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

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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
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

Application for Registration :

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)

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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
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.

Application for Registration :

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

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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
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.

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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

Statute/Legislation Relevant State Trust Act Societies Registration Act, Indian Companies Act,
or Bombay Public Trusts 1860 1956
Act, 1950

Jurisdiction Deputy Registrar/Charity Registrar of societies Registrar of companies

commissioner (charity commissioner in
Maharashtra).

Registration As trust As Society As a company u/s 25

In Maharashtra, both as a of the Indian
society and as a trust Companies Act.

Registration Document Trust deed Memorandum of Memorandum and

association and rules and articles of association.
regulations and regulations

Stamp Duty Trust deed to be executed No stamp paper required No stamp paper
on non-judicial stamp for memorandum of required for
paper, vary from state to association and rules and memorandum and
state regulations. articles of association.

Members Required Minimum – two trustees. Minimum – seven Minimum three

No upper limit. managing committee trustees. No upper
members. No upper limit. limit.

Board of Management Trustees / Board of Governing body or Board of directors/

Trustees council/managing or Managing committee
executive committee

Mode of Succession on Appointment or Election Appointment or Election by Election by members

Board of Management members of the general of the general body
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;

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Foreign Contribution (Regulation) Act, 1976;

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.

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

Relief of Poverty or Distress;

Education;

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

9
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, 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;

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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 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,

11
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.

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

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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).

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

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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.

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)].

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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

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

15
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;

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

16
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;

18
the institution's governing documents do not permit the use of income or assets
for any purpose other than a charitable purpose;

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."

19
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 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.

20
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.

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)

21
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
law to which he is subject. Thus, generally speaking, any person competent to
contract and competent to deal with property can form a trust.

22
 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.

2 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.

3 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.

4 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
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

23
and mosques or gifts are made to religious or charitable institutions they create a trust.

5 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.

6 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.
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.

2 Essentials of a valid Charitable or Religious Trust

24
 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.

2
3 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 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;

25
 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.

2 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;
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.

2 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

26
 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
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.

3 Registration of Charitable Trust

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

27
 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,
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

28
 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
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.

4 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

29
 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.
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.

2 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 :

30
 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.
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.

2 Registration under Income-tax Act

31
 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
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.

4. Provided that no order under sub-clause (ii) shall be passed unless the
applicant has been given a reasonable opportunity of being heard.

2 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

32
 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
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

33
 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.

2 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.

3 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
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

34
 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.

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,

35
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.
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

36
 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.
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.

2 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;

37
 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;
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.

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

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

5 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.

6 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

38
occasioned by his wilful neglect or default.

7 Any of the trustees may retire on giving one month’s notice in writing to the other
trustee(s).

8 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.

9 If at any time the number of the trustees is less than two, the existing trustee
shall appoint one or more trustees.

10 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.

11 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.

12 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.

13 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.

14 IRREVOCABLE
This Trust is irrevocable.

39
15 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 law as may be applicable for the time being.

16 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)

To

Court FeeThe Deputy/Assistant Charity Commissioner,

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

of Rs. 2/-Region
In the matter of Public Trust* ..............................................................
.......................................................................................................

40
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.

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 1.

village or town where situate, along with C. S.,
Municipal or Survey No., area, assessment or Judi 2.
and description of the tenure on which held (attach
certified copies of the entries in the Record of 3.
Rights,
city survey record or municipal record relating to

41
 the properties).

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

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

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

42
 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 ................... daySignature ................................

of .............. ]

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 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.

43
 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,

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

44
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.
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).
23. Maintenance of register of members.
The applicant should sign the format of application as mentioned in schedules 1,

45
 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
Sr. Name Address Designation Age Nationality
of this
No. Occupation
Memorandum
must be
1.
signed
2.
by minimum
3.
3 members
4.

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

46
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

1.
2.
3.

Place :
Date :

Note: Minimum three office bearers should certify.

CONSENT LETTER

To

The Asst. Registrar of Societies

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

47
towards the registration of the aforesaid society under the Societies Registration Act,
1860.

Yours faithfully,

Sr. No. Name Signature

1.
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

The Asst. Registrar of Societies

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,

Sr.No. Name Signature

48
1.
2.
3.
4.
5.
6.
7.

Place :Accepted
Date : (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

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

49
 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.

Signature..........................
Date .......................... Designation..........................

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

* Strike out whichever is not applicable

Form FC­1

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

50
 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
2 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".
3 Nature and full details of contribution including value, to be received.
4 The mode/channel of receipt.
5 Purpose for which foreign contribution is proposed to be received.
6 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
2 Nature of connection/dealings with the foreign source
3 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   ........................  Signature of the applicant

Date .........................

Note : In case of application by an organisation, it should be signed by the chief functionary.

1
[Form FC­1A

Application   for   seeking   prior   permission   from   the   Central   Government   under   the 
Foreign   Contribution   (Regulation)   Act,   1976   (Hereinafter   referred   to   as   the   Act) 

51
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

Subject: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 sub­section (1) of 
section 6 or under sub­section (1A) of that section or clause (b) of section 10 of the Act.

52
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.
Note: 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).
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.No Nam Name of  Nationalit Occupatio Office   held   in  Relation   Address
. e Father/  y n the   with 
Husban Association,  other   office 
d if any bearers,   if  
any

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;

53
 b. been found guilty of diversion or misutilisation of funds of the Association
or any other Association in the past.
2 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;
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.
2 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;
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.

54
 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.
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.
2 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;

55
 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)]

DECLARATION

I hereby declare that the above particulars furnished by me are true and correct.

Place:
Date :

Signature of the applicant

[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

56
 bearer of the Association.

[Certificate
1

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
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.

[Form FC-2
1

Application for seeking prior permission of the Central

Government
to accept foreign hospitality

[See rule 3(b)]

57
[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
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):—
a. If an individual, his personal particulars including
name, present address, permanent address,
nationality, profession

58
 b. If an
organisation/institution/Association/Trust/Foundation/T
rade 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

I hereby declare that the above particulars furnished by me are

true and correct.

Place ............ Signature of the applicant

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. 5­11­1984, w.e.f. 5­11­1984.

59
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

The Secretary to the Government of India,

Ministry of Home Affairs, Lok Nayak Bhavan, Khan Market,
New Delhi - 110 003

Subject: 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:

60
 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—

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. Nam Name Nationalit Occupatio Office held Relationshi

No e of y n in p with Addres
. Father/ the other s
Husban Associatio office-
d n, bearers, if
if any any

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;

61
 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.
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;
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 —

62
 a. refused registration under the Act;
b. prohibited from accepting foreign contribution
2 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.
2 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.
3 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

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;

63
 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

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)

64
 * 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
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.

65
 Name, Address Description & Signature of Signature, Name, Address,
Occupation of the Subscribers Description & occupation of witness.
Subscribers

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
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 & Signature of Signature, Name, Address,

66
 Occupation of the Subscribers Description & occupation of witness.
Subscribers

Place :
Date :

67
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

68
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 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 –

69
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

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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