Trust Registration

Trust is an arrangement between parties, in which one party holds the ownership of a property for the advantage of another party.

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OVERVIEW

Trust Registration

Trust is an arrangement between parties, in which one party holds the ownership of a property for the advantage of another party.

Following parties are involved in the trust arrangement:

  • The first party is the Author/settler/Trustor/Donor who creates the trust and transfers the property.
  • The second part is the Trustee in whom the First party has confidence i.e., Trust.
  • The third party is the Beneficiary, who will be benefited from the creation of Trust

The property includes cash, real estate, shares, etc.

There are two types of trust, Private Trust and Public Trust. The private trust is for the benefit of relatives, friends, or closed groups. The public trust is for the benefit of the public at large.
 

BENEFITS

Benefits & Advantages of Trust Registration:

1.    Income Tax benefits in the form of exemptions u/s 11 & 12 of the Income Tax Act, 1961.
2.    Deduction u/s 80G to the donors in case the trust is registered u/s 80G of the Income Tax Act, 1961.
3.    Registered Trusts comply with the legal provision of the Indian Trust Act, 1882 and other state-specific laws which keep them safe from any legal action.
4.    Registered Trusts are very effective in reducing the taxation of capital and income.
5.    Benefits to the poor and public at large by doing charitable activities fairly.
6.    Better management of assets for the benefit of the beneficiary.
7.    Better management of taxes in immigration of family.
REQUIRED DOCUMENTS

Documents required Trust Registration

PAN Card

PAN Card of the Author and Trustee.

Residence Proof

Residence Proof of the members. It can include Bank Statement/Aadhar Card/Electricity Bill/Passport/Driving License.

Trust Deed

Trust Deed on proper stamp paper which contains the name of the trust, objectives, registered address, number of trustees, rules and regulations, etc.

Address Proof

Address proof of the registered address. It can include property paper or utility bills. In case the property is rented then NOC from the owner is also required.

details of the Author and Trustee

Basic details of the Author and Trustee which includes self-attested identity and residence proof plus information relating to their occupation.

Photograph

Photograph of the Author and Trustee.

process

Process of Trust Registration in India

Trust registration is governed by the Indian Trust Act, 1882 in the case of private trust and general law or state-specific law in the case of public trust. The process is as follow:

  • Selecting a Unique Name of the trust.
  • Drafting the Trust Deed, the deed includes all the information related to name, objectives, registered address, number of trustees, rules, and regulations.
  • Identifying and selecting the Author and Trustees. The minimum number of trustees should be two.
  • Preparation of Memorandum of Association (MOA) which specifies the manifest of the Trust.
  • Paying the required fees.
  • Collecting a certified copy of the trust deed from the registrar.
  • Submission of all the self-attested documents and certified trust deed to the local registrar.
  • Verifying the documents and objectives of the trust by the registrar.
  • Registering the trust and an Incorporation Certificate are allotted along with an original copy of the Trust Deed.

Time Required

The time required varies from 7-10 working days from submission of all the requirements.

FREQUENTLY ASKED QUESTIONS

Explore Trust Registration

1. What are minimum number of trustees required and is there any limit to maximum number of trustees?

Minimum is Two and there is no upper limit.

2. What is the difference between private and public trust?

Private trust benefits smaller group and closed groups whereas public trust benefits larger group of people.

3. Whether the trust can apply for 12AB and 80G registration under Income Tax Act, 1961?

Yes, trust can apply for the registration under section 12AB and 80G of the Income Tax Act.

4. What are the parties involved in Trust arrangement?

Three parties are involved, Author, Trustee and Beneficiary.

5. When PAN can be applied for trust?

Application in Form No. 49A is required to be filed after receiving the Incorporation Certificate.

6. Who can create a trust?

Any individual above 18, HUFs, Company, Association of Persons etc.

7. Whether the provision of the Income Tax Act, 1961 viz. TDS, Tax Slabs or Rates or GST Act apply to the trust?

Yes, all the provisions of Income Tax Act, 1961& GST Act are applicable to the trust unless specifically exempted.

8. What is the difference between trustor and trustee?

Trustor is one who creates the trust and Trustee is one who manages the trust.

9. What is the governing law for the trust?

Indian Trust Act, 1882 for private trust and State wise Trust Act for public trust. Example for State wise Trust Act is Bombay Public Trusts Act, 1950, Rajasthan Public Trust Act, 1959 etc.

10. How trusts are registered under above acts?

The registration process remains the same in all the acts whether it is Indian Trust Act or its Bombay Public Trust Act or the others.