Public charitable trust
mukund
(Querist) 23 May 2014
This query is : Resolved
how trustees are paid? under which headings?
R.V.RAO
(Expert) 24 May 2014
Both Bombay Public Trusts Act 1950 and Section 13 of Income Tax Act state that the trustees can draw a “reasonable” compensation from the trust fund for the services they provide to the trust. Please note that being a trustee itself is not considered a service. Lets try to understand what could be a defined as a service.
Lets assume, one of the trustee is a qualified Chartered Accountant –and if he is managing trusts accounts, he is eligible for reasonable compensation because his work is saving the Trust from paying a CA’s fee.
“Reasonable” means that the compensation must not be higher than the prevailing average market rate. some suggest that such a compensation should actually be a notch below the average (after all you’re supposed to be doing charitable work -so it’s better to put the least possible burden on Trust Funds)
source:
http://techwelkin.com/
Actually no salary or any payment can be made to trustees, as per the law. However, ...., a honorarium can be paid out of funds of trust. Though the law does not exactly specify a limit of any kind, the word of prime importance here is "reasonable". Expenses can be reimbursed like travel, conveyance, etc. which is allowable, IF AND ONLY IF, they are defined in the rules and bye-laws of the Trusts and such provisions of payments are made during the constitution of the Trust. These must be within reasonable limits. i.e. the payment should be within limits of its funds, otherwise even that is not agreeable.
source:lawyersclubindia.com/forum/Rules-for-charitable-trusts-46888
T. Kalaiselvan, Advocate
(Expert) 25 May 2014
though appears to be an academic query without any details, expert Mr.R.V.Rao's opinion and advise is appreciable.
R.V.RAO
(Expert) 25 May 2014
thanks to sri jagga rao garu and
thiru kalaiselvan ji.
