Information on Trust Registration in India and How to form a Trust in India?

Any person who is competent to contract in India can establish a public charity Trust for objectives such as poverty relief, education, medical treatment, the advancement of any cause of public value, among other examples. There are two types of public Trusts: registered and unregistered. Information such as Trust Registration Certificate, How to form a Trust in India, and How to get a Trust Registration Certificate is discussed in this article.

Introduction

The writing of a Trust Deed is the first step in registering a Trust in India. In India, the primary need for registering a Trust is a Trust deed. The Trust Deed is written on non-judicial stamp paper, and each state in India has set its own stamp duty rate. Once the applicant has completed the Trust Deed preparation, he or she must schedule an appointment with the office of the sub-registrar. It is required that all of the Trust’s Trustees, as well as the Trust Deed and two witnesses, appear before the sub-registrar on the date of appointment.

What is a Trust?

A Trust is an arrangement in which the property is transferred to a Trustee by the owner, Trust, or Trustees. The property is transferred for the advantage of a third party. The Trust or a proclamation that the property should be held by the Trustee for the Trust’s beneficiaries transfers the property to the Trustee. The Indian Trust Act of 1882 establishes the legal framework for Trust in India. In India, Trust registration is recommended for gaining the benefits. Below is the 2 Category in which Trust is classified in India;

1. Public Trust – A Public Trust is one that has the public as one of its beneficiaries. A Public Trust in India can also be separated into two types: Public Religious Trust and Public Charitable Trust.

2. Private Trust – In India, a Private Trust is one that has individuals or families as beneficiaries. In addition, in India, a Private Trust can be classified into the following categories

• • A private Trust whose beneficiaries and requisite shares are both easily determined.

  • A private Trust whose beneficiaries or requisite shares are both difficult to determine.

Advantages of Trust Registration in India

• Through charity operations, the registered Trust provides much-needed financial assistance to the needy and the masses.

• Trusts are particularly beneficial for ensuring capital and income tax relief. The Trust may provide better protection for the settler, beneficiaries, and Trust assets against tax laws that are more rigorous.

• The Indian Trusts Act of 1882 provides the Trust with extensive legal protection. It also forbids any third party from making a frivolous claim that could jeopardize the Trust’s legal standing.

• When a person and his or her family relocate to another country, it is the ideal time to set up a Trust to avoid paying taxes in the new country, thereby protecting the family’s assets and allowing for greater organizational flexibility.

How to form a Trust in India?

An application for Trust Registration must be submitted to the official with jurisdiction in the state to register a charity Trust. The Charity Commissioner, for example, is in charge of Trust Registration in the state of Maharashtra. The application for Trust Registration must include information such as the name of the Trust, the names of the Trustees, and the mode of succession, among other things.

A court charge stamp of INR 2 and a small Trust registration fee, which varies based on the Trust property and the State of registration, must be included with the application. A certified copy of the Trust Deed must also be included in the application. Once completed, the applicant must sign the Trust registration form in the presence of the Regional Officer or Superintendent of the Charity Commissioner’s Regional Office or a Notary.

Documents Required for Trust Registration in India

• Aadhaar Card, Voter ID, Passport, and DL Address are examples of proof of identity for the Trustor and Trustee. Proof of Registered Office, such as a copy of the property certificate or utility bills.

• If the property is rented, the landlord must certify that there are no objections.

• The purpose of a Trust deed is to provide information on the Trustee and settlor, such as a self-attested copy of their identification and their address. Proof and work experience.

• Trust Deed with Accurate Stamp Value.

• Photos of the Trustee and the settlor.

• PAN information for the Trustee and the settlor.

• The following details must be included in the Trust Deed:

1. 1. The number of Trustees and the address where the Trust is registered

   2. Trust’s proposed name.

   3. Rules for the Trust that have been proposed.

   4. At the moment of Trust registration, the settlor and two witnesses must be present.

• Below are the Trust Compliances that is needed after its registration:

1. 1. Annual IT (Income Tax) Filing.

   2. GST Registration (If applicable).

   3. Shop and Establishment License – (If there is a need for employment).

   4. Bookkeeping and Accounting.

   5. Professional Tax Registration (If applicable).

Information on Tax Exemption

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

FAQs on Trust Registration in India

1. What are the many types of Trust Registration?

A Trust deed can be used to establish a Trust. In India, there are now two categories of Trust: Public Trust and private Trust.

2. What is the purpose of Trust in the first place?

Trusts are created to provide legal protection for the Trustor’s assets, ensuring that those assets are delivered properly to the intended beneficiaries, and to avoid or reduce inheritance or estate taxes.

3. How can I set up a Trust for income tax purposes?

The application in Form 10A for Registration of a Charitable or Religious Trust can be made on the IT department site to gain registration U/s 12A.

4. What is the procedure for a Trust’s closure?

In most cases, ‘Trust’ is unbreakable. The Trust can be combined with another Trust with identical objectives with the authorization of the court for reasons such as disqualification of Trustees, absence of Trustees, or mismanagement of the Trust.

5. Is there a certification for Trust Registration?

A Trust Registration does not require a specific certificate. Getting the Trust Deed registered with the right authorities, on the other hand, would suffice.