Charitable Trust Deed (India)

A Charitable Trust Deed in India creates a trust over the property, naming the trustees and beneficiaries and setting out how the assets are to be held and applied.

Public charitable trusts in India are regulated by the Income Tax Act 1961, the Indian Trusts Act 1882, the Charitable Endowments Act 1890, and — in several states — dedicated state legislation. The Maharashtra Public Trusts Act 1950 (administered by the Charity Commissioner, Maharashtra) is among the most detailed. Similar legislation exists in Gujarat, Rajasthan, and other states. In states without dedicated public trust legislation, the Indian Trusts Act 1882 and the Income Tax Act 1961 form the primary legal framework.

Charitable purposes recognised under Section 2(15) of the Income Tax Act 1961 include: (a) relief of the poor; (b) education; (c) yoga; (d) medical relief; (e) preservation of the environment including watersheds, forests, and wildlife; (f) preservation of monuments or places of artistic or historic interest; and (g) advancement of any other object of general public utility. The last category has specific restrictions — activities that involve trade, commerce, or business beyond specified monetary limits may disqualify the trust from charitable status.

The Charitable Trust Deed must clearly state the trust's objects (charitable purposes), the management structure (trustees, their powers and duties), the mode of succession of trustees, the investment powers of trustees limited to Section 11(5) authorised modes, and the irrevocability of the trust for charitable purposes. The Deed must be executed on stamp paper of the value prescribed by the applicable state stamp act and registered with the Sub-Registrar of Assurances under Section 17 of the Registration Act 1908.

After registration, the trust must: obtain a PAN from the Income Tax Department using Form 49A; apply for provisional 12AB registration using Form 10A through the income tax e-filing portal; apply for 80G approval to allow donors to claim deductions under Section 80G of the Income Tax Act 1961; and, in Maharashtra and other regulated states, register with the Charity Commissioner. Forms-legal.com provides this India Charitable Trust Deed as a starting point — always engage a Chartered Accountant and advocate for the registration process.

A charitable trust in India may be registered under multiple frameworks depending on the state and intended purpose. In Maharashtra and Gujarat, the Bombay Public Trusts Act 1950 (BPTA 1950) provides the primary registration mechanism through the Office of the Charity Commissioner. In states without a specific public trusts legislation — including Delhi, Karnataka, and Tamil Nadu — public charitable trusts may register under the Registration Act 1908 by executing a Trust Deed before a Sub-Registrar. Section 17 of the Registration Act 1908 requires compulsory registration for instruments that create trusts of immovable property. Societies incorporated under the Societies Registration Act 1860 or the relevant state societies act (such as the Karnataka Societies Registration Act 1960 or the Tamil Nadu Societies Registration Act 1975) constitute an alternative vehicle for charitable purposes.

For tax exemption, registration under Section 12AB of the Income Tax Act 1961 (which replaced the old Section 12AA registration from April 2021) is essential. The Principal Commissioner of Income Tax (Exemptions) [PCIT(E)] grants registration for a period of five years, renewable on application. Section 80G registration enables donors to the trust to claim deduction against their taxable income — 50% of the donation amount qualifies as deduction under Section 80G(2)(a)(iv) for trusts having 12AB registration. Forms-legal.com provides this India Charitable Trust Deed as a starting point — always register with the Charity Commissioner or Sub-Registrar and obtain Income Tax registrations before commencing charitable activities.

A Charitable Trust Deed is needed when individuals, families, or organisations wish to establish a permanent structure for philanthropic activities — running schools, hospitals, or welfare organisations; providing scholarships; supporting environmental or cultural causes; or conducting any activity for the benefit of the public.

A charitable trust is the preferred vehicle when the founders wish to make tax-efficient donations and enable third-party donors to claim 80G deductions under the Income Tax Act 1961. Section 80G allows donors (individuals and companies) to claim a deduction of 50% to 100% of the donated amount from their taxable income, depending on the category of the recipient trust and the amount donated.

A Charitable Trust Deed is also appropriate when the founders wish to receive foreign contributions from overseas donors. Under the Foreign Contribution (Regulation) Act 2010 (FCRA), administered by the Ministry of Home Affairs, only trusts and organisations registered under FCRA may receive foreign donations. FCRA registration requires that the trust has been registered for at least three years and has spent at least ₹15 lakh on charitable activities in the three preceding years.

For Corporate Social Responsibility (CSR) under Section 135 of the Companies Act 2013, companies with net worth of ₹500 crore or more, or turnover of ₹1,000 crore or more, or net profit of ₹5 crore or more are required to spend 2% of average net profits on CSR. Eligible CSR activities may be carried out through a registered charitable trust with a track record of at least three years. A properly structured Charitable Trust Deed is therefore essential for trusts that wish to receive CSR funding. Forms-legal.com provides this India Charitable Trust Deed as a starting point — always engage a qualified Chartered Accountant for the 12AB and 80G registration process.

A Charitable Trust Deed is also needed when a family wishes to establish a family philanthropy vehicle that can receive contributions from family members and deploy them for public benefit — while providing the family members with Section 80G tax deductions on their contributions. High-net-worth families and business houses use public charitable trusts as the vehicle for corporate social responsibility (CSR) spending under Section 135 of the Companies Act 2013. Companies meeting the CSR threshold (net worth of Rs 500 crore or more, or turnover of Rs 1,000 crore or more, or net profit of Rs 5 crore or more) must spend 2% of average net profits on CSR activities — contributions to public charitable trusts registered under Section 12AB and Section 80G are eligible CSR expenditure under Schedule VII of the Companies Act 2013.

A Charitable Trust Deed is further needed when a religious institution or endowment (such as a temple, mosque, gurudwara, or church managing body) needs to formalise governance and succession arrangements for management of religious properties. State-specific legislation — such as the Tamil Nadu Hindu Religious and Charitable Endowments Act 1959, the Andhra Pradesh Charitable and Hindu Religious Institutions and Endowments Act 1987, and the Karnataka Hindu Religious Institutions and Charitable Endowments Act 1997 — govern these institutions separately from general public trusts. Forms-legal.com provides this India Charitable Trust template — engage a tax consultant to apply for 12AB and 80G registrations simultaneously with the trust deed registration.

A well-drafted India Charitable Trust Deed must include the following provisions to satisfy the requirements of the Indian Trusts Act 1882, the Income Tax Act 1961, and applicable state trust legislation.

Trust name and registered office: The name of the trust and its principal place of operation.

Settlor details: Full name, address, and PAN of the person or persons establishing the trust (the authors of the trust).

Trustee details: Names, addresses, and PANs of all initial trustees. Minimum and maximum number of trustees. Procedure for appointment of new trustees (on retirement, death, or removal). Quorum and decision-making procedure at trustee meetings. The settlor may or may not serve as a trustee.

Charitable objects: The objects must be precisely stated and must fall within the categories of Section 2(15) of the Income Tax Act 1961 — education, medical relief, relief of poverty, environmental preservation, preservation of monuments, yoga, or general public utility. Vague objects such as 'welfare of the public' without specificity may be rejected by the Principal Commissioner of Income Tax (PCIT) at the 12AB registration stage.

Trust property: Schedule of assets transferred to the trust at inception (cash, movable property, or immovable property). For immovable property, the Transfer of Property Act 1882 and the Registration Act 1908 require a registered instrument.

Powers of trustees: Powers to invest trust funds in Section 11(5) authorised modes (government securities, FDs in nationalised banks, SEBI-approved securities, etc.); powers to make grants, disburse scholarships, run programmes; powers to employ staff; powers to open bank accounts; powers to enter into contracts; and powers to receive donations.

Section 13 compliance: Express prohibition on providing any benefit (loans, accommodation, services at below-market rates, unreasonable remuneration) to specified persons — settlors, trustees, persons with substantial interest, and their relatives — to preserve Section 11 income tax exemption.

Amendment provisions: The objects clause of a charitable trust generally cannot be amended after registration. Other administrative provisions may be amended by a specified majority of trustees with intimation to the income tax authorities.

Accounts and audit: Accounts to be maintained in accordance with Section 11 of the Income Tax Act 1961. Mandatory audit by a Chartered Accountant in Form 10B or 10BB when total income (before exemption) exceeds ₹2,50,000.

Dissolution: On winding up, all remaining assets must be transferred to another charitable organisation registered under Section 12AB and holding 80G approval — no assets may revert to the settlor or trustees.

Compliance registrations: PAN application using Form 49A; provisional 12AB registration through Form 10A; 80G application through Form 10G; FCRA registration through the Ministry of Home Affairs portal if foreign donations are intended; state Charity Commissioner registration if required in the state. Forms-legal.com provides this India Charitable Trust Deed template — consult a Chartered Accountant experienced in trust registrations for the complete compliance process.

Application for 12AB registration: The trust must file Form 10A (for new registration) or Form 10AB (for re-registration/renewal) on the Income Tax e-filing portal within three months of the trust deed registration or within the timeline prescribed by CBDT. The application must attach the trust deed, list of trustees, PAN of the trust, details of activities, and audited accounts (if available). The PCIT(E) may grant provisional registration valid for three years on Form 10AC, which must be converted to regular 5-year registration by filing Form 10AB at least 6 months before the provisional registration expires.

Application for 80G registration: Filed simultaneously with 12AB on Form 10A/10AB. The PCIT(E) issues approval in Form 10AC. The trust must obtain a unique 80G registration number which must be quoted on all donation receipts issued to donors. Donors must obtain a stamped receipt (Form 10BE) from the trust to claim deduction. CBDT requires trusts to file a statement of donations received in Form 10BD by May 31 of each assessment year.

Compliance obligations: Annual filing of ITR-7 (Income Tax Return for charitable trusts) by the due date under the Income Tax Act 1961; filing of audit report in Form 10B or 10BB (depending on income) by a Chartered Accountant under Section 12A(b); compliance with application of income — at least 85% of income must be applied for charitable purposes in India in each year (Section 11). Forms-legal.com provides this India Charitable Trust Deed template — always consult a Chartered Accountant for tax registration and compliance.