Government of India | NITI Aayog


What is a Trust?

The public charitable trust is a possible form of not-for-profit entity in India.  Typically, public charitable trusts can be established for a number of purposes, including the relief of poverty, education, medical relief, provision of facilities for recreation, and any other object of general public utility. The basic concept of setting up a Public Charitable Trusts relies on the settler (creator or owner) of the trust setting aside some moveable and/or immovable asset to be used by the trustee (eg, administrator of the trust) for achieving the objects (must be legal purpose) of the trust as laid down by the settler. Benefits of such trusts shall be open to people irrespective of caste, creed or faith.)

Public charitable trusts, as distinguished from private trusts, are designed to benefit members of an uncertain and fluctuating class.  In determining whether a trust is public or private, the key question is whether the class to be benefited constitutes a substantial segment of the public.

A private trust, created under and governed by the Indian Trusts Act of 1882, aims at managing assigned trust property for private or religious purpose. A private trust does not enjoy the privileges and tax benefits that are available to public trusts or NGOs.

Difference between a Public Trust & a Private Trust

  1. 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.
  2. Private trust is limited in duration, the other is not.
  3. In private trust the beneficiaries are limited and known. In a public trust the beneficiaries are a large.
  4. Public trust is controlled by special statutes and the authority like (for example), the Charity Commissioner has full control over the management of the trust which is not the case with private trust.
  5. A private trust cannot be altered except to the extent provided in the trust deed while (for example) under the Bombay Public Trust Act the Charity Commissioner and the Courts are given power to alter or even to change the whole scheme of the original trust in certain circumstances.
  6. 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.

Who is a ‘Trustee’  ?

A trustee is required to uphold a strong level of integrity and impartiality in conducting its duties. Typically, a trustee is not permitted to benefit or profit from its position unless the trust document specifically allows for payments to the trustee for providing services. Often, a trustee may have a fiduciary responsibility to the trust beneficiaries.