Oath Commissioner, Notary Public or First

Class Magistrate.

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f. Documentary proof of address such as House Tax receipt, rent receipt in

respect of premises shown as Registered Office of the society or no

objection certificate from the landlord of the premises.

If the Registrar is satisfied with the documents filed, he then requires the

applicant society to deposit the registration fee. Normally, registration fee is Rs.

50, payable in cash or by demand draft. After the registration formalities have

been completed and the Registrar is satisfied that the provisions of the Act have

been complied with, he issues a certificate of Registration. Certified copies of the

Rules and Regulations and Memorandum can be obtained by making simple

application.

An entity registered under the Societies Act also gets registration under the local

Public Trusts Act; i.e., Bombay Public Trusts Act by making an application

simultaneously as mentioned above in case of trust deed. This is so because the

definition of a Public Trust in Bombay Public Trusts Act includes a " Society "

which is registered under the Societies Registration Act.

Registration under Companies Act

A charitable institution/association can be registered as a non-profit company and obtain

a licence u/s 25 of the Companies Act. For obtaining a licence, the association has to first

apply for availability of name to the Registrar of Companies of the State in which it wants

to get itself registered. The application should be made in Form 1-A and the guidelines

issued in this regard should be followed. As soon as the letter of approval of name is

received from the Registrar, proceed for incorporation, as follows :

The institution/associations should apply to Regional Director, Registrar of

Companies of the region by a letter along with following documents.

i. Three typewritten copies of draft Memorandum and Articles of Association

of the proposed company. No stamp duty is payable.

ii. List of names, addresses, description and occupation of the promoters in

triplicate.

iii. List of companies, associations and other institutions in which promoters

are directors or hold responsible positions, with description of positions

held.

iv. List of members of the proposed board of Directors.

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v. Declaration in the prescribed form by an Advocate, Attorney, Pleader,

Chartered Accountant or a whole time practising Company Secretary, on a

non-judicial stamp paper of appropriate value.

vi. Copies of accounts, balance sheet and reports on working of association

for last two financial years ( for one year only if the association has

functioned for less than two years), in triplicate.

vii. Statement of assets and liabilities.

viii. Sources of income and estimate of annual income and expenditure.

ix. A note on work already done and proposed to be done by the association.

x. Grounds in brief for making application u/s. 25.

xi. Declaration signed by each of the applicant.

xii. Certified copy of notice published in newspaper .

xiii. A draft or paid treasury challan for requisite fees for registration.

A copy of the application with all enclosures and accompanying papers should be

sent to the Registrar of Companies of the State where the association proposes to

situate its Registered Office.

After the draft Memorandum and Articles have been approved by the Regional

Director, the association should apply to the Registrar of Companies, for its

registration as a company, in Form No.1 along with printed copies of

Memorandum and Articles and other documents necessary for registration along

with a registration fee of Rs. 500/-. The Registrar then issues a certificate of

incorporation.

Registration under Income-tax Act

1. Charitable or religious trusts, societies and companies claiming exemption

under sections 11 and 12 of the Income-tax Act are required to obtain

registration under the Act. Private/family trusts are neither allowed such

32

exemption nor required to seek registration under the Income-tax Act. The

detailed procedure is as under :

2. Registration of Trust under Income-tax Act procedure for registration u/s.

12AA of I.T. Act.

1. Application for registration in Form No.10A in duplicate.

2. List of Name and Address of the Trustees

3. Copy of Registration Certificate with Charity Commissioner or copy

of application to him.

4. Certified True Copy of the Trust Deed.

5. PAN No. or Copy of application of the Trust.

6. PAN of the trustees.

3. Procedure for registration (Sec 12AA)

The Commissioner, on receipt of an application for registration of a trust or

institution made under clause (a) of section 12A, shall –

a. call for such documents or information from the trust or institution

as he thinks necessary in order to satisfy himself about the

genuineness of activities of the trust or institution and may also

make such inquiries as he may deem necessary in this behalf; and

b. after satisfying himself about the objects of the trust or institution

and the genuineness of its activities he –

i. shall pass an order in writing registering the trust or

institution;

ii. shall, if he is not so satisfied, pass an order in writing

refusing to register the trust or institution,

and a copy of such order shall be sent to the applicant.

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4. Provided that no order under sub-clause (ii) shall be passed unless the

applicant has been given a reasonable opportunity of being heard.

Registration under Foreign Contribution (Regulation) Act, 1976 (FCRA)

1. Any Charitable Trust, Society, Company, desirous of receiving any foreign

contribution from a foreign source, is required to obtain registration under

section 6(1) of FCRA Any such association which is not registered or which

has been denied registration, can receive foreign contribution only after

obtaining prior permission from home ministry of the Central Government

under section 6(1A) of the Act.

In order to obtain registration under the Foreign Contribution (Regulation)

Act, (FCRA), the applicant association should preferably be incorporated as

a legal entity, that is, as a Charitable Trust, Society, or a Company (u/s. 25)

and should have been working for a period of at least three years. The

association must not have received any foreign contribution earlier without

prior permission of the Government.

2. Application for obtaining permission to accept foreign contribution or

hospitality

1. Every individual, association, organization or other person, who is

required by or under this Act to obtain the prior permission of the

Central Government to accept any foreign contribution, or foreign

hospitality, shall before the acceptance of any such contribution or

hospitality, make an application for such permission to the Central

Government in such form and in such manner as may prescribed.

2. If an application referred to in sub-section (1) is not disposed of

within ninety days from the date of receipt of such application, the

permission prayed for in such application shall, on the expiry of the

said period of ninety days, be deemed to have been granted by the

Central Government :

PROVIDED that, where in relation to an application, the Central

Government has informed the applicant the special difficulties by

reason of which his application cannot be disposed of within the

said period of ninety days, such application shall not, until the

34

expiry of a further period of thirty days, be deemed to have been

granted by the Central Government.

An application for obtaining prior permission of the

Central Government to –

a)receive foreign contribution under sub-section (1) of section 5,

or clause (a) of sub-section (2) of that section, shall be made in

Form FC-1;

aa)receive foreign contribution under proviso to sub-section (1) of

section 6, or under sub-section (1A) of that section or clause (b)

of section 10, shall be made in Form FC-1A.

b)accept foreign hospitality under section 9 or clause (d) of

section 10, shall be made in Form FC-2.

2. Application for registration

An application for registration of an association referred to in sub-section

(1) of section 6 for acceptance of foreign contribution shall be made in

Form FC-8.

Transfer of Movable Property to Trust

A trust in relation to movable property, can be formed also by mere transfer of ownership

of the property to the trustee, with a direction that the property be held under trust for

the benefit of the beneficiaries. The ownership of a movable property can be transferred

by physical act of handing over the possession of the property. The transfer of any

symbol of ownership will be deemed sufficient, such as the key of the godown where the

property is stored, or the deposit certificate of a Bank wherein the securities are lodged.

Where the author himself is the trustee, transfer of possession is neither

necessary nor possible; and a mere declaration of the author that he holds the

property under trust would be sufficient to constitute a trust.

Transfer of Immovable Property to Trust

An immovable property can be transfered to the Trust, either by way of settling the

property through a Will or Deed or by way of donating the same to the existing Trust. In

all the cases the instrument should be in writing and it should contain complete

35

description of the property so as to clearly identify the property. The title of property

should be clear to be transferable to the Trust. It should be free from mortgage and

litigation. The instrument by which the immovable property is desired to be introduced to

Trust is required to be registered, then only the property can be conveyed in favour of

the Trust.

An intimation in the form of change report is required to be sent to the Charity

Commissioner so as to record an entry in the P.T.Register. The entry in this record

is conclusive evidence that the particular immovable property belongs to the

Trust. This record contains description and location of the property and the area

of the property. This entry in the P.T. Register is necessary for the reason that if in

future the said property is desired to be alienated (sold) by the Trust, such an

entry is a prerequisite.

A model Trust deed and various forms for registration are enclosed herewith for

ready reference.

MODEL TRUST DEED OF A PUBLIC CHARITABLE TRUST

THIS DEED OF TRUST executed on this _______________________ day of __________________

year 20____, _______________________ BETWEEN __________________________________________

(Party of the first part) hereinafter called " SETTLOR OF THE TRUST"

________________________________________________________

________________________________________ AND _____________________________________ .

1. SHRI. S/O. SHRI , of ____________ &

2. SHRI. S/O. SHRI. , of ____________ &

3. SMT. W/O SHRI. , of ____________

(Hereinafter called " The Trustees" which expression shall unless repugnant to the

context or meaning thereof be deemed to include the survivors or survivor of them and

the trustees or trustee for the time being of these presents and their heirs, executors and

administrators of the last surviving trustee, their or his assignees) of the other part;

WHEREAS the party hereto of the first part is possessed of the sum of Rs. ___________/-

(Rs. __________ Only) as his absolute property and he is desirous of creating a Religious/

Charitable/Educational Trust for the benefit of the humanity at large.

36

AND WHEREAS each of the parties hereto of the "Other Part" has individually and jointly

has agreed to act as Trustees of the Trust, proposed by the party of the first part.

AND WHEREAS nothing contained in this deed shall be deemed to authorize the trustees

to do any act which may in any way be construed statutory modifications thereof and all

activities of the trust shall be carried out with a view to benefit the public at large,

without any profit motive and in accordance with the provisions of the Income-tax Act,

1961 or any statutory modification thereof.

AND WHEREAS the trust is hereby expressly declared to be a public charitable trust and

all the provisions of this deed are to be constituted accordingly.

NOW THIS INDENTURE WITNESSTH AS FOLLOWS :

1. SETTLEMENT

The party of the first part, the settlor, does hereby settle the sum of Rs._______ /-

(Rs. __________ only) in Trust, with the name and for the objects hereinafter stated,

by delivering the said amount in cash which the party of the other part, the

Tustees, have accepted the receipt of which they do hereby acknowledge, to hold

the same in and to the Trustees with the powers and obligations as provided

hereinafter.

2. NAME

The name of the Trust shall be "____________________________".

3. PLACE

The principal office of the Trust shall be situated at ______________________ or such

other place as the Trustees may from time to time decide. The Trust may also

carry on its work at any other place or places, as decided by the Trustees.

4. OBJECTS

a. Educational – to run, maintain or assist any educational or other institution

for coaching, guidance, conselling or vocational training or to grant

individual scholarships for poor, deserving and needy students for

elementary and higher education.

37

b. Medical – to run, maintain or assist any medical institution, nursing home

or clinics or to grant assistance to needy and indigent persons for meeting

the cost of medical treatment.

c. Relief of the poor – to give financial or other assistance in kind by way of

distribution of books, notebooks, cloths, uniforms, or meals for the poor

and indigent and to the persons suffer due to natural calamities.

d. Other objects of general public utility –

i. to acquire property for the sole use for public good by making it

available for public purposes as for example, housing a library

clinic, crèche and/or as a community ball to be available for public

use as training classes, seminars, discourses and other public

functions for benefit of the community in general.

ii. to undertake any other activity incidental to the above activities but

which are not inconsistent with the above objects.

PROVIDED the Trust may assist/donate the other TRUST to carry out the various

objects mentioned in the objects clause in such manner and to the extent the

Trustees may decide upon from time to time.

5. FUNDS

The Trustees may accept donations, grants, subscriptions, aids or contributions

from any person, Government, Local authorities or any other charitable

institutions, in cash or in kind including immovable property without any

incumbrance, but the Trustees shall not accept any receipt with any condition or

terms inconsistent with the objects of the Trusts. While applying such receipts to

the objects, the Trustees shall respect the directions, if any, by the granter. Any

receipt with specific direction to treat the same as part of the corpus of the Trust

or separate fund shall be funded accordingly.

6. INVESTMENTS

i. All monies, which shall not immediately required for current needs shall be

invested by the Trustees in eligible securities and investments, or in banks.

Such investments shall be in the name of Trust or Trustees.

38

ii. That the trustees shall invest the trust fund, carry on any business with the

trust fund and/or enter into partnership on behalf of the trust, as they may

deem fit.

iii. That the trustees shall manage the trust fund and investments thereof as a

prudent man would do the same. They shall recover all outstandings and

meet all recurring and other expenses incurred in the upkeep or

management thereof.

iv. That the trustees shall receive and hold the income of the trust on behalf

and for the benefit of the beneficiaries under the trust.

POWER OF TRUSTEES

That the trustees shall have the following powers :

i. to manage all the assets and/or properties of the trust including the

conduct of business;

ii. to appoint employees and to settle the terms of their service,

remuneration and termination;

iii. to look into the management of the trust;

iv. to invest the funds of the trust, in bank or in the purchase of company

shares or securities or other movable and movable and immovable

properties;

v. to sell, alter, vary, transpose or otherwise dispose or alienate the trust

properties or any investment representing the same for consideration and

to reinvest the same;

vi. to pledge or mortgage the trust properties for raising loans;

vii. to open the bank accounts in the name and on behalf of the trust and to

operate the same;

viii. To enter into a partnership on behalf of the trust with any other party or

parties;

39

ix. To pay all charges, impositions and other outgoings payable in respect of

the trust properties and also to pay all cost of the incidental to the

administration and management of the trust properties;

x. To file suit on behalf of the trust and to refer to arbitration all actions

proceedings and disputes touching the trust properties and to compromise

and compound the suits filed;

xi. To accept any gift, donation or contribution in cash or in kind from anyone

for the objects of the trust;

xii. To seek legal opinion of lawyers and/or Chartered Accountants as and

when required;

xiii. To nominate their representatives for any of the aforesaid purposes.

The number of the trustees shall not be less than two but not more than five.

In case of any difference between the trustees, the opinion of the minority shall

prevail.

Every trustee will be at liberty to nominate or appoint attorneys or agents and to

delegate all or any of the duties and powers vested in him to such attorney or agent, and

to remove such attorney or agent and reappoint other or others in his place.

No trustee shall be responsible or liable for any loss or any act of omission or commission

by his constituted attorney or agent or employees or other trustees unless occasioned by

his wilful neglect or default.

Any of the trustees may retire on giving one month’s notice in writing to the other

trustee(s).

If any trustee dies or retires or becomes incapable or unfit to act, the continuing or

surviving trustee or trustees shall appoint a successor in the place of such trustee.

40

If at any time the number of the trustees is less than two, the existing trustee shall

appoint one or more trustees.

Upon the appointment of a new trustee the trust properties shall vest in the new trustee

jointly with the continuing or surviving trustees, with the duties and power of the trustees

set out hereinabove in this deed.

If the trust is determined by efflux of time, the corpus of the trust shall be divided

amongst the beneficiaries in the shares as fixed by the trusees.

BANKING ACCOUNT

All income, subscription and pecuniary donations for the general purposes of the Trust

and the income, investments and all other moneys from time to time forming part of the

general revenue of the Trust shall on the same being received be paid into a banking

account with any scheduled bank for the purpose of the Trust. The bank accounts shall

be operated by the Managing Trustee along with any one of the remaining Trustees.

ACCOUNTS AND AUDIT

i. The Trustee shall keep proper books of account of all the assets, liabilities

and income and expenditure of the Trust and shall prepare an Income and

Expenditure Account and Balance Sheet for every year as on the last day

of March.

ii. The accounts of every year shall be audited by a Chartered Accountant or

a firm of Chartered Accountants who shall be appointed for that purpose

by the Trustees and the audited accounts shall be placed at a meeting of

the Trustees, which shall be held before the end of the succeeding year.

IRREVOCABLE

This Trust is irrevocable.

AMALGAMATION

The trustees may amalgamate the trust with another Charitable Trust or Institution

having similar objects with prior permission of the Charity Commissioner/Court/any other

41

law as may be applicable for the time being.

WINDING UP

In the event of dissolution or winding up of the Trust the assets remaining as on the date

of dissolution shall under no circumstances be distributed amongst the Trustees but the

same shall be transferred to some other similar Trust/Organisation whose objects are

similar to those of this Trust with the permission of the Charity Commissioner / Court /

any other law as may be applicable for the time being.

The Trustees shall be indemnified against all losses and liabilities incurred by them in the

execution of the Trust and shall have a lien over the funds and properties of the Trust for

such indemnity.

IN WITNESS WHEREOF, The Parties hereunto have signed and delivered the presents on

the day and year first hereinabove written.

SETTLOR

WITNESS : 1. TRUSTEE ____________

1. 2. TRUSTEE ____________

2. 3. TRUSTEE ____________

Form of Application for Registration of a Public Trust

Schedule II (Vide Rule 6)

Court Fee

Stamp

of Rs. 2/-

To

The Deputy/Assistant Charity Commissioner,

............................................................................ Region/Sub-Region

In the matter of Public Trust* ..............................................................

.......................................................................................................

I ............................................. trustee of the above named public trust,

hereby apply under section 18 of the Bombay Public Trust Act, 1950 for the

Registration of the said public trust.

42

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2. I submit the following necessary particulars:–

(ai) The designation by which the public trust is or shall be

known.

(Name of the Public Trust)

(i) Names of the trustees and managers with their addresses

(ii) Mode of succession to the trusteeship and managership

(iii) Objects of the trust :

(iv) (a) Particulars of documents creating the trust

(attach copies)

(b) Particulars other than documents about the origin or

creation of the trust.

(v) Particulars of the scheme, if any, relating to the trust

(attach copy).

(vi) Movable property with estimated value of each class

of such property.

(Note:– Entries should be made by board description

of classes of such property, e.g., furniture, books, etc.,

rather than of each individual article. Entry regarding

cash should be made only if such cash forms part of

the capital of the trust. In the case of scripts give

particulars of each security, stock, share and debenture

including the number which it bears).

(vii) (a) Details of immovable properties showing the

village or town where situate, along with C. S.,

Municipal or Survey No., area, assessment or Judi

and description of the tenure on which held (attach

certified copies of the entries in the Record of Rights,

city survey record or municipal record relating to

the properties).

1.

2.

3.

(b) Estimated value of each immovable property:– 1.

43

2.

3.

(viii) Sources of income of the trust.

(ix) Average gross annual income:– 1. From Movable:–

2. From Immovable:–

(x) Average annual expenditure

(xi) Amount of average annual expenditure:–

(a) on remuneration to trustees and manager ..

(b) on establishment and staff ..

(c) on religious objects ..

(d) on charitable objects ..

(e) on miscellaneous items ..

(xii) Particulars of encumbrances, if any on trust Property

–

(xiii) Particulars of title deeds pertaining to trust

property and the names of trustees in possession thereof

–

(xiv) Remarks, if any –

3.Fees of Rs............................../- (...............................................) accompanies

4.Any communication to the trustee or manager in connection with the trust, may be

sent to the following address :–

Name .......................................................

Address ....................................................

...............................................................

44

Date .................Signature of Applicant.................

I, the above named ............................................. inhabitant residing

at ......................................... do solemnly affirm and say that what is stated

in the above application is true to the best of my information and belief.

Solemnly affirmed at .................................. ]

aforesaid this ................... day of .............. ]Signature ................................

200... ]

Before me.

* Give full name and address of the trust.

* If the Wakf or Trust is registered under the old Acts, no fees under 3 are payable.

CONSENT LETTER

To

Deputy Charity Commissioner/Assistant Charity Commissioner

.............................. Region

Sir,

Shri ................................................................................................................

..............................

(Name of Applicant)

For Charitable

Institution/Association/Trust ...........................................................................

have applied for registration under B.P.T. Act, 1950,

on .................................... The information provided in the application are

45

true, we have not to say anything more than that. We state that a separate

notice for the details of the said application is no more necessary. We have

no objection for the issue of Registration Certificate in the name of

applicant. Please note that.

Name of other trustees

(including the applicant) Signature

1..................... .................

2..................... ....................

3..................... ....................

4..................... ....................

5..................... ....................

6..................... ....................

7..................... ....................

I know all the above said signatories.

(Applicant Sign.)

Date :

To

The Asst. Registrar of Societies

Greater Bombay, Bombay

Sub: Registration of Society under Societies Registration Act, 1860

Name of the Society

Dear Sir,

46

I request you to kindly register the aforesaid society under the Societies Registration Act,

1860. I forward herewith to you the following documents.

1. Memorandum of Association

2. True copy of Rules and Regulations

3. Consent letters of all the members of Managing Committee

4. Authority letter duly signed by all the members of Managing Committee

5. An Affidavit of the President or Secretary in respect of the address and property of

the society duly stamped together with the Court Fee Stamp of Rs. 1.25

6. A declaration given by Managing Committee assuring the use of the fund of the

society for the purpose for which they are collected

I further declare that the object, of the captioned society are in consonance with Section

20 of the Societies Registration Act, 1860 and that no other society exists, having the

same or similar name to the name of the captioned society. I also declare that the

captioned society is not registered under any other law and that I am agreeable to pay

the registration charges of Rs. 50/-.

In view of aforesaid, I request you to register the aforesaid society immediately under the

captioned Act.

Yours faithfully,

(Name & Address)

Encls: As aforesaid.

RULES AND REGULATIONS OF SOCIETY

1. Definition of terms used in Bye-laws.

2. Area of Operation.

3. Accounting Year.

4. Membership and procedure for enrolment.

47

5. Kinds of membership.

6. Termination of membership.

7. General Body Meeting, its powers and functions.

8. Notice of General Body Meeting and quorum.

9. Extraordinary General Body Meeting and its functions.

10. Managing Committee, Office Bearers.

11. Term of Managing Committee and procedure of election of office bearers.

12. Office-bearers of Managing Committee and their duties.

13. Meeting of the Managing Committee and meeting on requisition.

14. Notice of Meeting of Managing Committee and quorum.

15. Rules of election of Managing Committee.

16. Filling of vacancies in Managing Committee.

17. Powers and duties of Managing Committee.

18. Funds and income of the society or its utilisation.

19. Objectives based provision for expenditure (Percentage).

20. Provision for loans and deposits.

21. Provision regarding purchase and sale of immovable property

22. Operation of bank accounts and other financial matters (who is

empowered to operate the bank account).

48

23. Maintenance of register of members.

The applicant should sign the format of application as mentioned in schedules 1, 2

and 6 to the Registration of Societies (Maharashtra) Rule, 1971 and the bye-laws

should provide for the same.

24. Provision for amendment in Rules and Regulations.

25. Provision for change in the name and ] Implementation will be according to

Ss.12 object of the society ] and 12A of the S. R. Act, 1060

26. Desiplution of the society will be according to Ss. 13 and 14 of the S. R.

Act, 1960.

MEMORANDUM OF ASSOCIATION

1. Name of the Society :

2. Office Address :

3. Objects of the Society :

4. The names, addresses, designations, ages, occupations and

nationalities of all the members of the first Managing Committee of

the Society to whom the management and business of the society is

entrusted.

Every page

of this

Memorandum

must be

signed

by minimum

3 members

Sr.

No. Name Address Designation Age

Nationality Occupation

1.

2.

3.

4.

49

5. (For registration, the minimum requirement is seven)

6.

7.

5. We the following member signatories of the society desire to form our

society under the Societies Registration Act, 1860 and accordingly

we have formed the said society, today; i.e., ........ and we have

signed the Memorandum for the purpose of the registration of the

society under the Societies Registration Act, 1860.

Sr.No. Member Full Name and Address Signature

(If the member of the Managing

Committee is more than seven,

then name, address of all should

be given and all should sign)

Place :

Date :

I know the aforesaid persons who have signed this Memorandum in my presence.

Date : Sign/S.E.M./Advocate/C.A./Notary

Full Name & Address with seal.

CERTIFICATE

Certified to be the true copy of the bye-laws of the society.

Name & Designation of Office Bearers Signature

50

1.

2.

3.

Place :

Date :

Note: Minimum three office bearers should certify.

CONSENT LETTER

To


Bombay.

Dear Sir,

Sub: Registration of ..................................................... Society under Societies

Registration Act, 1860.

We the undersigned being the members of the first Managing Committee

of ...................................... Society do hereby consent to Act according to the aims,

objects and bye-laws of the society. We have signed this letter in token of our consent

towards the registration of the aforesaid society under the Societies Registration Act,

1860.

Yours faithfully,

Sr. No.Name

Signature

1.

51

2.

3.

4.

5.

6.

7.

(to be signed by the office bearers of the Managing Committee)

Place :

Date :

I know the persons who have signed as aforesaid, signed in my presence.

Signature with Date

(S.E.M./Advocate/C.A./Notary)

Full Name, Address & Seal.

To


Bombay

Dear Sir,

We the undersigned members of the Managing

Committee ............................................. Society do hereby authorise

Shri ................................................................(Name and Designation) to

carryout any changes/amendments in the papers necessary for registration

of the Society. We further assure that the funds raised for the society will

only be utilised to achieve the objectives of the society,

52

Sr.No.Name

Signature

1.

2.

3.

4.

5.

6.

7.

Place :

Date :

Accepted

(One who accepts the Signature with Date)

Form No. 10A

[See Rule 17A]

Application for registration of charitable or religious trust or institution

under section 12A(a) of the Income-tax Act, 1961

53

To

The Chief Commissioner or Commissioner of Income-tax,

................................

Sir,

I, ..................................................... on behalf of ..............................................................

(Name of the trust or institution)

hereby apply for the registration of the said trust/institution under section 12A of the

Income-tax Act, 1961. The following particulars are furnished herewith:–

1. Name of the *trust/institution in full (In Block letters)

2. Address

3. Name(s) and address(es) of author(s)/founder(s)

4. Date of creation of the trust or establishment of the institution.

5. Name(s) and address(es) of trustee(s)/manager(s).

I also enclose the following documents:

(1) (a)*Original/certified copy of the instrument under which the trust/institution was

created/established, together with a copy thereof.

(b)*Original/certified copy of the document evidencing the creation of the trust or

the establishment of the institution, together with a copy thereof.

(The originals if enclosed will be returned)

(2)Two copies of the accounts of the *trust/institution for the latest *one/two/three

years

I undertake to communicate forthwith any alteration in the terms of the

trust, or in the rules governing the institution, made at any time hereafter.

54

Date ..........................

Signature..........................

Designation..........................

Address..........................

* Strike out whichever is not applicable

Form FC-1

Application for seeking prior permission of the Central Government for

accepting foreign contribution by or on behalf of an organisation of

political nature not being a political party

[See rule 3(a)]

[Sections 5(1) and 5(2)(a) of the Foreign Contribution (Regulation) Act, 1976]

1. a. Particulars of the organisation (Full name in block letters, and address)

b. Address of the principal/head office of the organisation

2. Full particulars of the person applying on behalf of the organisation:

b. Name in full (in block letters)

c. Name of father

d. Occupation

e. Residential address

f. If an office bearer, the office held in the organisation

55

Reference of the order published by the Central Government in the Official Gazette

specifying the organisation as an "organisation of political nature, not being a political

party".

Nature and full details of contribution including value, to be received.

The mode/channel of receipt.

Purpose for which foreign contribution is proposed to be received.

Particulars of the foreign source from which contribution to be received:

0. If an individual, his personal particulars including name, present address,

permanent address, nationality, profession

a. If an organisation/institution/association/trust/foundation/trade union,

etc., full particulars thereof including:—

i. Full name and complete address

ii. Address of head office/principal office

iii. Aims and objects

iv. Particulars of important office bearers

Nature of connection/dealings with the foreign source

Any other information of significance which the applicant may like to furnish

DECLARATION

I hereby declare that the above particulars furnished by me are true and

correct.

Place ........................

Date .........................

Signature of the applicant

Note : In case of application by an organisation, it should be signed by the chief

functionary.

56

1[Form FC-1A

Application for seeking prior permission from the Central Government

under the

Foreign Contribution (Regulation) Act, 1976 (Hereinafter referred to as

the Act)

for the acceptance of foreign contribution by an Association having

definite cultural, economic, educational, religious or social

programme

No. ................... Date ..................

To

The Secretary of the Government of India,

Ministry of Home Affairs, Lok Nayak Bhavan, Khan Market,

New Delhi - 110 003

57

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Subje

ct

:Application for seeking the prior permission of the Central Government

under the Foreign Contribution (Regulation) Act, 1976 for acceptance of

foreign contribution.

Sir,

I, ......................., on behalf of the Association named hereafter, apply for seeking prior

permission of the Central Government for the acceptance of foreign contribution under

proviso to sub-section (1) of section 6 or under sub-section (1A) of that section or clause

(b) of section 10 of the Act.

1. i. Name of the Association and its complete postal address:

Name

Address

Town/City

State

District

Pin Code

ii. If the Association is a registered trust or Society please indicate its-

a. registration number,

b. place of registration,

c. date of registration, (certified copy of the registration certificate to

be attached.)

iii. Nature of Association:

(a) religious (b) cultural (c) economic (d) educational (e) social.

Not

e: If a religious Association, then state whether (a) Hindu (b) Sikh (C)

Muslim (d) Christian (e) Buddhist (f) Others.

iv. Please indicate the main aims(s) and object(s) of the Association (enclose

copy of the Memorandum of Association and/or the Articles of

Association, if applicable).

58

v. Please furnish the names and addresses of the members of

the Executive Committee/Governing Council etc. of the

Association including the Chief Functionary, in the following

manner:

Sl.N

o.

Na

me

Name

of

Father

/

Husba

nd

National

ity

Occupati

on

Office held

in

the

Association,

if any

Relation

with

other

office

bearers, if

any

Addre

ss

1 2 3 4 5 6 7 8

2. Please indicate whether any member of the Executive Committee/Governing

Council etc. of the Association, including the Chief Functionary has, in the

discharge of his/her official functions—

b. been convicted by any court of law;

b. a prosecution for any offence pending against him/her;

b. been found guilty of diversion or misutilisation of funds of the Association

or any other Association in the past.

Please indicate whether the applicant/Association—

b. is a branch/unit/associate of foreign based organisation or another

Association already registered under the Act. If so, name and address of

the parent organisation should be furnished;

c. has been directed by the Central Government in terms of the proviso to

sub-section (1) of section 6 of the Act to seek prior permission. If so, the

number and date of the relevant order should be furnished;

59

d. has been directed by the Central Government in terms of section 10 of the

Act to seek prior permission. If so, the number and date of the relevant

order should be furnished.

Please indicate—

0. whether the Association ever applied for registration under the Act in the

past, if so,

a. the date of submission of application for registration;

b. the number and date of last reference, if any, received from the

Ministry;

c. whether registration was refused;

d. whether the application for registration is still pending;

i. whether the Association has close links with another Association, or its unit

or branch which has been

a. refused registration under the Act,

b. prohibited from accepting foreign contribution.

2. Please indicate,—

0. whether the Association was,—

a. granted prior permission to receive foreign contribution under the

Act in the past. If so, the number and date of the letter granting

prior permission should be furnished;

b. whether the account of the receipt and utilisation of the foreign

contribution received above was sent to the Central Government in

the prescribed form. If so, the date of submission of the accounts

should be furnished;

60

c. If the prior permission was granted in the current year, details of

the foreign contribution received and utilised, purposewise,

showing the unspent balance should be annexed.

i. whether the Association has received foreign contribution without the prior

permission of the Central Government, in the past. If so, –

a. full particulars of the foreign contribution received, address of the

branch of the bank and account number in which deposited should

be furnished;

b. whether the said violation has been condoned by the Central

Government;

c. whether the Association has been prohibited from accepting foreign

contribution under the Act.

3. Please indicate whether the Associations is owner/printer/publisher, editor of a

publication which is a "registered newspaper" under the Press and Registration of

Books Act, 1867.

4. Please furnish—

0. details of the activities of the Association during the past three – years;

i. Copies of the audited statement of accounts of the Association for the past

three years.

5. i. Please indicate the—

a.nature and value of the foreign contribution to be received (a copy of the

latest commitment letter from the donor should be furnished);

b.the purpose for which the foreign contribution is proposed to be received

and utilised indicating also the geographical area(s) to be covered

ii. a copy of the proposal/project which has been approved by the foreign

source for funding, including projected outlays/budget breakup, should be

enclosed.

61

iii. a copy of the proposal/project which has been approved for funding out of

the foreign contribution should be enclosed (This column applies only to

subsequent recipients)

1. Please indicate—

0. the name of the bank and address of the branch through which the foreign

contribution is proposed to be received;

i. the account number in the said branch of the bank.

Please indicate the particulars of the foreign source or the sources from which, the

foreign contribution is proposed to be received:—

0. If an individual, his personal particulars including name, present address,

permanent address, nationality, profession;

a. If an organisation/institution/association/trust/trade union etc. full

particulars thereof, including—

i. Full name and complete address.

ii. Address of the Head office/principal office.

iii. Particulars of Chief Functionary and important office bearers.

a. Please indicate whether the foreign source is a Government of a foreign

country or agency thereof.

10A. Whether a recommendation certificate from the competent authority is attached

(Yes/No).

11. Any other information which the Association may like to furnish.

Yours faithfully,

Signature of the Applicant

[Name of the Chief Functionary or

authorised office bearer (with seal of the Association)]

62

DECLARATION

I hereby declare that the above particulars furnished by me are true and correct.

Place:

Date :


[Name of the Chief Functionary or

authorised office bearer (with seal of the Association)

*If the foreign contribution, whether currency or articles is to be received from any

person or Association who has received the same as first, second or subsequent

recipient, particulars of such person or Associations should be given against column

10 above.

Note:1.An incomplete application i.e., without necessary documents/details/explanations

is likely to be rejected summarily.

2.In case the space against any column is insufficient, separate annexure should

be attached.

3.Please use Capital letters

4.The application should be signed by the Chief Functionary or authorised office

bearer of the Association.

1[Certificate

1. This is to certify that the ................. (name of the Association having its registered

office at .............. (Address) has been formed for undertaking welfare activities in

its chosen (Economic, Educational, Cultural, Religious and Social) field of activity.

The antecedents of the organisation have been verified and there is nothing

adverse against them.

2. Its proposed project would be undertaken in the ............ (District ) of ............

(State).

The said project is likely to prove beneficial to the people living in the area.

3. Grant of prior permission to the aforementioned association to accept foreign

contribution amounting to ........... (Currency/Amount) from ........ (Name and

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http://www.citcindia.org/itr/sept03/vp_batavia.htm#FC-1Acer

address foreign donor) under the Foreign Contribution (Regulation) Act, 1976 for

the said project is recommended.

(Recommending Authority)**

(With Seal)

* Strike out whichever is not applicable.

** Any concerned.

(1) Collector of District.

(2) Department of the State Government.

(3) Ministry/Department of the Government of India]

(To be submitted in triplicate)

1. Substituted by GSR 8 (E), dt. 4-1-1999, w.e.f. 17-4-2000.

1. Substituted by GSR 755(E), dt. 5-11-1984, w.e.f. 5-11-1984.

1[Form FC-2

Application for seeking prior permission of the Central

Government

to accept foreign hospitality

[See rule 3(b)]

[Section 9, read with sections 10(d) and 11(1) of the Foreign

Contribution (Regulation) Act, 1976]

1. Name in full (in block letters)

2. Date of birth

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http://www.citcindia.org/itr/sept03/vp_batavia.htm#FC-2

3. Name of father/husband

4. Present address

5. Permanent address

6. Passport particulars (if already in possession)

7. Status:

a. Member of Legislature

b. Office-bearers of a political party

c. Judge of Supreme Court/High Court

d. Government servant

e. Employee of a company/corporation

f. Any person or class of persons not specified in section

9

8. Names of countries/places to be visited with duration of stay

9. The countries and places where foreign hospitality is to be

accepted

10. Duration and purpose of visit to the

country(ies)/place(s) mentioned in Column 9 with specific

dates

11. Particulars of host(s):—

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a. If an individual, his personal particulars including name,

present address, permanent address, nationality,

profession

b. If an

organisation/institution/Association/Trust/Foundation/Tr

ade Union, etc., full particulars thereof including,—

i. Full name and complete address

ii. Address of head Office/Principal Office

iii. Aims and objects

iv. Particulars of important office-bearers

12. *Full particulars as in serials II(a) and (b) of the foreign

source in case the actual source extending the hospitality is

located in a country other than actually proposed to be

visited.

13. Nature and duration of #foreign hospitality proposed to

be accepted with specific dates and with specific details

14. Nature of connection/dealings with the host and/or

foreign source extending the hospitality

15. Approximate expenditure to be incurred on hospitality

16. Any other information of significance which the

applicant may like to furnish.

DECLARATION

66

I hereby declare that the above particulars furnished by me are true and

correct.

Place ............

Date .............


*Delete if not applicable

#"Foreign Hospitality" means any offer, not being a purely casual one, made by a foreign

source for providing a person with the cost of travel to any foreign country or territory

or with free board, lodging, transport or medical treatment.

1. Substituted by GSR 755(E), dt. 5-11-1984, w.e.f. 5-11-1984.

Form FC -8

Application for seeking registration with the Central

Government Under the Foreign Contribution (Regulation)

Act, 1976 (Hereinafter referred to as the Act) for the

acceptance of foreign contribution by an association

having a definite cultural, economic, educational, religious

or social programme

[Rule 3A)

No...................Date..............

To

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The Secretary to the Government of India,

Ministry of Home Affairs, Lok Nayak Bhavan, Khan Market,

New Delhi - 110 003

Subjec

t

: Application for registration under the Foreign Contribution

(Regulation) Act, 1976 for the acceptance of foreign contribution.

I ....................... on behalf of the Association named hereafter

apply for registration of the Association under clause (a) of sub-

section (1) of section 6 of the Act for the acceptance of foreign

contribution.

1. i. Name of the Association and its complete postal address:

Name:

Address:

Town/City:

District:

State:

Pin Code:

ii. If the Association is a registered trust or Society please indicate its:—

a. registration number:

b. place of registration:

c. date of registration:

(certified copy of the registration certificate to be attached).

iii. Nature of Association

(a) religious (b) cultural (c) economic (d) educational (e) social.

Note: If a religious Association, state whether (a) Hindu (b) Sikh (c) Muslim

(d) Christian (E) Buddhist (f) Others.

iv. Please indicate—

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b. the main aim(s) and object(s) of the Association (enclose a copy of

the Memorandum of Association and/or the Articles of Association,

if applicable);

c. the main object(s) and definite programme(s) for which the foreign

contribution is to be accepted/utilised.

i. Please furnish the names and addresses of the members of

the Executive Committee/Governing Council etc. of the

Association, including the Chief Functionary in the following

manner:

Sl.

No

.

Nam

e

Name

of

Father/

Husban

d

Nationalit

y

Occupatio

n

Office held

in

the

Associatio

n,

if any

Relationshi

p with

other

office-

bearers, if

any

Addres

s

1 2 3 4 5 6 7 8

1. Please indicate whether any member of the Executive Committee/Governing

Council etc. of the Association, including the Chief Functionary has in the

discharge of his/her official functions—

b. been convicted by any court of law;

c. a prosecution for any offence pending against him/her;

d. been found guilty of diversion or misutilisation of funds of the Aassociation

or any other association in the past.

2. Please indicate whether the applicant Associations is a brand/unit/associate of

foreign based organisation or another associations already registered under the

Act. If so, the name and address of the parent organisation.

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3. Please indicate,—

ii. whether the Association was,—

a. granted prior permission to receive foreign contribution under the

Act in the past. If so, the number and date of the letter granting

prior permission should be furnished;

b. whether the account of the receipt and utilisation of the foreign

contribution received above was sent to the Central Government in

the prescribed form. If so, the date of submission of the accounts

should be furnished;

iii. whether the, —

a. Association has received foreign contribution without the prior

permission under Act in the past. If so, full particulars of the foreign

contribution received along with complete address of the bank

branch and bank account number in which deposited should be

furnished;

b. said violation has been condoned by the Central Government;

c. Association has been prohibited from accepting foreign contribution

under the Act.

2. Please indicate whether the Association is functioning as editor, owner, printer or

publisher of a publication required to be registered as "newspaper" under the

Press and Registration of Books Act, 1867. If so, the details thereof.

3. Please indicate.—

ii. Whether the Association ever applied for registration under the Foreign

Contribution (Regulation) Act, 1976, if so, —

a. the date of submission of application for registration;

b. the number and date of the last communication, if any, received

from the Ministry;

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c. whether registration was refused;

d. whether application for registration is till pending

iii. whether the Association has close links with another association, or its unit

or branch which has been —

a. refused registration under the Act;

b. prohibited from accepting foreign contribution

Please furnish,—

ii. details of the activities of the Association during the past three years,

iii. copies of the audited statement of accounts of the Association for the past

three years.

iv. details of the area(s) of operation.

Please indicate whether the Association has been specified as an organisation of a

political nature, not being a political party, under section 5 of the Act. If so, the details of

the notification should be furnished.

Please indicate,—

ii. the name and address of the branch of the bank through which the foreign

contribution shall be received;

iii. Please specify the account number in the said branch of the bank.

9A. Whether a recommendation certificate from the competent authority is attached

(Yes/No).

10. Any other information which the Association may like to furnish.

Yours faithfully,

Chief Functionary for and on behalf of the Association (Name of Association)

DECLARATION AND UNDERTAKING

71

The Association named hereinabove affirms that the information furnished above is

correct and undertakes:—

i. to inform the Central Government (Ministry of Home Affairs) within thirty days, if

any, change takes place in regard to the name of the Association, its address, its

registration, its nature, its aims and objects with documentary evidence effecting

the change;

ii. to obtain prior permission for change of office bearer(s), if, at any point of time

such change causes replacement of 50% or more of the office bearers as were

mentioned in the application for registration under the Foreign Contribution

(Regulation) Act, 1976 and undertakes further not to accept any foreign

contributions except with prior permission till the permission to replace the office-

bearer(s) has been granted;

iii. not to change the bank or branch of the bank without prior permission of the

Central Government. The reasons for change of bank or branch of the bank shall

have to be relevant and justifiable; and

iv. not to accept any foreign contribution unless it has obtained either the

registration number, as applied for hereinabove, or prior permission of the Central

Government under sub-section (1A) of section 6 of the Foreign Contribution

(Regulation) Act, 1976.

(Chief Functionary)

for and on behalf of the Association (Name of the Association)

Note :

i. The receipt of application for registration is not a commitment for grant of

registration by the Central Government.

ii. An incomplete application; i.e., without the required

documents/details/explanations is likely to be rejected summarily;

iii. In case the space provided against any column is insufficient separate sheets

should be attached; and

Please use Capital letters.

1[Certificate

72

1. This is to certify that the .............................. (Name of the Association) having its

registered office at ............... (Address) has been engaged in economic,

educational, cultural, religious, social activities in the ............. (District)

of .............. (State) for the last ............ years.

2. It has undertaken commendable welfare activities in the area and has incurred

substantial expenditure (excluding administrative expenditure) amounting

to ......... (Amount in rupees) during the last three years on its chosen ......

(Economic, Education, Cultural, Religious and Social) field of activity.

3. The antecedents of the organisation have been verified and there is nothing

adverse against them

4. Grant of registration to the aforesaid Association to accept foreign contribution

under the Foreign Contribution (Regulation) Act, 1976 is recommended.

** (Recommending Authority)

(With Seal)

*Strike out whatever is not applicable.

**Any concerned

(1)Collector of District

(2)Department of the State Government

(3)Ministry/Department of the Government of India]

(To be submitted in triplicate) (This form has been last modified on 24-1-2000)

CHARITABLE INSTITUTIONS FORMED BY REGISTERING AS A COMPANY U/S. 25

OF THE COMPANIES ACT

POINTS TO BE COVERED UNDER MEMORANDUM OF ASSOCIATION

AND ARTICLE OF ASSOCIATION

I. Memorandum of Association is

73

1. Name of the Company is ______

2. The Registered office of the Co. will be situated in the state of _____________

3. Objects

a. Main objects of the Co. to be perused on incorporation.

b. Objects incidential or ancillary to the attainment of the main objects

c. Other objects if any.

4. The objects of the Co. extend to the whole of India and all other countries

of the world.

5. Distribution of Income and Property of Company.

6. Alteration of MOA & AOA.

7. Liability of the members is limited.

8. Contribution of members in the event of winding up.

9. Accounts and Audit.

10. Distribution of surplus amount on winding up.

We, the several persons whose names, addresses, descriptions and

occupations are hereupto subscribed are desirous of being formed

into a company not for profit, in pursuance of this M.O.A.

Name, Address Description &

Occupation of the

Subscribers

Signature of

Subscribers

Signature, Name, Address,

Description & occupation of

witness.

74

Place :

Date :

II. Article of Association :

a. Interpretation

b. Members including appointment and cessation

c. Annual Budget and Subscription

d. Copies of Memorandum & Articles to be sent to members

e. Borrowing powers

f. Meeting of members

g. Meeting of Board of Directors

h. Minutes

i. Registers

j. Powers of Board of Directors

k. Remuneration to Directors

l. Administration

m. The Seal

n. Books and Documents

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o. Accounts and Balance Sheets

p. Audit

q. Documents and Notices

r. Indemnity

s. Winding up.

We, the several persons whose names, addresses, descriptions and

occupations are hereupto subscribed are desirous of being formed

into a company not for profit, in pursuance of this M.O.A.

Name, Address Description &

Occupation of the

Subscribers

Signature of

Subscribers

Signature, Name, Address,

Description & occupation of

witness.

Place :

Date :

76

How to Form a Charitable Trust

A public charitable or religious institution can be formed either as a Trust or as a Society or as a

Company registered u/s 25 of the Companies Act.

It generally takes the form of a trust when it is formed primarily by one or more persons.

To form a Society at least seven persons are required. Institutions engaged in promotion of art,

culture, commerce etc. are often registered as non-profit companies.

These forms are enumerated as under :

Charitable Trust settled by a settlor by a Trust Deed or under a Will.

Charitable or religious institution / association can be formed as a society.

Charitable institution can be formed by registering as a company u/s. 25 of the Companies Act, 1956,

as non profit company (without addition to their name, the word “Limited” or “Private Limited”).

Registration under Income-tax Act

Charitable or religious trusts, societies and companies claiming exemption under sections 11 and 12

of the Income-tax Act are required to obtain registration under the Act. Private/family trusts are

77

neither allowed such exemption nor required to seek registration under the Income-tax Act. The

detailed procedure is as under :

Registration of Trust under Income-tax Act procedure for registration u/s. 12AA of I.T. Act.

Application for registration in Form No.10A in duplicate.

List of Name and Address of the Trustees

Copy of Registration Certificate with Charity Commissioner or copy of application to him.

Certified True Copy of the Trust Deed.

PAN No. or Copy of application of the Trust.

PAN of the trustees.

Procedure for registration (Sec 12AA)

The Commissioner, on receipt of an application for registration of a trust or institution made under

clause (a) of section 12A, shall –

call for such documents or information from the trust or institution as he thinks necessary in order

to satisfy himself about the genuineness of activities of the trust or institution and may also make

such inquiries as he may deem necessary in this behalf; and

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after satisfying himself about the objects of the trust or institution and the genuineness of its

activities he –

shall pass an order in writing registering the trust or institution;

shall, if he is not so satisfied, pass an order in writing refusing to register the trust or institution,

and a copy of such order shall be sent to the applicant.

Provided that no order under sub-clause (ii) shall be passed unless the applicant has been given a

reasonable opportunity of being heard.

Donation Given to Charitable Trust is allowed to deduction u/s 80G.

For Full Detail about registration of charitable trust under Company Act, Registration under the

Societies Registration Act. Click Here

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NGO Registration Methods

Documents

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