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A charitable trust is a legal arrangement designed to benefit the public, specific charitable purposes, or nonprofit organizations. Whether you’re planning to create a charitable trust, manage an existing one, or resolve disputes, our legal team is here to provide clear, effective guidance.

What is a Charitable Trust?

Charitable trusts are unique in that they exist solely for philanthropic purposes. Unlike other trusts, charitable trusts do not have specific beneficiaries but instead support causes that benefit society. These causes might include:

  • Education: Scholarships, schools, and educational programs.
  • Healthcare: Medical research or hospital funding.
  • Relief for the Poor: Food, housing, and financial aid programs.
  • Environmental Conservation: Wildlife preservation or green initiatives.
Types of Charitable Trusts
  1. Charitable Remainder Trusts (CRTs): Allows donors to transfer assets, receive income during their lifetime, and leave the remaining assets to a charity.
  2. Charitable Lead Trusts (CLTs): Provides income to a charitable organization for a set term, with the remainder passing to non-charitable beneficiaries, such as family members.
  3. Private Foundation Trusts: A vehicle for ongoing charitable giving, often established by families or corporations.
Benefits of Charitable Trusts
  • Tax Advantages: Significant tax deductions for the donor.
  • Estate Planning: Reducing estate taxes while leaving a legacy.
  • Flexibility: Control over how funds are distributed.
  • Social Impact: Contributing to causes that align with your values.
Legal Services We Provide

Our experienced attorneys offer comprehensive services for charitable trusts, including:

  • Drafting and setting up charitable trust agreements.
  • Advising on compliance with state and federal regulations.
  • Filing necessary tax documentation.
  • Resolving disputes or mismanagement issues.
  • Ensuring proper administration and trustee guidance.
  • Suits related Charitable Trust against Charity Commissioner & in Civil Courts.

ACTS & RULES OF CHARITABLE TRUST

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Indian Trusts Act, 1882
  • Governs private trusts in India.
  • Does not apply to public or charitable trusts, but serves as a foundational reference.
  • Charitable trusts are governed more by state-specific laws and judicial precedents.
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Public Charitable Trusts – State Laws

Charitable trusts are mainly governed by state-level laws. There’s no central legislation exclusively for public charitable trusts. Common state laws include:

Maharashtra and Gujarat:

  • Bombay & Gujarat Public Trusts Act, 1950
  • Most comprehensive law for registration, administration, and regulation of charitable trusts.
  • Administered by: Charity Commissioner

Rajasthan:

  • Rajasthan Public Trusts Act, 1959

Madhya Pradesh:

  • Madhya Pradesh Public Trusts Act, 1951

Other states either follow common law principles or register charitable trusts under Societies Registration Act or Indian Trusts Act (where applicable).

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Income Tax Act, 1961
  • Critical for tax exemption and recognition of charitable trusts.
  • Key Sections:
    • Section 12A – Registration of trust for income tax exemption
    • Section 80G – Donor gets tax deduction for donations
    • Section 10(23C) – Exemptions for educational and medical institutions
    • Section 11 & 12 – Income application for charitable purposes
  • Note: From 2020 onwards, all trusts must renew their registration periodically with the Income Tax Department.
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Societies Registration Act, 1860
  • Alternative to creating a trust – allows forming a charitable society.
  • Societies are registered for literary, charitable, scientific, or religious purposes.
  • Operates under central legislation but implemented by state registrars.
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Section 8 Companies under Companies Act, 2013
  • Yet another option for forming a charitable entity.
  • Section 8 Company is a non-profit company formed for charitable, religious, or social objectives.
  • Regulated by the Registrar of Companies (RoC) under the MCA.
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Foreign Contribution (Regulation) Act (FCRA), 2010
  • Mandatory for charitable trusts receiving foreign donations.
  • Must register with the Ministry of Home Affairs (MHA).
  • Regulates:
    • Source of foreign funds
    • Purpose and utilization
    • Annual filings and disclosures
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Must-Have Registrations for Charitable Trusts:
  1. Trust deed registration (with sub-registrar of the area)
  2. PAN & TAN (for Income Tax)
  3. 80G and 12A registration (for tax exemption)
  4. FCRA registration (if accepting foreign donations)
  5. GST registration (if engaged in taxable services)

Would you like a checklist for registering a charitable trust or a comparison between trust, society, and Section 8 company? I can also help draft a sample trust deed if needed.

Why Choose Covenant Chambers?

At Covenant Chambers, we combine legal expertise with a passion for philanthropy. Our team is dedicated to helping you maximize the impact of your charitable endeavours while ensuring full compliance with the law.

Contact us today for personalized advice on creating or managing a charitable trust. Together, we can make a difference.

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