Sangeetha Tax Consultancy

Trust Registration

Secure Your Future: Register Your Trust with sangeethatax
Trust registration enhances credibility, ensures legal protection, provides tax benefits and facilitates access to grants and donations.
Ensure compliance and credibility with our dedicated support throughout the registration process.
Safeguard your assets and ensure your legacy with a secure trust registration process from sangeethatax.

Overview of Trust Registration in India

According to the Indian Trust Act of 1882, a trust is a legal entity in which the owner, or trustor, decides to assign the authority and control over his property or asset to a third party, called the trustee, so that the beneficiary, or third party, might profit from it. The trust registry transfers such an asset or property to the trustee along with a declaration that the trustee shall own it on behalf of the trust's beneficiaries.

When a particular item of property is given by the trustor to the trustee with the ultimate goal of benefiting the beneficiary, a trust is created, and it provides a means of meeting the needs of the impoverished. Both regular men and women are capable of building Trust. Additionally, trusts are divided into two groups, public Trust and Private Trust. The provisions of Indian Trust Act 1882, governs only private trusts, and the public Trust are usually governed by state-specific legislation.

What is a Trust?

As per the Indian Trust Act 1882, the Trust is an organization in which the owner or trustor adjudicates to transfer the power and right of his property or asset to a second person named trustee, which means that the third person or beneficiary can get the benefit out of it. Such an asset or property is transferred by the trust register to the trustee with the declaration of the statement that the trustee should own the asset or property for the recipients of the Trust.

Types of Trusts

Public Trust:

A public charitable trust and a religious trust are created for the benefit of the general public or a specific group of individuals.

1. To provide an education to children, it will establish a school/educational institute

2. To provide medical services and facilities for the poor, it will establish a hospital/nursing home,

3. For taking care of aged/senior citizens, orphans, handicapped, widows, etc.

4. For the promotion of child health & and women's empowerment

5. For the social welfare of weaker sections of society,

6. For the promotion of spiritual/yoga/ art, craft and cultural activities

7. For providing training to the Backward and poor classes to make them employable

8. For religious activities such as setting up a temple, etc.

9. For the protection of the environment, planting trees, reducing pollution, etc.

10. For providing food, clothing and shelter to socially disadvantaged

Private Trust:

A private trust established by new residents is established as the beneficiary of one or more specific individuals. So, a private trust is one whose beneficiaries are families or private individuals, and that can be done:

1. For the benefit and welfare of members of a family

2. For the management & Preservation of a Property.

Public-cum-Private Trust

A Public-cum-Private Trust is an entity that serves two purposes. The income they generate can be used for public or private reasons. A trust registered of this type is considered the most versatile in India.

People in a Trust

Author/settlor/Trustor/Donor: An individual who is willing to surrender his/her property and entrust it to another for the creation of a trust.
Trustee: The individual who grants confidence in order to establish a Trust
Beneficiary: A person who will benefit from the Trust in the near future.

Consequences in India For Working in an Unregistered Trust

Civil and Criminal Penalties: It shall be considered a violation of the Trust Register Act's requirements if the rule outlined in the trust instrument is not followed. You could face both civil and criminal sanctions as a result.
Default in acquiring Tax Deduction Account Number: A Trust must obtain the Tax Deduction Account Number. Not doing so is considered a criminal offence per Section 27BB of the Indian Trust Act of 1882.
Default in filing Income Tax Returns: Not all Trusts are considered non-profit organisations. A trust must register under the Income Tax Act section 12A in order to receive tax benefits. This means that the Trust must file tax returns on time. Otherwise, your company will face difficulties.

Qualification for Trust Registration

To obtain the registration certificate for a Trust, you need to keep in mind the following points:

• Your Trust should follow the rules of the bylaws.

• All the members mentioned in your Trust should have a clean record.

• Your Trust's purpose should not contravene the Indian Trust Act of 1882.

• The applicant must follow the precise trust registration format.

• You must agree never to contravene the rules and regulations of your bylaws.

• You must designate beneficiaries in the documents you submit to register a trust in India

Merits of Trust Registration

Tax exemption: Since it is a charity, it can get tax exemption and is also known as a non-profit organisation.
Legal entity: As the Trust is a separate legal entity, it can avail of all the benefits offered by the government. Trust Act and Federal laws make it essential for such companies to get registered as Charitable Trusts.
Financial support: Through their charitable endeavours, registered trusts give the public and the impoverished vital financial support.
Family Wealth Protection: By allocating certain assets, trusts help manage and preserve family wealth that might be challenging to split up amongst family members.
Benefits of Immigration and Emigration: Creating a trust can be helpful when moving, reducing taxes, protecting assets, and providing flexibility in how assets are organised.

Income Tax Formalities

After completion of registration, the Trust has to file Forms 12A and 80G to get tax exemption. Form 10A is used to file the application for registration.

The total remuneration of the foundation or office, without affecting the terms of clauses 11 and 12, exceeds 50,000/- the annual accounts and report or documents are audited annually by a qualified accountant or other accountant selected as a corporate valuer. Foundation for this year.

The Requirement to Register a Trust

A charity's eligibility for registration is determined by particular legal conditions that must be fulfilled in order to begin the registration process. Trust registration is a legal process that involves creating a legally recognised trust entity. Complete the given eligibility criteria and register your Trust now.

● Minimum of two persons required for trust formation

● Trust formation must comply with the Indian Trusts Act of 1882.

● Parties must not be disqualified under any Indian law.

● Objectives of Trust must align with Indian laws & regulations.

● The Trust formation must not harm the public interest or violate any laws.

● Trust activities must not cause harm to any individual.

● Activities must adhere to the memorandum of the Trust.

● A deed must be professionally drafted & reflect parties ‘interests.

● Trust registration online requires strict compliance with legal requirements.

● The trustee must act in the best interests of the beneficiaries.

● The assets must be managed professionally & ethically.

Requirements to Apply for a Trust Deed Registration

The following conditions must be met in order to register a trust deed:

No objection to a trust deed on stamp paper with the necessary stamp duty. This is a certificate from the property owner. It also includes a passport-sized photo and proof of residence ID. It also includes a passport-sized photo and proof of the identities of two trustees and two witnesses.

Documents Required for Trust Registration in India

For the trust registration under ’The Indian Trust Act, 1882”, the following documents are mandatory:

A bill of water or electricity mentioning the address which needs to be registered.
The identity proof of minimum of two members of the entity. The identify proof can be:
Driving License
Voter ID
Aadhaar Card
Passport
After paying the fee for the registration process, it takes around 8 to 10 days for online trust registration as per the norms of the Indian Trust Act – 1882.
Before the legal document becomes valid all around the country, the applicant has to submit a presentation at the corresponding registrar’s office.

Criteria for the Registration of Trusts:

A trust must be formed by two or more people in order for a registration to be considered valid.
The provisions of the Indian Trusts Act of 1882 must be followed in the establishment of the Trust.
No Indian law currently in effect should disqualify any of the parties involved.
The Trust's goals must not conflict with any Indian laws currently in effect.
The trustee is required to carry out their duties in an equitable and just way.
Neither the public interest nor any other relevant laws should be violated by the Trust's creation.
The Trust's operations should be in line with the goals outlined in the trust deed.
The Trust's operations cannot injure any individual.
The trust deed needs to be properly drafted, considering the sincere interests of the parties who formed the Trust.
The Trust has more than one goal, and each goal needs to be legitimate. The Trust cannot be established if one objective is valid and the other is not.

Process of Trust Registration in India

1. Choose an appropriate name:

The first stage is to select a name that is appropriate or adequate. The name that the applicant proposes must not be prohibited by the Trade Marks and Names Act of 1950.

2. Obtain MOA and Trust Deed:

A trust deed is a contract that has legal force and creates and outlines a trust's policies and procedures. This document also contains the rules for changing, removing or adding an administrator. The MOA and Incorporation Agreement represent the foundation's constitution and define the relationship between the trustee and the trustee. It also defines the purpose for which the Trust is formed. Such memorandum of association shall contain the names, addresses, occupations and signatures of all members.

3. Arrange the trust deed on stamped paper:

Applicants must have the trust deed on stamped paper, and the stamped paper represents a percentage of the fund's value. This percentage also varies from state to state. After the applicant submits all the required documents, he can collect the certified copy of the trust deed. You will receive a copy from the registration office within a week.

4. Submit Trust Deed to the Registrar:

After receiving a copy of the receipt of the trust deed, send it to your local registration office along with copies of all relevant documents. The resident must sign each page of the photocopy of the trust document. All settlors and two witnesses are also required to be physically present in India during trust registration with proof of identity, but the physical presence of the trustee is questionable.

5. Obtain Registration Certificate:

The original trust deed will be given to the applicant when it has been transferred, and the registrar will keep a copy. The applicant will get a registration certificate in the mail in seven business days after completing all trust registration requirements.

The Analysis of a Trust Deed

One important document that summarises a trust's main characteristics and terms is the trust deed. It includes the subsequent clauses:

The length of time that the Trust will continue to function.
This is the Trust's registered office address.
The geographical area or region in which the Trust will operate;
The aims and objectives that the Trust seeks to accomplish.
Particulars of the assets or property being transferred to the Trust, as well as information about the person establishing the Trust (settlor).
Details about the members of the board of trustees, such as their titles, terms, and tenure.
The trustees' functions, authority, and responsibilities.
The steps involved in making changes to the trust deed and the clauses pertaining to its closure or termination.
The trust deed ensures that the Trust is managed in accordance with all relevant laws and regulations.

Objections & Answers in Trust Registration

Navigating Legal Complexities: Professional Help: Engaging a legal professional can simplify understanding and navigating the applicable laws.
Managing Trust Assets: Asset Management: Trustees must effectively manage and invest Trust assets, adhering to the Trust deed's stipulations.
Balancing Beneficiary Interests: Fair Distribution: Ensure that the Trust's benefits are distributed fairly among the Beneficiaries.
Dealing with Disputes: Dispute Resolution: Handle disputes between beneficiaries or beneficiaries quickly and fairly.

Winding Up a Trust

Termination of a trust occurs when all trust assets/assets are distributed, either directly or through redistribution, to legal beneficiaries or a similar entity. The parties must deal with the tax responsibilities resulting from the transfer of property throughout the liquidation procedure. Following the court's orders, the Charity Commissioner's permission and other relevant laws are essential to reduce the likelihood of litigation.

How Can We Help You?

sangeethatax is a team of leading business professionals who are well-versed in trust registration. In addition to answering several questions about what a trust registration certificate is and its rules and regulations, we will provide you with the following services:

Document furnishing
Application filing
Department follow up
Aid in the removal of errors in the application form

Frequently Asked Questions

Should all trustees be residents of India? +

Indeed, all trustees in an Indian trust must be nationals of India. As per the regulations of India, a minimum of one trustee needs to be a resident of India to guarantee appropriate management and adherence to the Trust.

In India, how many trustees are needed to register a trust? +

A trust must be registered in India with two trustees at the very least. As per the law, a trust needs at least two trustees to handle the Trust's assets on behalf of the beneficiaries.

To register a trust, what are all the certificates required? +

The following are the typical paperwork needed to register a trust in India: Credible Deed, Identity, Attestations of Trustees, Address Proofs, and Images.

Is a physical office address required for trust registration? +

Yes, in order to register a trust in India, you must have a physical office address. The Trust's formal address is its physical office, which is also used for correspondence, legal correspondence, and communication.

Can a Trust Have Goals That Are Both Public and Private? +

Indeed, a trust can have both public and private goals. This type of Trust is called a public cum-private trust, and it serves both the general public and particular persons through its operations.

What Is the Duration of Trust Registration? +

Trust registration can be completed in a few weeks, though this depends on the completion of the required paperwork and clearances.

Can a Trust Be Called Off? +

Yes, a trust may be wound up by following the legal procedures and distributing its properties and assets to beneficiaries or a comparable organisation. This process is called winding up.