How To Create Charitable Trust ?

Income Tax Act has specific provisions for exempting income of a charitable trust and also giving deduction u/s 80G to persons giving donation to approved charitable trusts.The process of setting  up a charitable trust , there fore , has two steps:

1. Registering a Trust deed with registering authority.
2. Applying before Commissioner of Income Tax for registration of trust for the purpose of exemption.

Registering a trust deed

• Prepare the  trust deed   on non-judicial stamp paper.
  • [Compute value of stamp paper as per the value of the property of the trust deed]
• Submit it the office of  District Registrar  .

Important points to incorporate in the trust deed

• Name of the trust deed.
• Name of the authors or settler of the trust.
• Name of the trustees
• Clearly mention if the public at large are beneficiaries.
• Details regarding principal office and other branch office.
• Details regarding the property which devolve on trustees
• Procedure of appointment,replacements and removal  of trustees along with their duties , rights and power.
• Rights and duties of beneficiaries.

Procedure of registration with  income tax dept.
As per Rule 17A , apply  in Form 10A in duplicate to Commissioner of Income tax (Exemption) within whose jurisdiction the trust falls.  Following documents should accompany

1. Original copy of instrument creating the trust/institution, .
2. Documents evidencing the creation of trust/institution, with one copy thereof, where trust/institution is created otherwise than under an instrument.
3. If the trust/institution was in existence during any year(s) prior to financial year in which application for registration is made, the application should be accompanied by two copies of accounts of trust/institution relating to prior year or years, not being more than 3 years immediately preceding the year in which application is made.

Time limit for applying for registration
Before the expiry of 1 year from the date of creation of the trust.