The execution of the Trust deed might result in the creation of a trust, which is a wholly online operation. The Trust deed is the first step in the Trust registration process. It’s crucial to understand what trust is before diving into the details of the Trust Registration process. Trust Registration process online, Documents required for Trust Registration.
Trust Registration
In the context of India, what is trust?
A trust is established under the Indian Trust Act of 1882, which governs trust-related matters. The trust is a harmonisation in which the property is transferred to a trustee by the trust’s owner. The goal of transferring the property in this case is to benefit a third party. The trustor transfers the property to the trustee with a proclamation that it should be retained by the trustee again for benefit of the trust’s beneficiaries.
Benefits of Trust Registration
· Participate in charitable endeavours
Philanthropic trusts are established with the goal of engaging in charitable activities while collecting benefits for the donor, his heirs, and successors.
· Tax Exemptions for Registered Trusts
Another major motivation for forming a registered trust is to take advantage of tax benefits. These charity trusts are nonprofit organisations, and in order to take advantage of all of these benefits, the charitable trust must have its own legal entity.
· Provides Assistance to the Poor
By carrying out philanthropic activities fairly, the registered trust benefits the underprivileged and the general public.
· Conformity to the Law
By registering the trust, it would be subject to the requirements of the Indian Trusts Act, 1882, which will protect the Trust from any legal entanglements.
Parties Involved
The Trust Registration Process involves the following parties: Trustor, Trustee, and Beneficiary.
Types of Trust
In India, there are two sorts of trusts: private and public trusts. While the Indian Trusts Act of 1882 governs private trusts, public trusts are separated into benevolent and religious trusts. Some of the statutes regulating the enforcement of public trusts in India include the Charitable and Religious Trust Act of 1920, the Religious Endowments Act of 1863, the Charitable Endowments Act of 1890, and the Bombay Public Trust Act of 1950.
Private Trusteeship
A private trust is one that is established for the benefit of one or more individuals who are, or will be, certain at some point in the future. The Indian Trusts Act of 1882 governs private trusts. Inter vivos or by will, these trusts can be established.
The Public’s Trust
A Public Trust is a trust formed solely for the benefit of the general public. The general Law regulates public trusts, which are mostly charitable or religious trusts. The Indian Trusts Act’s provisions do not apply to public trusts. Public trusts, like private trusts, can be established during one’s lifetime or by will.
Public-Private Partnerships
Public-cum-Private Trusts are trusts that have a portion of their income that can be used for public purposes and a portion that can go to a private entity or persons.
Documents required for Trust Registration
- Aadhaar Card, Voter ID, Passport, and Driving License Address Proof of Identity for Trustor and Trustee Copy of Certificate of Property/Utility Bills as proof of registered office (Telephone, Water, Electricity Bill)
- A letter of authorization from the landlord is required in the case of rental property.
- The Trust Deed’s main goal.
- Details on the Trustee and the Settlor (Self-attested copy Id and Address Proof along with the information related to occupation).
- Trust Deed with Correct Stamp Value
- Photographs of the settlor and the trustee.
- Trustee and settlor PAN Card
Steps to register Trust
Choose a Name That Is Appropriate
The first step in registering a trust is to choose a suitable name for the trust. An applicant must keep in mind that the suggested name must not be on the Emblems and Names Act, 1950’s restricted list of names.
Trust Deed Drafting
The Trust deed must be drafted before the Trust may be registered. A trust deed is a document that contains all of the necessary information for registration, and it must be presented to the Registrar at the time of registration.
Choosing Settlers and Trustee Trustees
The next stage is to choose the Trust’s settlor and Trustees. There is, however, no precise provision for the number of settlers/authors. In addition, a Trust must have a minimum of two trustees.
Preparing a Memorandum of Association It is critical to draught a Memorandum of Association before registering a trust since it serves as the trust’s charter.
Payment of the Required Fees
The following step is to pay the Trust registration cost.
Obtaining a Copy of the Trust Deed
After submitting the paperwork, an applicant can pick up a certified copy of the Trust Deed from the registrar’s office within one week.
The Trust Deed Is Submitted To The Registrar
Submit a certified copy of the Trust Deed to the local registrar after acquiring one. The trust deed must be supplied with copy that have been properly attested.
Obtain a Certificate of Registration
After submitting the Trust Deed to the registrar, the registrar preserves the photocopy and returns the original registered copy to the applicant within seven business days, together with the certificate.
Penalties for non-compliance
Penalties, Both Civil And Criminal
In the event of a breach of trust, the Beneficiary may face legal and criminal penalties. The Indian Penal Code 1860, Sections 405 to 409, deals with the specific provisions surrounding criminal breach of trust.
Number of Tax Deduction Account Application
The Trust or Institution should apply for a tax deduction account number in form 49B of the Income-Tax Rules to the Assessing Officer or the prescribed authority as soon as the trust or institution is registered, and quote the number on all challans for payment of sums under section 200, on all TDS certificates, and on all returns delivered under sections 206, 206A, and 206B. In the event that this is not done, section 272BB imposes a penalty of Rs. 10,000/-.
Failure To Provide An Income Return
The Act imposes a penalty for failure to file an income tax return. If the certificate for the tax deducted at source is not provided with the return of income due to the payer’s failure to provide such certificate, the return of income will not be considered defective. However, the certificate must be delivered within two years of the conclusion of the evaluation year.
Section 12AB impact on trust
To continue to get exemption under section 10 or 11, all current charity trusts or organisations must obtain a new registration under Section 12AB, unless they are already registered under the following section:
Sections 12A and 12AA, as well as Sections 10(23C) and 80G.
The trust must also renew its registration under section 12AB if it was established under section 10 (23C) or section 12AA. As a result, Section 12AA, which governs the registration process for trusts and institutions, will be repealed, and a new section 12AB will take effect at the end of the above-mentioned term, whichever comes first.
FAQ
Is trust a legal entity in its own right?
A trust, unlike a corporation, is not a separate legal entity in the strictest sense. When the settlor gives any property to the trustee to be utilised and used for the benefit of the beneficiary, a trust is formed. A trust deed formalises this legal arrangement.
What is the distinction between a trustee and a trustee?
The person who creates the trust is known as the Trustor, while the person who is in charge of maintaining the trust for the beneficiary is known as the Trustee.
What is the law that governs a Trust?
The Indian Trusts Act of 1882 is the law that governs a Trust in India.
What is a Public Trust, and why is it necessary to establish one?
Generally, a public trust is established for the purpose of establishing a school, universities, other educational activities, clinics, senior homes, halfway houses, advancement of child welfare and strengthening, government assistance to more vulnerable segments of society, and fulfilment of Corporate Social Responsibilities (CSR) by organisations.
What about a Private Trust Deed Amendment?
It is incredibly difficult to change a trust deed since trusts are irreversible by their very nature. As a result, it’s critical to include amending clauses in the trust deed itself. However, if the trust deed’s amending clauses are overly broad, the trust may not be considered irrevocable. Trust Registration process online, Documents required for Trust Registration.
