People often say “trust” when they mean two different things: a private trust set up for family members, and a public trust for a religious or charitable purpose. They are governed by different laws and only one of them is registered with the Charity Commissioner.
Public trust
Under the Maharashtra Public Trusts Act, 1950, a public trust is an express or constructive trust for a public religious or charitable purpose, or both (section 2(13)). It must be registered with the Charity Commissioner’s office (section 18), and it is then supervised: accounts, audit, change reports and permission for certain property transactions. The process is in how to register a public trust step by step.
Private trust
A private trust is created to hold property for named beneficiaries, usually family members, and is governed by the Indian Trusts Act, 1882. Section 5 of that Act says a trust in relation to immoveable property is not valid unless it is declared by a non-testamentary instrument in writing, signed by the author of the trust or the trustee and registered, or by the will of the author. A trust of moveable property must be declared in the same way or the ownership of the property must be transferred to the trustee. In practice, a family trust holding a flat or land needs a registered deed.
The Indian Trusts Act does not cover charitable trusts
Section 1 of the Indian Trusts Act says nothing in it applies to public or private religious or charitable endowments. So a charitable trust is not a private trust, and the two sets of rules should not be mixed up.
Which one do you need?
| Question | Private trust | Public trust |
|---|---|---|
| Purpose | Benefit of named persons, such as family | Public religious or charitable purpose |
| Main law | Indian Trusts Act, 1882 | Maharashtra Public Trusts Act, 1950 |
| Registered with | Sub-registrar, where the instrument must be registered (for immoveable property) | Charity Commissioner |
| Supervision | Not by the Charity Commissioner | Yes: accounts, audit, change reports |
If your aim is to run a school, a medical aid group, a temple or a community fund open to the public, you are in public trust territory. If your aim is to manage family property for children or parents, a private trust may fit, though a will or a gift deed can sometimes serve better. See will making in Mumbai and gift deeds.
Trust or society?
If the work is charitable but you prefer a membership structure, a society is another option: public trust vs society.
Common questions
Does a private trust need the Charity Commissioner?
No. The Charity Commissioner registers public trusts under the Public Trusts Act.
Can I make a trust by a simple letter?
For immoveable property, section 5 requires a registered instrument, so a letter is not enough.
For help choosing and drafting, see trust registration assistance in Mumbai.
This is general information, not legal advice. Tax treatment and stamp duty depend on the deed and the property, so get advice on your facts.
Sources: Indian Trusts Act, 1882 (sections 1 and 5); Maharashtra Public Trusts Act, 1950 (sections 2(13) and 18).
Also deciding between a trust, a society and a Section 8 company? See trust, society or Section 8 company: which to register.