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.
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.
Charitable Purpose: a charitable purpose includes
(a) relief of poverty or
(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.
3. REGISTRATION OF TRUST
(i) Apply to Asst./Deputy Charity
Commissioner of the region in Schedule II (prescribed form) affix court fees
stamp of Rs. 100.
(ii) Application to be made within
3 months of creation of the trust.
(iii) Documents to be submitted at
the time of registration
(a) covering letter
(b) Schedule II (the signatory
to the application to affirm & subscribe before appropriate authority)
(c) trust deed certified
copy/memorandum of association and rules & regulations (in case of society)
(d) affidavit in prescribed
(e) consent letter signed by the
remaining trustees and stating that they hereby allow the applicant trustee
to represent on their behalf and complete all registration formalities and
obtain the certificate of registration.
(f) prescribed application fees
based on value of the property.
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
4. REGISTER UNDER SEC. 17/SCHEDULE I
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.
5. INTIMATION OF CHANGE: Sections 22
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.
6. IMMOVABLE PROPERTY (SEC. 36)
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
7. BORROWING POWERS OF TRUSTEES
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.
8. CONTRIBUTION TO CHARITY
COMMISSIONER (SEC. 58) (SCH. IXC)
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:
(a) Donations received from other
public trusts and dharmadas
(b) Grants received from
government & local authorities
(c) Interest on sinking and
(d) Amount spent for secular
education/ medical relief/veterinary treatment of animals
(e) Expenditure incurred from
donations for relief of distress caused by natural calamity
(f) Deduction of land revenue,
rent payable to landlord, cost of production out of income from land used for
(g) Deductions of municipal taxes,
ground rent, cesses, insurance premia, repairs @10% of gross rent of let out
buildings out of income from land used for non agricultural purposes
(h) Cost of collection of income
or receipts from securities, stock etc. @1% of such income
(i) Deduction in respect of
repairs of building (yielding no income) @10% of estimated gross annual rent.
The following trusts are exempt
from payment of contribution —
(a) public trusts having gross
annual income of Rs. 25000 or less
(b) public trusts exclusively for
advancement/propagation of secular education/medical relief/veterinary
(c) recognised public libraries
and reading rooms
(d) public trusts exclusively for
the purpose of relief of distress caused by scarcity, drought, flood, fire, or
any other natural calamity.
9. INVESTMENTS (SEC. 35)
A public trust can invest its
funds in any of the following modes :
(a) scheduled bank as defined in
RBI Act, 1934
(b) postal savings bank
(c) co-operative bank approved by
(d) public securities being
securities of Central/State government (includes Units of UTI)
(e) first mortgage of immovable
property situated in India provided the property is not leasehold for a term
of 99 years and the value of the property exceeds by one half of the mortgage
(f) any other investment permitted
by Charity Commissioner, not exceeding 50% of total investment
10. BUDGET (SEC. 31A & RULE 16A)
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.
11. ACCOUNTS AND AUDIT (SECs. 32 &
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
12. CHANGING THE OBJECTS OF THE
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.
13. AMALGAMATION OF TRUSTS
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.
14. FOREIGN CONTRIBUTION
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.
15. PENALTIES (SECTION 66)
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.
16. DIFFERENCE BEWEEN PUBLIC AND
PRIVATE TRUST CAN BE STATED BRIEFLY AS UNDER:
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
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
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.