How to Register a Public Charitable Trust in India: A Step-by-Step Guide
A Public Charitable Trust is a legally recognized non-profit entity established to promote social welfare, philanthropy, and development initiatives. In NGO India, many organizations and individuals choose to register a Trust to enhance credibility, ensure transparency, and access funding opportunities from government bodies and corporate entities. Understanding how to setup NGO in India or how to make NGO in India is crucial for those committed to social service. Additionally, securing 12A and 80G registration is essential for tax exemptions and attracting donations.
The registration process begins with choosing a unique name for the Trust and defining its objectives in alignment with social welfare activities. The next step involves drafting a Trust Deed, which serves as the legal document outlining the governance structure, objectives, financial policies, and responsibilities of trustees. The Trust Deed must be signed by the Settlor and Trustees in the presence of a Registrar or Sub-Registrar. Essential documents such as identity proof, address proof, and photographs of trustees must be submitted during this process.
Once the Trust is registered, obtaining a Permanent Account Number (PAN) and opening a bank account in the Trust’s name are necessary for financial transactions. To maximize funding opportunities, NGOs must apply for 12A and 80G registration, enabling them to receive tax exemptions and allowing donors to claim deductions on their contributions. Additionally, NGOs seeking foreign funding must register under the Foreign Contribution Regulation Act (FCRA).
Corporate Social Responsibility (CSR) funding is another key financial avenue for NGOs. CSR fund means contributions made by companies under the Companies Act, 2013, to support social initiatives. Many organizations prefer Section 8 Company registration due to its credibility and compliance benefits. Following the correct registration process ensures long-term sustainability and impact in the non-profit sector.
Introduction
A Public Charitable Trust is a legally recognized entity established with the primary objective of promoting social welfare, philanthropy, and development initiatives. It serves as a structured platform for individuals and organizations committed to making a positive impact on society through charitable activities. In NGO India, social entrepreneurs and non-profit organizations frequently opt for Public Charitable Trust registration to ensure their operations are transparent, legally compliant, and eligible for various funding opportunities, including government grants and corporate donations.
For those wondering how to set up an NGO in India or how to make NGO in India, understanding the registration process of a Public Charitable Trust is essential. Registering as a Trust ensures that the organization operates within a legal framework, providing credibility and accountability in its social welfare initiatives. Unlike other forms of NGO registration, such as Society or Section 8 Company Registration a Public Charitable Trust is governed by the Indian Trusts Act, 1882, and does not require a large number of members for its formation.
One of the most crucial aspects of NGO registration is obtaining 12A and 80G registration under the Income Tax Act. These registrations offer significant tax benefits, ensuring that the Trust’s income remains tax-exempt and that donors can claim tax deductions, thereby encouraging donations and financial support. This makes 12A and 80G registration an essential component for NGOs looking to maximize their fundraising efforts and sustain long-term operations.
This guide provides a detailed step-by-step process for registering a Public Charitable Trust in India, highlighting the necessary documentation, legal requirements, and the benefits associated with it. By following this structured approach, individuals and organizations can effectively establish and manage a Trust to contribute to meaningful social change.
What is a Public Charitable Trust?
A Public Charitable Trust is a legally recognized non-profit entity that is established to serve the public by engaging in philanthropic and social welfare activities. It is a structured organization that aims to address various societal issues such as education, healthcare, poverty alleviation, environmental conservation, and other humanitarian causes. These trusts play a crucial role in bridging the gap between government efforts and community needs, providing essential services and resources to underserved populations.
Unlike other forms of NGO registration in India, such as Societies and Section 8 Companies, a Public Charitable Trust operates under the Indian Trusts Act, 1882. One of its distinguishing features is that it does not require a large number of members to be established. A Trust can be formed with just a single Settlor (the person establishing the Trust) and one or more Trustees, making it an efficient and straightforward option for individuals or groups looking to engage in charitable work.
The primary objective of a Public Charitable Trust is to ensure accountability and transparency in managing donated funds and assets for social causes. Since it operates as a non-profit organization, all income generated by the Trust must be utilized for charitable activities rather than distributed as profits. To enhance its credibility and gain access to government grants, corporate funding, and tax exemptions, a Trust should obtain 12A and 80G registration under the Income Tax Act. These registrations help the Trust in securing financial sustainability while also encouraging donors to contribute, as they can claim tax benefits on their donations.
By registering as a Public Charitable Trust, social entrepreneurs and philanthropists can create a structured framework to carry out long-term social impact initiatives, ensuring that their charitable activities are legally recognized and effectively managed.
Why Register a Public Charitable Trust?
Registering a Public Charitable Trust is a crucial step for individuals and organizations dedicated to social welfare, philanthropy, and community development. It offers numerous advantages, making it easier for the Trust to operate effectively, secure funding, and gain credibility. Below are some key reasons why registration is essential:
1. Legal Recognition
A registered Public Charitable Trust is a legally recognized entity, which allows it to function transparently and carry out its charitable objectives without legal hindrances. Registration ensures that the Trust operates under a structured framework, making it easier to establish partnerships with government agencies, donors, and corporate entities.
2. Tax Benefits through 12A and 80G Registration
One of the most significant advantages of registering a Trust is its eligibility for 12A and 80G registration under the Income Tax Act.
- 12A Registration grants tax exemptions on the income of the Trust, allowing it to retain more funds for social initiatives.
- 80G Registration enables donors to claim tax deductions, which encourages more contributions and long-term financial sustainability.
These tax benefits make the Trust an attractive recipient for both individual and corporate donations, strengthening its financial base.
3. Access to CSR Funding
Under the Companies Act, 2013, companies meeting specific financial criteria must allocate a portion of their profits towards Corporate Social Responsibility (CSR) initiatives. A registered Trust with 12A and 80G certification is eligible to receive funds from corporate organizations as part of their CSR obligations. This provides a significant source of financial support for Trusts engaged in education, healthcare, environmental conservation, and other social projects.
4. Eligibility for Government Grants and Foreign Contributions
A registered Public Charitable Trust can apply for government schemes, subsidies, and grants, which further strengthens its capacity to implement large-scale welfare programs. Additionally, if the Trust intends to receive foreign donations, it must be registered under the Foreign Contribution Regulation Act (FCRA). This opens opportunities for international funding, enabling the organization to expand its impact beyond national boundaries.
5. Enhanced Trust and Credibility
Legal registration enhances the credibility and trustworthiness of the organization, making it easier to raise funds, collaborate with stakeholders, and attract volunteers. A properly registered Trust demonstrates transparency, accountability, and good governance, which are essential for gaining public confidence.
How to Set Up an NGO in India: Steps for Public Charitable Trust Registration
If you are wondering how to setup NGO in India or how can I start NGO in India, follow these steps to register a Public Charitable Trust:
Step 1: Decide the Name and Objectives of the Trust
- The chosen name should be unique and not violate any trademark laws.
- Clearly define the objectives and mission of the Trust, aligning with social welfare initiatives.
Step 2: Drafting the Trust Deed
A Trust Deed is a crucial document that outlines the governance, operations, and responsibilities of the Trust. It should include:
- Name of the Trust
- Details of Trustees and Settlor
- Objectives and Scope of Work
- Operational Guidelines
- Financial Management Policies
- Rules for Amendment and Dissolution
Step 3: Selection of Trustees
- A minimum of two trustees is required, though more may be appointed.
- Trustees should be responsible individuals committed to social service.
Step 4: Registering the Trust Deed
- The Trust Deed must be executed on stamp paper of appropriate value.
- The Settlor and Trustees must sign the Trust Deed in the presence of a Registrar/Sub-Registrar.
- Submit identity proof, address proof, and passport-size photographs of all trustees.
Step 5: Obtain PAN and Bank Account for the Trust
After registration, the Trust must:
- Apply for a Permanent Account Number (PAN).
- Open a bank account in the name of the Trust to manage funds and donations.
Step 6: Apply for 12A and 80G Registration
- 12A Registration: Provides tax exemption on the Trust’s income.
- 80G Registration: Allows donors to claim tax deductions on their contributions.
- Applications are filed online with the Income Tax Department, along with Trust Deed, financial statements, and activity reports.
Step 7: Register Under FCRA (If Receiving Foreign Funds)
- NGOs receiving international donations must register under the Foreign Contribution Regulation Act (FCRA).
CSR Fund and Its Importance for NGOs
Corporate Social Responsibility (CSR) Fund is a crucial source of financial support for Non-Governmental Organizations (NGOs) working towards social development. Under the Companies Act, 2013, companies with a net profit exceeding ₹5 crore must allocate at least 2% of their average net profits to CSR activities.
For NGOs, CSR funding provides essential resources to implement projects in areas like education, healthcare, poverty alleviation, environmental conservation, and skill development. To qualify for CSR funding, NGOs must be legally registered as a Trust, Society, or Section 8 Company and obtain 12A and 80G registration for tax exemptions.
CSR funds help NGOs scale their impact, sustain operations, and build credibility with corporate donors, ensuring long-term social change.
What is CSR Funding?
Corporate Social Responsibility (CSR) funding refers to the mandatory financial contributions made by companies towards social development projects in India. Introduced under the Companies Act, 2013, CSR funding ensures that businesses actively participate in social welfare by allocating a portion of their profits to causes that benefit society.
According to the law, companies with a net profit of over ₹5 crore, a net worth of ₹500 crore, or an annual turnover of ₹1,000 crore or more are required to contribute at least 2% of their average net profits from the last three financial years towards CSR initiatives. These funds are directed toward projects in areas such as education, healthcare, environmental conservation, poverty alleviation, skill development, rural development, and women’s empowerment.
To receive CSR funding, NGOs must be registered as a Trust, Society, or Section 8 Company and comply with tax regulations, including obtaining 12A and 80G registration. CSR funding not only helps NGOs implement impactful projects but also strengthens corporate-NGO partnerships, fostering sustainable development in the country.
How to Access CSR Fund?
Accessing Corporate Social Responsibility (CSR) funding is essential for NGOs seeking financial support for their social initiatives. To secure CSR funding, organizations must follow a structured approach that ensures compliance with legal requirements and aligns with corporate expectations.
1. Register the NGO as a Section 8 Company, Trust, or Society
To be eligible for CSR funding, an NGO must be a legally recognized entity. The three primary structures for NGO registration in India are:
- Public Charitable Trust (governed by the Indian Trusts Act, 1882)
- Society (registered under the Societies Registration Act, 1860)
- Section 8 Company (registered under the Companies Act, 2013)
Among these, Section 8 Company registration is often preferred by corporations due to its transparency, structured governance, and ease of compliance.
2. Obtain 12A and 80G Registration for Tax Benefits
NGOs must apply for 12A and 80G registration under the Income Tax Act to qualify for tax exemptions and make donations more attractive to corporate sponsors.
- 12A Registration exempts the NGO’s income from taxation.
- 80G Registration allows donors, including corporations, to claim tax deductions on their contributions.
Having these registrations enhances an NGO’s credibility and increases its chances of securing CSR funding.
3. Approach Companies Aligning with Your NGO’s Objectives
Corporations prefer funding NGOs whose social initiatives align with their CSR policies. NGOs should:
- Research companies that actively support projects in their area of work (e.g., education, healthcare, environment).
- Network with corporate CSR teams and stakeholders to establish connections.
- Maintain a strong track record of past projects and financial transparency.
4. Submit Project Proposals Demonstrating the Impact of Funding
A well-prepared CSR project proposal is crucial in securing funding. The proposal should include:
- A clear mission and objectives of the NGO.
- A detailed project plan outlining activities, beneficiaries, and expected impact.
- A budget estimate specifying fund utilization.
- A monitoring and evaluation framework to ensure accountability.
Companies prioritize NGOs with measurable impact, effective governance, and alignment with their CSR objectives. By following these steps, NGOs can successfully secure CSR funds to drive social change and expand their outreach.
Differences Between Public Charitable Trust, Society, and Section 8 Company
| Aspect | Public Charitable Trust | Society | Section 8 Company |
|---|---|---|---|
| Governing Law | Indian Trusts Act, 1882 | Societies Registration Act, 1860 | Companies Act, 2013 |
| Minimum Members | 2 or more Trustees | 7 or more Members | 2 or more Directors |
| Registration Authority | Sub-Registrar Office | Registrar of Societies | Ministry of Corporate Affairs (MCA) |
| Tax Benefits | Eligible for 12A & 80G | Eligible for 12A & 80G | Eligible for 12A & 80G |
| CSR Fund Eligibility | Yes | Yes | Yes |
| Best for | Charitable and religious activities | Educational and research institutions | Large-scale social enterprises |
Comprehensive Benefits of Section 8 Company Registration for NGOs
Establishing a non-profit organization in India requires selecting the right legal structure to ensure transparency, accountability, and financial sustainability. Among the available options—Public Charitable Trusts, Societies, and Section 8 Companies—the Section 8 Company registration is highly favored for large-scale operations due to its legal credibility, structured governance, and ability to attract funding, including Corporate Social Responsibility (CSR) contributions. Below are the key advantages of registering an NGO as a Section 8 Company.
1. High Credibility and Strong Legal Recognition
A Section 8 Company is registered under the Companies Act, 2013, which makes it one of the most transparent and legally recognized forms of NGO registration. It is governed by the Ministry of Corporate Affairs (MCA) and must comply with strict financial and operational regulations, ensuring high levels of trust among:
- Government agencies, facilitating grant approvals
- Corporate donors, seeking reliable CSR partners
- Foreign contributors, looking for legally structured organizations
Since Section 8 Companies are subject to stringent compliance standards, they automatically enjoy a higher level of credibility than Trusts and Societies.
2. Greater Tax Benefits Through 12A and 80G Registration
One of the most significant advantages of a Section 8 Company is its ability to obtain 12A and 80G registration easily, which provides key tax exemptions:
- 12A Registration: Grants the NGO complete tax exemption on its income, allowing it to retain and reinvest more funds for charitable activities.
- 80G Registration: Enables donors to claim tax deductions on their donations, making fundraising easier and more attractive.
These tax benefits significantly improve an NGO’s ability to secure financial support from individuals, corporations, and philanthropic institutions.
3. Limited Liability Protection for Members
A Section 8 Company provides limited liability protection to its directors and members, unlike Trusts and Societies, where personal liability may arise in financial or legal disputes. This means:
- Directors and members are not personally liable for the company’s financial losses.
- Their personal assets remain protected even if the NGO faces debts or legal challenges.
- The organization can take calculated risks in expanding its initiatives without jeopardizing the financial security of its members.
This legal safeguard makes Section 8 Companies the preferred choice for individuals and organizations planning to establish large-scale NGOs.
4. Increased Eligibility for CSR Funding
Corporate organizations in India must allocate at least 2% of their net profits towards CSR activities under the Companies Act, 2013. Due to their strict regulatory framework and transparency, Section 8 Companies are often prioritized over Trusts and Societies when corporations distribute CSR funds.
Why CSR funders prefer Section 8 Companies:
- Legal recognition under the Companies Act enhances trust.
- Accountability and financial transparency ensure proper fund utilization.
- Tax benefits (12A & 80G) make donations more appealing to corporations.
By registering as a Section 8 Company, NGOs increase their chances of obtaining financial support from corporate entities, thereby ensuring long-term sustainability.
Challenges Faced During Public Charitable Trust Registration
Although registering a Public Charitable Trust is beneficial, challenges include:
- Legal Compliance: Adhering to tax laws, FCRA, and CSR fund regulations.
- Fundraising Difficulties: Securing corporate donations, CSR funding, and government grants.
- Transparency and Accountability: Maintaining clear financial records to retain credibility.
Conclusion
Setting up a Public Charitable Trust is a significant step toward promoting social welfare and addressing critical societal issues. The process of establishing an NGO in India—whether as a Trust, Society, or Section 8 Company—requires careful planning, legal compliance, and strategic execution. Those interested in starting an NGO must understand the legal requirements and registration process to ensure smooth operations and financial sustainability.
To successfully register an NGO, one must focus on proper documentation, including drafting a Trust Deed, specifying objectives, and fulfilling the compliance requirements outlined under relevant laws, such as the Indian Trusts Act, 1882, the Societies Registration Act, 1860, or the Companies Act, 2013 for Section 8 Companies. Ensuring 12A and 80G registration is essential, as it provides tax exemptions and makes the organization more attractive to donors, philanthropists, and corporate sponsors. These registrations allow NGOs to retain more funds for social projects and incentivize donations by offering tax benefits to contributors.
In addition to government grants and public donations, securing Corporate Social Responsibility (CSR) funding is a crucial factor in maintaining an NGO’s financial health. Under the Companies Act, 2013, corporations are mandated to allocate a portion of their profits toward social development projects. Registered NGOs, especially Section 8 Companies, are preferred recipients of CSR funding due to their structured financial framework and transparent operations. This additional funding ensures long-term sustainability, allowing NGOs to expand their reach and create a meaningful impact in society.
By following the correct registration procedures, maintaining transparency, and leveraging available tax benefits and funding opportunities, NGOs in India can strengthen their credibility, enhance financial stability, and efficiently achieve their social objectives. A well-structured and legally compliant NGO is better positioned to drive lasting change and make a significant difference in society.
Why Choose Vakilkaro for Public Charitable Trust Registration and Other Legal Services?
When setting up a Public Charitable Trust, NGO, Section 8 Company, or any other legal entity, ensuring compliance with regulatory requirements is crucial. Vakilkaro stands out as a trusted legal service provider, offering end-to-end assistance for NGO registration, tax exemptions, and compliance needs. Here’s why Vakilkaro is the right choice:
1. Expert Guidance & Hassle-Free Registration
Vakilkaro has a team of experienced legal professionals specializing in Public Charitable Trust registration, Section 8 Company registration, and Society registration. They simplify the legal process, ensuring compliance with the Indian Trusts Act, Companies Act, and Societies Registration Act.
2. Assistance with 12A & 80G Registration
To benefit from tax exemptions and attract donations, NGOs need 12A and 80G registration. Vakilkaro ensures a smooth application process, helping NGOs gain tax-exempt status and making them eligible for donor tax deductions.
3. CSR Fund & Government Grant Assistance
Securing Corporate Social Responsibility (CSR) funding and government grants is essential for NGOs. Vakilkaro helps in CSR fund application, proposal drafting, and corporate outreach, ensuring NGOs maximize funding opportunities.
4. Transparent & Cost-Effective Services
Vakilkaro offers affordable pricing with no hidden charges, providing a cost-effective solution for NGOs and businesses. Their transparent process ensures clients receive timely updates and expert advice.
5. End-to-End Legal & Compliance Support
Beyond registration, Vakilkaro provides business licenses, trademark registration GST compliance tax advisory, and legal documentation, making them a one-stop solution for legal and corporate services.
Whether you are starting an NGO, seeking 12A & 80G registration, or applying for CSR funding, Vakilkaro offers reliable, efficient, and expert legal assistance. Their expertise ensures a seamless registration process, allowing organizations to focus on their social mission while staying legally compliant.