Trust registration is a type of non-government organization that works for the welfare of society directly or indirectly. Generally, the Indian Trust Act, of 1882 governs trust registration in India. However, it is not the only law that is applicable while registering a trust there are many other laws like the Bombay Public Trust Act of 1950 that are needed in some situations. In general, trusts are of two types private trusts and public trusts. Further public trust has been divided into two different types religious trust and charitable trust. To learn about the difference between religious trust and charitable trust it’s important to know them separately. Hence in the current blog for a better understanding of the difference between religious trust and charitable trust will learn about them one by one separately first.
What is trust?
Trust is an institution where one party that is settlor forms an organization with the help of a trustee for the benefit of the beneficiary. It directly or indirectly works for the Welfare of the society with no objective of making a profit. It is an institution formed with an altruistic intention. Trust has certain important or essential elements which make a trust a legal entity. Given below is the list of those essential elements:
- Settler or author of the trust
- Trustee of the trust
- Beneficiary of the trust
- Property of the trust that will be considered as the subject matter of the trust
- Well defined object or purpose of the trust
Types of Trust in India
There are basically two types of trust in India. One is private trust and another one is public trust. In the sub-type of public trust, religious and charitable trusts fall. Although there are a number of difference between religious trust and charitable trust their essentials are similar. To know the difference between religious trust and charitable trust let us read them separately first.
Meaning of Religious Trusts in India
Religious trust as the name suggests is related to the promotion and preservation of religious activities or institutions. They are non-profit organizations working for the upliftment and welfare of religious activities and institutions. Such kinds of institutions are generally formed by religious organizations and their activities are managed by the board of directors of trustees.
Religious trust is there for the promotion of religious activities and the activities can be related to temples, mosques, and churches. They are responsible for maintaining and providing religious services and programs to the community at large. They also sponsor religious education among the people.
Religious trust works with the help of the donations that they get from the supporters of that particular religion. Any funds or donations that one religious trust gets and is unable to use the same, then it will be transferred to another organization that is working with the same objective. In India, there are strict laws that look after the activities of the trust so that these trusts can’t work outside the scope of their objective. These laws properly give instruction about the financial management of trust, how the donation will be used, how the organization will run, how they will perform the religious services etc
To get the benefit associated with the trust, one needs to register the trust. Before the amendment of 2020 religious trusts were registered under section 12AA but now all the trusts have to register themselves under section 12AB of the Income Tax Act.
Meaning of Charitable Trusts in India
Charitable trust, the name is enough to describe their purpose. Charitable Trust basically works for the public welfare and their main goal is to do charity for the welfare of the public at large. They assist or engage in activities related to education, healthcare, environment, unemployment, poverty, etc. Funds of the trust must be used to achieve the purpose of the trust. They cannot use the fund beyond the purpose of the trust.
Charitable Trusts are usually made by individuals, groups or businesses. Donations of such kind of trust must be used for the operation and projects of the trust which are going hand in hand with the objective of the trust. If the donation is remaining then it should be donated to another organization that is working for the same cause.
Differences Between Religious Trust and Charitable Trust in India
With the help of the above explanation difference between religious trust and charitable trust is very clear. Now for a better understanding of the difference between religious trust and charitable trust go through the table given below:
| Particulars | Religious Trust | Charitable Trust |
| Objective | Religious trust as the name itself suggests is related to the promotion and preservation of religious activities or institutions | Charitable Trust basically works for the public welfare and their main goal is to do charity for the welfare of the public at large |
| Fundraising | Religious trust gets their funds from the supporters of the religion for which the particular trust is working. Their funding has limitations. | Charitable Trust gets its funding from the general public, institutions, organizations, corporations, groups, etc. Their funding is not Limited |
| Management | Religious trusts are managed by the board of directors of trustees and these trustees are the qualified religious people | Charitable trusts are managed by the board of directors of trustees who are experts in the particular field for which the trust is working |
| Governing Law | Govern by the Indian Trust Act, of 1882 | Govern by the Indian Trust Act, 1882 and some prohibitions of the Income Tax Act are also applicable. |
| Use of Funds | Funds of religious trusts are used to support religious activities like maintaining buildings, providing food at religious premises, religious education, etc | Funds of charitable trusts are used for the cause of charity only |
| Example | Some of the examples of religious trust in India are given below: Sri Padmanabhaswamy Temple in KeralaJama Masjid in Delhi Gurudwara Bangla Sahib in DelhiShri Sai Baba Santhan Trust in shirdiSidhivinayak temple in Mumbai | Some of the common examples of charitable trust are given below: Tata Trust Bill & Melinda Gates FoundationBeing Human FoundationUpay FoundationGreen Pencil Foundation |
Conclusion
The difference between religious trust and charitable trust is explained in the current blog. There is a significant difference between religious trust and charitable trust with respect to their objectives, funding sources, management structure, legal regulations, and beneficiaries. Religious trusts in India focus on promoting and preserving religious activities, primarily funded by supporters of their religion, while charitable trusts work for public welfare and charity, drawing funding from various sources. Religious trusts are managed by religious individuals, while charitable trusts are led by experts in their respective fields. Both are governed by the Indian Trust Act, with religious trusts serving religious purposes and charitable trusts exclusively dedicated to charitable causes.
