What is a Trust License in India and How to renew it?

Introduction

The Indian Trusts Act of 1882 has been used to register many recent charitable trusts in India. Providing education, health care, financial aid, and environmental programs are just a few of the problems that charity trusts aim to address. Trust registration is the procedure of legally authorizing an institute/trust for the proper authorities of the area. The legalization of the trust is very advantageous and permits tax exemption. In this article information on “How to renew a Trust License in India?”, and Documents required to renew a trust license is mentioned.

What is Trust License in India?

The process of legalizing the trust deed (a binding legal agreement between the settler and the trustee) with the appropriate registrar of the jurisdiction is known as trust registration. The Trust acts as a formal entity responsible for the equal distribution of the settlor’s assets to the beneficiaries. A trust must register under section 12AB of the Income-tax Act of 1961 in order to claim an exemption under section 11.

What is Trust in an Indian Context?

All registered trusts in India are governed by the Indian Trust Act of 1882, which also simplifies the related legal requirements. Generally, the Trust is described as a legal arrangement where the Trust’s owner transfers the property to the relevant Trustee (beneficiary).

The goal of the Trust is to make sure that the assets of the Granter are distributed among the beneficiaries according to the terms stated in the Trust deed. When the Trust is established, the granter appoints a trustee who handles managing the Trust and ultimately distributing the grantor’s assets to the designated beneficiaries. Beneficiaries of trusts in India usually include heirs, family members, or charities. A trust license in India can be used to save taxes, streamline or avoid the probate procedure, and safeguard assets. In India, there are many kinds of trust, like;

• Revocable
• Testamentary
• Irrevocable
• Charitable
• Asset security
• Spendthrift
• individual needs

List of documents required to renew a Trust License in India

Self-certified copies of the following documents are required to renew a Trust License in India and these must be uploaded with Form No. 10A.

• Memorandum of association(MoA) or two copies of a trust deed
• Certificate of Registration
• Aadhar cards and Permanent Account Number (PAN) of the managing trustees.
• Digital Signatures of one of the trustees
• Current valid 12A, 12AA, and 80G certificates
• Foreign Contribution (Regulation) Act (FCRA) or any other certificate
• Annual accounts since incorporation or for the three financial years  (balance sheet, income and expenditure, receipts and payments accounts, and all relevant schedules)

When attaching the necessary documents, the combined size of all the attachments should not exceed 50MB, and no single document should be larger than 5MB.

What is the procedure to renew Trust License in India?

The following steps must be taken to renew a trust license in India:

The actions listed below must be followed by the trust or institution to submit Form 10A online:

• Visit the webpage at https://www.incometaxindiaefiling.gov.in/home
• Click “Login Here”.
• Enter the “User ID,” “Password,” and “Captcha Code”.
• Select “Login.”
• Proceed to e-File > Income Tax Forms
• From the drop-down list, choose Form 10A, the applicable Assessment Year, and the form of submission.
• Press “Continue.”
• Fill out the Form 10A completely and attach any necessary documents.
• Submit Form 10A.
• Please take note that Form 10A should only be filed with a digital signature when providing an income tax return is required. If not, you should submit Form 10A using an electronic verification code (EVC).

Conclusion

The Indian government regulates trust funds which need a license to run properly. They operate under a charitable trust that is governed by law and is required to register with the Income Tax Department. A trust that is created specifically for charity purposes is known as a charitable trust.