"Any charitable purpose will do": what Section 2(15) actually requires
A vague trust deed objects clause is the most common reason Section 12AB registration gets rejected. This piece covers what Section 2(15) actually requires, how the Bombay Public Trusts Act, 1950 registration process works, and how to draft an objects clause and quorum clause that survives scrutiny.
CA Harun Raaj
Chartered Accountant · Harun Raaj & Associates
Legal basis: Income Tax Act, 1961 — Section 2(15), Section 11, Section 12AB (the corresponding ITA 2025 provisions apply from Tax Year 2026-27, i.e., 1 April 2026 onward); Bombay Public Trusts Act, 1950 — Sections 9 and 18 — Effective: ongoing. Source: https://charity.maharashtra.gov.in/Portals/0/Files/B.P.T.Act,1950.pdf. Last reviewed by CA Harun Raaj: September 2026.
A Pune-based industrialist's family set up a charitable trust in 2024 to run a hospital and fund local schools. The trust deed's objects clause read: "The trust shall be established for charitable purposes, including education and medical relief, and any other charitable activity that the trustees may determine from time to time." Six months later, the Income Tax Department rejected their Section 12AB provisional registration application: the objects clause was "vague, not confined to the specified purposes under Section 2(15), and allows unlimited deviation at trustee discretion." The entire charitable structure — and the tax exemption it was built around — had to be rebuilt.
This is not a rare case. The most common reason for Section 12AB rejection is a trust deed whose objects clause copies generic language from a template rather than mapping to the exhaustive list of charitable purposes the law actually recognises.
Key point: A trust deed's objects clause must map explicitly to the categories in Section 2(15) — vague "any other charitable purpose" language exposes even education and medical relief trusts to rejection under Section 12AB.
What the law actually says about "charitable purpose"
Section 2(15) of the Income Tax Act, 1961 — and the corresponding ITA 2025 provision applicable from Tax Year 2026-27 — defines "charitable purpose" as one or more of seven specific categories:
- Relief of the poor — includes distributions to persons in poverty or distress. "Poor" is not limited to BPL cardholders; it is interpreted by the courts based on the dominant beneficiary class.
- Education — formal schooling, technical training, coaching institutions, skill development linked to a vocation.
- Yoga — added by the Finance Act 2015; the provision is intentionally narrow: yoga instruction and promotion only.
- Medical relief — hospitals, dispensaries, free medical camps, preventive health outreach.
- Preservation of the environment — including watersheds, forests, and wildlife; added by Finance Act 2010.
- Preservation of monuments or places or objects of artistic or historic interest — added by Finance Act 2010.
- Advancement of any other object of general public utility — the catch-all category, and the one that carries a critical proviso.
Categories 1 through 6 are immune to the proviso. A hospital trust registered under "medical relief" can charge user fees indefinitely without losing its charitable status, as long as the dominant purpose remains medical relief and income is applied accordingly.
The Bombay High Court and the ITAT have consistently held that the objects clause in the trust deed determines which category applies — not what the trustees happen to do in a given year. A deed that mentions category 7 ("general public utility") alongside education exposes the trust to the 20% receipts threshold even for educational fee income, because the Assessing Officer will argue the combined clause falls in category 7.
Under the Bombay Public Trusts Act, 1950 (BPT Act), Section 9 defines charitable purpose separately for Maharashtra:
- (1) Relief of poverty or distress
- (2) Education
- (3) Medical relief
- (3A) Recreation or leisure facilities, if provided in the interest of social welfare and public benefit
- (4) Advancement of any other object of general public utility — but specifically excluding purposes that relate exclusively to religious teaching or worship
The BPT Act definition mirrors the ITA 1961 closely but operates independently. A deed valid under the BPT Act may still fail the Income Tax Department's objects test for Section 12AB registration, and vice versa. Both tests must be satisfied for the trust to function as a tax-exempt charitable entity in Maharashtra.
What the trustees' quorum clause must specify
Unlike company law — where the Companies Act, 2013 mandates quorum rules for board meetings — trust law under the Indian Trusts Act, 1882 leaves quorum entirely to the trust deed. A court-tested trust deed should specify four things explicitly:
Minimum quorum for meetings: "Not less than two trustees" or "a majority of serving trustees, subject to a minimum of two." A single-trustee quorum clause is consistently rejected by charity commissioners and creates succession risk if the sole trustee becomes incapacitated or vacates.
Decision-making threshold: Whether ordinary resolutions require a simple majority and major resolutions (sale of trust property, amendment of the deed, removal of a trustee) require a two-thirds majority of all serving trustees.
Frequency of meetings: At least one meeting per year is required under standard practice; the Charity Commissioner expects this to be stated in the deed when reviewing annual accounts under the BPT Act.
Vacancy handling: What happens when the number of trustees falls below quorum, and who has authority to appoint new trustees. This single omission caused a Maharashtra High Court dispute in 2019 where a trust operating with one surviving trustee (out of three original trustees) was found to have made legally void property decisions for four consecutive years.
BPT Act Section 18(5)(ii) mandates that the registration application disclose "the mode of succession to the office of the trustee" — meaning the succession mechanism (appointment, election, or co-option of new trustees) must be spelled out in the deed before registration can be completed.
The BPT Act, 1950 registration process
The BPT Act, 1950 applies to the entire State of Maharashtra under Section 1(2). Gujarat follows the Gujarat Public Trusts Act, which is substantially identical; Karnataka, Tamil Nadu, and other states have their own public trusts legislation with different procedures.
Who must register: Every "public trust" — defined under Section 2(13) of the BPT Act as an express or constructive trust for a public, religious, or charitable purpose. This covers schools, hospitals, cultural organisations, temples, mosques, churches, charitable endowments, and societies formed for charitable purposes under the Societies Registration Act, 1860.
Registration deadline: Under Section 18(4)(b) of the BPT Act, a public trust created after the Act comes into force must apply for registration within three months of its creation. The creation date is typically the date the trust deed is executed and — where immovable property is simultaneously transferred — the date of such transfer and stamp duty payment.
Where to file: The application goes to the Deputy Charity Commissioner or Assistant Charity Commissioner of the region or sub-region within whose limits the trust has its administrative office, or where the substantial portion of its property is situated (Section 18(2)).
Required disclosures under Section 18(5):
- Full name of the public trust
- Names and addresses of all trustees and the manager
- Mode of succession to the office of trustee
- List of movable and immovable trust property with sufficient description for identification
- Approximate value of all property (movable and immovable separately)
- Gross average annual income estimated from three preceding years — or estimated income if newly formed
- Objects for which the trust was created
The application is filed in the Schedule II form prescribed under Rule 6 of the BPT Rules, 1951, accompanied by a court fee stamp of ₹100. Immovable property must separately be notified in a memorandum in Schedule IIA form.
After filing: The Deputy or Assistant Charity Commissioner conducts a verification enquiry, typically including site inspection and examination of property documents. Once satisfied, the Charity Commissioner registers the trust and assigns a registration number (format: State/District/Number/Year). The trust thereafter must file annual accounts in the prescribed forms and have accounts audited if receipts exceed the prescribed threshold.
Drafting and registering a public charitable trust, step by step
Step 1 — Identify the dominant purpose. Pick from categories 1-6 under Section 2(15) wherever possible. Education and medical relief are the cleanest categories — no commercial receipts proviso applies to them. If the trust's activities are multidisciplinary, list each purpose explicitly by category name.
Step 2 — Draft specific, not general. Replace "charitable purposes" with wording such as: "To establish and maintain educational institutions including schools and colleges for students without discrimination of caste, religion, or financial status; to provide scholarships and financial assistance to economically disadvantaged students; and to carry on educational activities directly related to these objects." Every clause should map to a named category in Section 2(15).
Step 3 — Delete unlimited trustee discretion. Remove phrases like "and any other charitable activity that the trustees may determine from time to time." This language, however well-intentioned, signals an unlimited objects clause. A deed that says "education and such other purposes as the trustees may decide" will be treated as a category 7 general public utility trust — triggering the 20% receipts proviso.
Step 4 — Write the quorum and succession clause. A model clause: "The quorum for trustees' meetings shall be two trustees or a majority of the serving trustees, whichever is greater. Resolutions shall be passed by a simple majority of trustees present and voting, except for amendment of this deed or alienation of immovable property, for which the affirmative vote of not less than two-thirds of all serving trustees shall be required. Vacancies in the office of trustee shall be filled by co-option by the remaining trustees within 60 days of the vacancy arising."
Step 5 — Execute and register under the BPT Act. Execute the trust deed on stamp paper at the value applicable to the property settled (consult the IGR Maharashtra schedule for current rates). File the Schedule II application with the local Deputy Charity Commissioner within three months of execution, attaching the certified copy of the trust deed, trustee identity and address proofs, property documents, and a court fee stamp of ₹100.
Step 6 — Apply for Section 12AB on the e-filing portal. File Form 10A at incometax.gov.in under e-File → Income Tax Forms. Provisional 12A status and 80G approval are applied for simultaneously on Form 10A. A provisional certificate is issued within 30 working days if the application is complete, and is valid for 3 years. Before expiry, file for final (permanent) registration under Section 12AB. Errors in the objects clause discovered after BPT registration require Charity Commissioner sanction to amend, so get the drafting right the first time.
Step 7 — File ITR-7 annually. Once registered under Section 12AB, the trust must file ITR-7. Under Section 11(1)(a) of the ITA 1961 (the corresponding ITA 2025 provision applies from Tax Year 2026-27 onward), income applied towards the charitable objects is exempt to the extent of 85% of the trust's income. The remaining 15% can be accumulated in a specified bank account without tax. Any income not applied and not accumulated under Section 11(2) is taxable at the maximum marginal rate — 42.744% for AY 2026-27.
For families integrating a charitable trust into a broader estate structure, the objects clause has a further implication: a donor's Section 80G deduction eligibility depends on the trust's registered objects matching the approved purpose. If the objects clause is broader than the Section 12AB approval, donors may claim deductions that are later disallowed in scrutiny.
I'm CA Harun Raaj, Visakhapatnam. If your trust deed's objects clause reads more like a template than a Section 2(15) checklist, get it reviewed before you file Form 10A — correcting it after BPT registration means going back to the Charity Commissioner for sanction to amend.
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See Also
Frequently Asked Questions
Can a public charitable trust charge fees for its services, such as school fees or hospital charges?
Yes, for categories 1-6 under Section 2(15) (relief of the poor, education, yoga, medical relief, environmental preservation, heritage preservation). The commercial receipts proviso in Section 2(15) applies only to category 7, "general public utility". A hospital trust charging fees retains its charitable status as long as the dominant purpose remains medical relief. For a general public utility trust, commercial activity receipts must stay within 20% of total receipts in the previous year, failing which the trust loses charitable status for that year.
Can an NRI be a settlor or trustee of a public charitable trust in India?
Yes. There is no nationality or residential bar on trusteeship under the Indian Trusts Act, 1882 or the Bombay Public Trusts Act, 1950. If the trust receives foreign contributions, FCRA 2010 provisions apply — contributions from persons of Indian origin who are foreign nationals or OCI holders are classified as foreign contributions and require FCRA registration. NRI settlors who are Resident and Ordinarily Resident (ROR) at the time of settling assets into the trust must also disclose the trust in Schedule FA of their ITR.
What happens if we miss the three-month BPT Act registration window?
The BPT Act does not prescribe a specific penalty for late registration, but an unregistered public trust faces real risk: the Charity Commissioner can initiate proceedings under Section 66 of the BPT Act for breach of trust, trust property is unprotected under the Act's statutory framework, and the Income Tax Department treats BPT registration as a de facto prerequisite for Section 12AB registration in Maharashtra practice. Courts have condoned delays for genuine reasons, but a trust that has operated unregistered for years faces retrospective challenges to its property transactions.
Our deed says "for charitable purposes" without specifying categories — can we amend it before applying for 12AB?
Yes, if the deed itself includes an amendment clause, which is why drafting that clause correctly at the outset matters. In Maharashtra, amendments to a registered trust deed require prior sanction from the Charity Commissioner under Section 22 of the BPT Act. An unregistered deed can be amended by the settlor before execution or by the trustees if the deed so permits. After amendment, reapply for 12AB on Form 10A with the revised deed attached; the Income Tax Department accepts amendments provided the amended objects fall within the Section 2(15) categories.
Does the Income Tax Department require BPT Act registration before granting Section 12AB registration?
The BPT Act and the Income Tax Act operate as separate tests, but in Maharashtra practice the Income Tax Department treats BPT registration as a de facto prerequisite for Section 12AB registration. A deed valid under the BPT Act can still fail the Section 12AB objects test, and vice versa — both must be satisfied for the trust to function as a tax-exempt charitable entity in the state.
How long does Section 12AB provisional registration last, and what comes next?
A provisional 12AB certificate, applied for on Form 10A alongside 80G approval, is issued within 30 working days of a complete application and is valid for 3 years. Before it expires, the trust must apply for final (permanent) registration under Section 12AB.
What documents must accompany the BPT Act Schedule II registration application?
Under Section 18(5), the application must disclose the trust's full name, the names and addresses of all trustees and the manager, the mode of succession to the office of trustee, a description and value of all movable and immovable property, gross average annual income for the preceding three years (or estimated income if newly formed), and the trust's objects. It is filed in the Schedule II form under Rule 6 of the BPT Rules, 1951, with a ₹100 court fee stamp, and immovable property is separately notified via Schedule IIA.
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