Intention to start a school - should i go in for trust or society
Raj M B M S
(Querist) 04 December 2012
This query is : Resolved
Dear Hon Experts,
I am of the intention to start a playschool chain. I have both a business purpose & a charity purpose. I will have to run the school efficiently for business gain and at the same time, am seeing opportunities to support under privileged children for learning & good experiences in a playschool.
In this context, I would like to know which is the right approach to go ahead with registration - Should my primary Educational entity be a trust or a society ? Where do I park my charitable funds (for eg, donations etc) and would I be able to carve out the profitable piece too. What would be the kind of Bank Accounts that I shud hold for the purpose.
Will appreciate a kind revert from the experts forum please. Looking fwd to it at the earliest.
Devajyoti Barman
(Expert) 04 December 2012
If you register it trust and make some charitable activities then it would help you to save income tax.
Raj M B M S
(Querist) 04 December 2012
Thankyou Mr Devajyoti, I agree that the Trust gives me an opportunity to register under Section 80G for Income Tax exemptions. Am keen to differentiate moneys that come in as earnings from a school, from those that come in as donations for charitable causes. Will a Trust therefore help me meet that. For eg, I will have to generate income for the investments that banks/individuals make on my preschool chain. Will such income be recognised by the Trust as individual income or be added to the charitable cause. In which case, I would not be able to utilise the income out of running a school for meeting the needs of investors right. Not sure if my understanding is correct, hence need some sort of expert support here. Please see if you can help me with this
Raj Kumar Makkad
(Expert) 04 December 2012
Such income derived from banks/school earning cannot be diverted by you in case Trust is formed. It is better to have Registered Society otherwise your trust can be got derecognized and in that event entire recovery of income tax rebate with heavy penalities can be made from you.
Raj M B M S
(Querist) 04 December 2012
Thanks Mr Raj Kumar, That was an insight. I wanted to know if then, there are many Educational Trusts that are operational & do flourish. Not sure how do they manage therefore. Could you please give me some support here..
Raj Kumar Makkad
(Expert) 04 December 2012
Such confidential matters cannot be disclosed so openly as you want.........
