Trust Registration

What do you mean by trust?

A trust is an arrangement in which the property is transferred by the owner, trust, or trustees to a trustee. The property is transferred for the advantage of a third party. The trust or a proclamation that the trustee should hold the property for the trust's beneficiaries transfers the property to the trustee

The Indian Trust Act of 1882 establishes the legal framework for trust. Trust registration is recommended for gaining benefits.

What are the benefits of Registering a trust?
  • Participate in charity works
  • Tax Exemptions for Registered Trusts.
  • Assists those who are less privileged.
  • Preserve family wealth and avoid forced heirship through immigration or emigration through the courts.
  • Mitigation of taxes
  • Asset Management.

What are the different types of trusts?

Private Trust

A private trust is created to benefit one or more people who have been or will be certain at some point in the future. To put it another way, private trusts are established for the benefit of individuals rather than the general public. The Indian Trusts Act of 1882 governs private trusts.

Public Belief

A Public Trust is a trust established solely for the benefit of the general public. The following are the crucial regulations under Public Trusts: – Public trusts are separated into charity and religious trusts and are governed by general law.

Public-Cum-Private Trusts

Public-cum-Private Trusts are trusts whose income can be used for public and private purposes, with a portion of the income going to a private person or persons.

What are the processes needed in Trust Registration?

The method for registering a trust in India is as follows:

Pick an appropriate name

This is the first stage in the Trust Registration procedure in India. Furthermore, according to the rules of the Emblems and Names Act, 1950, the name provided by the applicant must not be on the restricted list of names.

Determine who the authors and trustees will be

The number of settlers or authors is unrestricted. However, in most circumstances, a Trust has only one author. Furthermore, the number of trustees who could serve on a Trust is limitless. In India, however, a minimum of two trustees is required to establish a trust. Furthermore, the author cannot be a Trustee in general. In addition, the author must be a resident of India.

Prepare an MOA and a Trust Deed

A Trust Deed serves as legal proof of the trust's existence. It explains the primary purposes for which the applicants form such a Trust and the relationship between trustees. It includes the trust's rules and regulations. The statutes governing the removal, alteration, or addition of Trustees to the Trust are also contained in this text. On the other hand, the trust's charter is represented by the Memorandum of Association, or MOA. In a Trust document, all members' residences, names, and professions, as well as their signatures, should be included.

Preparing Trust Deed on a Stamp Paper

The Trust Deed must be written on stamp paper by the applicant as a Trust. The stamp paper's value is based on a proportion of the trust's overall asset value. In addition, the trust's percentage value varies by state. A charge of Rs. 1100 is also due. The Trust Registration price is Rs. 100, and the fees for storing a certified copy of the Trust Deed with the Sub-Registrar are Rs. 1000.

Registrar's Acceptance of Trust Deed

Following receipt of a copy of the Trust Deed, the applicant shall submit it to the local registrar's office, along with adequately attested photocopies of all relevant papers.

Documentation is required

  • A trust deed that has been carefully written on stamp paper.
  • Evidence of a registered office - (Rental Agreement or ownership document)
  • Utility Bill Copy (Gas Bill/Water Bill/Electricity Bill)
  • Identification of the Trust's Founder
  • ID proof of two witnesses.
  • Objective of Trust

What is the purpose of establishing trust?

  • Trust registration is required under all states' Public Trust Acts if the faith has a charitable cause or a transfer of real estate into the trust's name.
  • Under Sections 12A and 80G of the Income Tax Act, tax breaks are available only to registered trusts.
  • Because it generally includes funds in donations, registering a trust gives it more credibility.

Compliance with Trust

Following its registration, a trust must undertake the following.

  • Obtain a PAN card Accounting and Bookkeeping
  • IT filings on an annual basis
  • If applicable, professional tax registration
  • Enrolment for (GST) if applicable
Whether or not a tax exemption is applicable

There is a widespread belief that trusts do not have to pay taxes because they work to benefit the general public. However, this is not the case. Trust must pay taxes, just like any other legal company. To be tax-exempt, a trust must receive certification from the Internal Revenue Service for exemptions such as Section 12A, 80G, and others.

Why should you go to TaxDraw to get your trust registered?

Our TaxDraw professionals will assist you with obtaining the necessary support for Trust Registration and compliance. In India, trust registration entails delicate legal responsibilities. Our expertise ensures that you have a better understanding of the governing provisions of Trust in India so that you can carry out Trust-related operations with the least amount of legal complication.

FAQ's

Although the Trustees do not have the authority to sell the property, the trust properties can be sold with the authorization of the competent civil court.

NGOs can be registered as Trust or Section 8 corporations online, depending on their purpose and objectives.

In most cases, the trust is unbreakable. The trust can be combined with another trust with identical objectives with the court's authorization for reasons such as disqualification of trustees, absence of trustees, or mismanagement of the trust.

A trust registration does not follow a particular certificate. Getting the trust deed registered with proper authorities, on the other hand, would suffice.