In the State of Maharashtra, the legislation governing Public Trust is Bombay Public Trusts Act, 1950. Similar legislation by the same name prevails in the State of Gujarat also. This is because, the Act was passed when Maharashtra and Gujarat were one. Gujarat State after its separation has made certain variations according to their requirements. But more or less both the states have similar provisions. Under the BPT Act, the Charity Commissioner is the guardian of the trusts. The office of the Charity Commissioner has been given the powers of supervision, regulation and control of public trusts. It is compulsory for every public trust to register with the charity Commissioner so as to ensure proper administration and Management.

Sec. 2(13): Public Trust : means an express or constructive Trust for either public or charitable purpose or both and includes a temple, a math, a wakf, church, synagogue, agiary or any other religious or charitable endowment and a society formed either for religious or charitable purpose or both and registered under the Societies Registration Act, 1860.

Sec. 9(1): Charitable Purpose: a charitable purpose includes

(a) relief of poverty or distress

(b) education

(c) medical relief

(d) provision for facilities for recreation or other leisure time occupation (including assistance for such provision), if the facilities are provided in the interest of social welfare and public benefit, and

(e) the advancement of any other object of general public utility, but does not include a purpose which relates exclusively to religious teaching or worship.

In order to be a public trust, it is not essential that the trust should benefit the whole of mankind or all the persons living in a particular state or city. It is said to be a public trust if it benefits a sufficiently large section of the public as distinguished from specified individuals. Also if the beneficiaries of the trust are uncertain or fluctuating, then the fact that the beneficiaries belong to a certain religion/caste does not make any difference.

Memorandum of particulars of immovable property to be filed within 3 months of creation of trust in Schedule IIA. Application for registration of a public trust created by will has to be made within 1 month of granting of probate (i.e., copy of will certified under the seal of the Court) or within 6 months of testator’s death, whichever is earlier. In case of a society, it will have to be registered under the Societies Registration Act as well as with the Charity Commissioner. Unlike trusts, societies have a more democratic set up. There is usually a scheme of election for members of the governing council/managing committee. In case of trust, generally new trustees are appointed by invitation of the sitting trustees.

The office of the Charity Commissioner maintains a register in schedule I containing all details of the Trust viz. Regn No., details of trustees, trust property etc. A copy of the same can be obtained by filing an application along with the prescribed fees.

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. No permission is necessary if immovable property is acquired to fulfill objects of the trust; e.g.; construction of school building, library etc. 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.

A trustee of every public trust shall administer the affairs of the trust & apply the funds & properties thereof for the purpose & object of the trust in accordance with the terms of the trust, usage of the institution & lawful directions which the charity commissioner or court may issue in respect thereof & exercise the same care as a man of ordinary prudence does when dealing with such affairs, funds or property as if they were his own,

No trustees shall borrow moneys (whether by way of mortgage or otherwise ) for purpose of or on behalf of trust except with previous sanction of the Charity Commissioner and subject to such conditions and limitations as may be imposed by him in the interest or proection of the trust.

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:

The following trusts are exempt from payment of contribution —

A public trust can invest its funds in any of the following modes :

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. Every such budget shall make adequate provision for carrying out the object of the trust, & for the maintenance & preservation of the trust property.

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 Schedules 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 may inturn 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 & utilised. 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.

Maximum fine of Rs. 1,000 is payable on failure to apply for registration within time, failure to keep regular accounts, failure to pay contribution, failure to invest money in public securities, failure to report a change. Failure to send memoranda of immovable property within time attracts penalty of Rs. 200. Failure to apply in time u/s 22B or failure to send memoranda within time u/s. 22C attracts penalty of Rs. 100. Failure without reasonable cause to comply with Sec. 41 AA (i.e., reserving hospital beds for poor patients) attracts penalty of Rs. 2,000. W.e.f. 16-9-2005 (As per Maharashtra Ordinance 6 of 2005) value of court fees stamps to be affixed to various documents submitted to Charity Commissioner have been revised.

i) One is for the benefit of private individuals and the other is for the benefit of public in general or a section of the public.

ii) Private trust is limited in duration, the other is not.

iii) In private trust the beneficiaries are limited and known. In a public trust the beneficiaries are a large.

iv) Public trust is controlled by special statutes and the authority like charity commissioner has full control over the management of the trust which is not the case with private trust.

v) A private trust cannot be altered except to the extent provided in the trust deed while under the Bombay Public Trust Act he Charity Commissioner and the Courts are given power to alter or even to change the whole scheme of the original trust in certain circumstances.

vi) There are also significant differences regarding the tax treatment of public & private trust. Public trusts enjoy favorable tax treatment, particularly with regard to donations. The tax treatment of private trusts varies hugely depending on the terms of the individual trust.