Trust registration with Income Tax - Part 2

In 2nd part of the article, we will see the clauses which are very important for 80G certification.

Object Clause- The trust deed should not contain any object clause that seems to be of a commercial nature.

Irrevocable Clause-  Another very important clause it states that  “it is expressly provided & agreed that the trusts created by this Deed of Trust by settler is irrevocable. The trust is irrevocable”.

Property Clause- In this clause, we specifically mentions that “The funds/ property of the trust will be used only for the objectives of the Trust.”

Investment Clause- This clause should state that, the investments shall be done as per section 11(5) of the Income Tax Act.

Utilization of Profits Clause-  This clause is to include and should mention that, The profits or income of the trust shall be solely used for the objects of the trust and for the benefit of the public at large. (as the case may be)

Amendment Clause- This clause is to be included in the trust deed separately stating that Board of Trustee will have power to omit, alter, amend or change any clause of the said trust but subject to the permission of the charity commissioner.

Beneficiaries Clause- This clause is essential and should be stated as follows, The beneficiaries of the Trust are a section of the public and not specific individuals. The beneficiaries are a section of the  public not specific individuals irrespective of caste,  class, race, creed, gender or individual.

Winding up Clause- in this clause it is to be specifically stated that in the event of winding up of the trust assets left if any, shall be disbursed/ transferred only to some other Trust or Association having similar objectives with the permission of the Charity Commissioner / Court / any other applicable authority(ies) as may be applicable for the time being.

Some points to have knowledge about

Q. If a NGO wants to avail 80G certificate then which is the fast and less time consuming mode to register it  society/ trust/ section 8 Company and which will be more beneficial?

Ans. Both ways income tax has become stringent. Earlier it was very easy to get 80G be it company or trust.There is no hard and fast rule. Everything is common under IT Act. The law is very strict to get such Certificate for any form of Organisation.So just check what is beneficial


This blog is authored by Company Secretary Ronak Gupta. He is author of many blogs and runs many websites and youtube channels. His work is dedicated to corporate laws, legal, secretarial, professional services and also in strategy formulations for corporates. Mail him at: csronakgupta23@gmail.com or call at :9910226715

Comments

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