NGO is an organization constituted through legal means, operated by a legal person who works apart from government, apparently if NGOs are funded through government but it is barred from participating as to secure its non-governmental status. In India, NGO can be registered as a trust, society or a private limited non-profit Company. Individuals involved with NGO generally serve in a fiduciary capacity and are committed towards broadcasting information.




A “trust” is an obligation annexed to the ownership of property, and arising out of a confidence reposed in and accepted by the owner, or declared and accepted by him, for the benefit of another, or of another and the owner.

A trustee is entrusted with the responsibility to safeguard the interest of the beneficiary by the ‘author of the trust’. ‘Beneficiary’ is a person for whose benefit trust confidence is reposed or declared. The ‘interest’ of the beneficiary or ‘beneficial interest’ is a right against the trustee as owner of the trust property. The subject matter of the trust is called ‘trust property’ or ‘trust money’.

Trust in simple terms means, the responsibility assigned to the trustee to safeguard the interest of the beneficiary. The interest of the beneficiary is paramount. If the trustee breached any duty assigned to him, it is a breach of trust.


Trusts are of two types, ‘Private Trust’ and ‘Public Trust’. Private Trust is created for one or more certain number of individual. It is created for private purpose. It is governed by the Indian Trust Act, 1882. It may be created by a will or a gift.

Public Trust is established to fulfil area concern public utility and floated where it provides for property especially dealing in land and buildings; also a form of NGO which has to be registered by Charity Commissioner Office having jurisdiction over it, making it eligible to opt for tax-exemption. There is no Central Legislation to govern Public Trust, however, some states have enacted legislative provisions to regulate Public Trust, for instance, Bombay Public Trust Act, 1950. Public trust is essentially charitable or religious trust. It may also be created by inter vivos or by will.


As per Section 5 of the Indian Trust Act, private trust in relation to immovable property must be created by a non – testamentary instrument signed by the author or the trustee and registered. Therefore, registration of trust is necessary when it is declared in non – testamentary instrument.

In the case of private trust declare by will or gift, registration will not be required in the case of immovable property or movable property as well.

In the case of Public Trust, registration of trust created in relation movable and immovable property or whether created under a will or gift is not mandatory but desirable.


An application is made in Form 10A and in the prescribed manner to the Commissioner of Income Tax within one year from the date on which trust is created.

When the total income of the trust or institution, without giving effect to the provisions of Section 11 and 12 of Income Tax Act,1961 exceeds Rs.50,000 in a previous year. The account and trust or institution is audited by the charted accountant or any other accountant entitled to be appointed as an auditor of companies.

In case of Charitable or Religious Trust, for claiming an exemption under S’11 and S’12 of I T Act, 1961, it is essential that the instrument is duly registered. Therefore, registration is not mandatory but desirable.


Society is an association of seven or more person for literary, scientific and charitable and other purposes mentioned under S’20 of the Society Registration Act, 1860. By subscribing their name to the memorandum of association and filing the same with the registrar of Joint Stock Companies, they form themselves into a Society. These organizations are governed and maintained by the Society Registration Act, 1860 (SRA), unlike trust it can be dissolved and does not need to be executed on stamp papers like trust deed.. The main instrument for registration is MOA and rules and regulations wherein aims and object are enshrined. Registration of Society could be performed at either on State or on District level. Here also to gain benefit of tax exemption under Income Tax Act 1961 , society can get itself register with State Registrar of Society and can afterwards acquire a certificate from Income-tax(IT) department, called as 12A, donation to these societies are also exempted, for this a certificate named 80G has to be obtained from IT department.

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