Under Trusts Act

Documentation required for registration under Trusts Act : :

Various states of the country have different provisions for documentation requirement of trust registered under the law applicable in the state. An illustrative list of document required under Bombay Public Trust Act is given below:

Where any change occurs in any of the entries recorded in Schedule I, the same has to be intimated to Charity Commissioner within 90 days of occurrence of change in Form “Schedule III’” along with relevant documentary evidence. Intimation of change relating to any immovable property has to be given in Form ‘Schedule IIIA’ (change report) Affix court fees stamp of Rs. 100.

Investment in immovable property requires Charity Commissioner’s permission. Prior permission of Charity Commissioner is required for sale, exchange, gift of any immovable property, lease exceeding a period of 3 years in case of non-agricultural land/building, lease exceeding 10 years in case of agricultural land

No trustees shall borrow money for the purpose of or on behalf of trust except with previous sanction of the Charity Commissioner.

A public trust (other than one which is exempt) having gross annual income (from all sources) exceeding Rs. 25,000 has to pay contribution to the Public Trust Administration Fund @2%. Gross annual income excludes corpus donations. Contribution is payable @2% on the gross annual income after making the deductions prescribed in Rule 32 which are stated hereunder:
a. Donations received from other public trusts and dharmadas
b. Grants received from government & local authorities
c. Interest on sinking and depreciation fund
d. Amount spent for secular education/ medical relief/veterinary treatment of animals
e. Expenditure incurred from donations for relief of distress caused by natural calamity
f. Deduction of land revenue, rent payable to landlord, cost of production out of income from land used for agricultural purpose
g. Deductions of municipal taxes, ground rent, cesses, insurance premia, repairs @10% of gross rent of let out buildings out of income from land used for non agricultural purposes
h. Cost of collection of income or receipts from securities, stock etc. @1% of such income
i. Deduction in respect of repairs of building (yielding no income) @10% of estimated gross annual rent.

The following trusts are exempt from payment of contribution –
a. Public trusts having gross annual income of Rs. 25000 or less
b. Public trusts exclusively for advancement/propagation of secular education/medical relief/veterinary treatment
c. Recognized public libraries and reading rooms.
d. Public trusts exclusively for the purpose of relief of distress caused by natural calamity.

Trustee of every public religious trust having annual income exceeding Rs. 5000 and Rs. 10000 in case of other trusts has to prepare and submit the budget to the Charity Commissioner, one month before the commencement of the accounting year. The budget has to be prepared as per format given in Schedule VIIA.

ACCOUNTS AND AUDIT (SECs. 32 & 33, 34)
Regular accounts to be maintained. Balance sheet to be prepared as per Schedule VIII and Income and Expenditure account as per Schedule IX. If the trust/society operates in more than one city or geographical region with separate branch or project offices, the accounts of all such branches or project offices should be consolidated. However it is permissible to file separate accounting returns if filed at one time. Contribution u/s. 58 has to be made as per consolidated income. In case of religious trusts, gold, silver and other valuable articles should be valued after every 10 years and a footnote as to such value should be given in the balance sheet. Accounts shall be balanced on 31st March every year or on such other day as may be fixed by the Charity Commissioner. Audit should be completed within 6 months of the completion of the accounting year. The auditor shall forward a copy of the Balance Sheet and Income & expenditure account along with his Audit report to the Deputy or Assistant Charity Commissioner within a fortnight of the audit. Trust having an annual income of Rs. 15000 or less is exempt from audit. Trust exempted from audit is required to file affidavit as to the extent of their income and also has to file accounts in Schedule IX-A and IX-B within 3 months of the completion of the accounting year.

Sometimes, a trust created for certain specific objects fails due to unforeseen circumstances. In such cases the doctrine of cy pres comes into play. The meaning of the phrase ‘cy pres’ is as near as possible. i.e. the trust can change its objects and the funds can be used for a similar other purpose. For this an application has to be made to the Charity Commissioner who inturn may further require the trust to take sanction from the Court. 

To rescue financially weak trusts sec. 50A(2) of the BPT Act lays down the provisions for legally amalgamating two or more trusts with similar objects.

All trusts receiving foreign contribution (i.e., any article, currency whether Indian or foreign, foreign securities received from a foreign source) have to register with the Central Govt. under FCRA. Moneys received in Indian currency from companies in India that are foreign controlled are also considered as foreign contributions. The Government is to be intimated in Form FC-3 within 30 days of the receipt of foreign contribution. Separate accounts have to be maintained of the foreign contribution received & utilized. Every account so maintained shall be audited by C.A. along with Balance sheet and statement of receipts and payments. It has to be furnished to the Secretary, GOI, Ministry of Home Affairs, New Delhi, within 60 days of closure of the year.