A Trust is the obligation or responsibility placed on one in whom confidence or authority is place; it is a confidence reposed in a person by conveying to him the legal title to property which he is to hold for the benefit of others. Therefore, the “Trustee” responsibility includes protection of rightful ownership in the Trust property, the preservation of the Trust property and channelising the income from the Trust property in accordance with the intentions of the creator of the Trust.

For creating a private Trust, the foremost requirement is that the Author must express with reasonable certainty by words or acts, an intention on his part to create a Trust. Thus, a Trust may be declared either by words, spoken or written or by acts. Where a Trust is declared by words, the language used must be clear enough to show an intention to create a Trust. No formal language is required to constitute an effective declaration of Trust, but the language used must make it certain that:

1. The Author intended to constitute a Trust binding in law on himself or the person to whom the property was given.
2. The Author intended to bind definite property by the Trust.
3. The Author intended to benefit a definite person or persons in a definite way.

• a) Interest payable to partners shall be in accordance with the terms of the partnership deed, however, it shall not exceed 12% per annum.
• b) Remuneration payable to partners shall be in accordance with the terms of the partnership deed, however, it shall not exceed the following limit:
  • On first Rs. 3 Lakhs of book profit or in case of loss – Rs. 1,50,000 or 90% of book profit, whichever is more;
  • On the balance of the book profit – 60% of book profit.

Where 85% of the income is not applied for charitable purposes, the NGO is required to accumulate or set apart such income for future application. The incomes so accumulated will not be included in the total income of the NGO if the following conditions are applied:

• Such trust or institution furnishes Form No. 10 – notice of accumulation of income by charitable trust or institution electronically to assessing officer, on or before the due date for filing the return of income.
• Mention the purpose for which income is being accumulated or set aside.
• Income shall not be accumulated for more than 5 years and years in which income accumulated or set aside due to order or injunction of any court to be excluded in computing 5 years.
• Money so accumulated or set aside is invested or deposited in specified mode as mentioned under section 11(5).

Above such option is to be exercised in form 10 to be furnished electronically to the assessing officer with or without digital signature by the trust on or before due date of filing the return.