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Tag Archives: Income of Trusts

Trust Registration in India

A private trust, created under and governed by the Indian Trusts Act of 1882, aims at managing assigned trust property for private or religious purpose.

The law relating to private trusts is governed by the Indian Trusts Act (“Trust law”). A trust is basically a vehicle under which property is transferred from the original owner and held by the person to whom it is transferred for the benefit of another. The “author of the trust”, the “trustee”, the “beneficiary”, the “trust-property”, the “beneficial interest” and the “instrument of trust” are the integral elements of a trust. A trust can be created for any lawful purpose.

Trust Registration and Tax Rate – Income Tax

Trust formed for charitable or religious purposes which are not intended to do commercial activities are allowed various benefits under the Income-Tax Act, inter-alia, exemption under section 11.
The term religious purpose is not defined under the Income-Tax Act. However, Section 2(15) of the Act defines “charitable purpose” to include relief of the poor, education, medical relief, preservation of environment (including watersheds, forests and wildlife) and preservation of monuments or places or objects of artistic or historic interest, and the advancement of any other object of general public utility.

Income of Trusts

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In India there are many religious/charitable trusts for e.g. temples, Ashram, Gurudwaras, hospitals, educational, etc. propagating and working for social and charitable activities. What about their financial and taxing matters?

These trusts have to follow many regulations. Mainly they have to follow the rules of Bombay Public Trust Act (For Maharashtra State), Indian Societies Act, Companies Act (old sec 25 and new section 8) and Income Tax Act. Further if the trust receives donation from foreign then registration under Foreign Contribution Regulation Act is required.  

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