Frequently Asked Questions
 
Q1. Are foreigners allowed as members of the trust ?
Ans. There is no apparent bar on the foreigners becoming a trustee of trust.
 
Q2 Will there be subsequent problems if foreigners are the trustees?

Ans. It is difficult to get FCRA registration if foreigners are there as trustees. Normally, FCRA registration is not granted to such organisations. The FCRA is silent in this regard but FCRA authorities confirmed that FCRA registration is not given if foreigners are its subscribers/members/ trustees. We did come across instances of organisations being given FCRA registration inspite of having foreigners as board members/trustees. But these are exceptions and we have to assume that FCRA registration will not be given, unless the foreigners involved are too distinguished and intervention of higher authorities is availed.

The difficulties involved in getting FCRA permission for NGOs having foreigners as trustees is a deterrent for foreign NGOs contemplating the option of floating an Indian NGO. Therefore, foreign NGOs should explore other legal and legitimate way of controlling an Indian NGO.

 
Q3. Can foreigners be inducted as ex-officio or nominated trustees?
Ans. There should not be any problem in having foreigners as ex-officio or nominated trustees. The trust deed can be suitably drafted so as to have Ex-Officio directors or nominated trustees.
 
Q4. After registration, how long a trust can exist ?
Ans. The registration as a trust provides perpetual existence. A trust will cease to exist if the subject mater of the trust is totally liquidated. A trust cannot be revoked once it is legitimately created.
 
Q5. Can a Public Charitable Trust Indian have activities outside India?

Ans. The various acts under which an NGO can be registered do not prohibit activities outside India. The FEMA and FCRA are silent in this regard and under the liberalized regime of RBI, current account transactions are allowable without any prior permission. Therefore, there should not be any problem in transfer of foreign exchange, subject to the guidelines of FEMA.

The most important legislation in this context is the Income Tax Act, which under section 11(1)(c), prohibits the activities of Indian NGO outside India without specific permission of the CBDT. An Indian NGO spending money on activities outside India will be subject to income tax on that portion of its income.

 

Q6. What are the annual returns that a Trust is required to file with the Registrar ?

Ans. A trust is not regulated by any authority therefore, no annual returns are required to be filed with the registering authority. However, trust has to file annual returns as required under FCR Act, 1976 and Income Tax Act, 1961.
 
Q7. Who can form a trust?

Ans. Every person competent to make a contract and competent to deal with property can create a Trust. Besides individuals, a body of individuals or an artificial person such as an association of persons, an institution, a limited company, a Hindu Undivided Family through its Karta can also form a Trust. For all practical purposes, two or more individuals are required to form a charitable trust.