The Union Cabinet, chaired by the Prime Minister Shri Narendra Modi, today (5-12-2014) approved the introduction of the “Indian Trusts (Amendment) Bill” 2014 in the current session of Parliament to amend section 20 and 20A of the Indian Trusts Act, 1882.
These amendments are intended to provide the trustees greater autonomy and flexibility to take decisions on investment of trust money. This would enable the Central Government to notify securities or class of securities, for investment by trusts and to remove the outdated provisions occurring in section 20 of the Indian Trusts Act, 1882.
Trusts are governed by the trust deed and applicable local laws. Depending on the corpus, a trust may be formed as a company or society. In case of companies, Section 25 of the Companies Act applies to non-profit making companies while institutions established for promoting religion, science etc. may also be registered as limited companies. Their is a provision in Income Tax Act under section 10(23C) – tax exemption for charitable and religious trusts
The Indian Trusts Act, 1882 (2 of 1882) provides the law relating to Private Trusts and Trustees. Section 20 of the Act states where the trust property consists of money and cannot be applied immediately or at an early date to the purposes of the trust, the trustee is bound, subject to any direction contained in the instrument of trust, to invest the money in securities enumerated in clauses (a) to (f) of the said section. Clause (a) of section 20 provides for investing the trust money in promissory notes, debentures, stock and other securities of the United Kingdom of Great Britain and Ireland and clause (b) for bonds, debentures, and annuities charged or secured by Parliament of the United Kingdom. The Law Commission of India had recommended for amendments of section 20.