Public or Private Trust Registration Online in India
Create an organization that manages assets or money for a specific purpose like education or charity.
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Overview of Trusts
In India, trusts are established as legal entities to manage assets for specific purposes, broadly classified as either public or private. Public trusts are set up for the benefit of the general public and often focus on charitable, educational, or religious activities. They are governed by various laws depending on the state, such as the Indian Trusts Act, 1882, and state-specific legislation like the Bombay Public Trust Act, 1950.
Private trusts, on the other hand, are created primarily for the benefit of specific individuals, typically family members. These are usually governed by the Indian Trusts Act, 1882, and are often used for estate planning, including through testamentary trusts which become effective after the death of the settlor. Both types of trusts are instrumental in structured asset management and fulfillment of philanthropic or familial objectives.
In India, trusts are established as legal entities to manage assets for specific purposes, broadly classified as either public or private. Public trusts are set up for the benefit of the general public and often focus on charitable, educational, or religious activities. They are governed by various laws depending on the state, such as the Indian Trusts Act, 1882, and state-specific legislation like the Bombay Public Trust Act, 1950.
Private trusts, on the other hand, are created primarily for the benefit of specific individuals, typically family members. These are usually governed by the Indian Trusts Act, 1882, and are often used for estate planning, including through testamentary trusts which become effective after the death of the settlor. Both types of trusts are instrumental in structured asset management and fulfillment of philanthropic or familial objectives.
Advantages of Trust Registration
Benfits of Trust Registration
Asset Protection
Trusts legally protect assets from creditors and lawsuits, securing them for beneficiaries.
Tax Benefits
Registered trusts can avail of certain tax exemptions under the Income Tax Act.
Succession Planning
Trusts facilitate smooth transfer of assets to beneficiaries without the need for probate.
Confidentiality
Trust details remain private, unlike wills which become public through probate courts.
Flexibility
Trusts offer flexibility in managing and distributing assets according to the settlor’s instructions.
Charitable Purposes
They enable systematic charitable activities, potentially enhancing social impact and community benefits.
Minimum Requirements
Examples:
Charitable Trusts: Tata Trusts, which support health, education, and rural development initiatives.
Religious Trusts: Tirumala Tirupati Devasthanams, which manages the operations of the Tirumala Venkateswara Temple in Andhra Pradesh.
Examples:
Family Trusts: A trust established to provide for the educational expenses of the settlor’s children and grandchildren.
Testamentary Trusts: A trust specified in a will to manage and distribute assets to the settlor’s relatives after their death.
Minimum Requirements
As Per Indian Trust Act, there are Minimum Requirements that need to be met For Trust Registration in India.
Parties to the trust
Purpose or object of the trust
Property of the trust
Documents for formation of the trust
Documents for Trust Registration
The following documents need to be scanned and attached for Trust Registration
Basic Legal and Identity Documents
Property and Compliance Documents
Basic Legal and Identity Documents
Trust Deed
Proof of Registered Office Address
Trust Deed
Proof of Identity of Settlor(s) and Trustees
Proof of Address of Settlor(s) and Trustees
Photographs of all Members
Proof of Identity of Settlor(s) and Trustees
Property Documents
Property and Compliance Documents
Proof of Registered Office Address
Property Documents
NOC from Landlord
Affidavit(if applicable)
Proof of Address of Settlor(s) and Trustees
NOC from Landlord
Photographs of all Members
Affidavit(if applicable)
Note: The registrar’s office may also ask for additional documents or details specific to the state or the nature of the trust.
Trust Registration Procedure
Where state-specific trust acts exist, they govern trust registration; otherwise, the Indian Trusts Act, 1882 applies.
Define Name of Trust: Choose a legally permissible and unique name for the trust to avoid any confusion with existing entities.
Define Objects and Area of Work: Clearly outline the trust’s objectives and the geographical areas where it intends to operate, specifying the type of charitable work and beneficiaries.
Choose Trustees of the Trust: Select trustworthy and competent individuals who align with the trust’s mission to manage and oversee its operations.
Execute Trust Deed on Requisite Value of Stamp Paper: Draft the trust deed including all the details above, and execute it on stamp paper of the value mandated by the state where the trust is being registered.
Obtain Signatures of Settlor and All Trustees: Ensure that the settlor and all trustees sign the trust deed in the presence of a witness to validate their consent and understanding of the trust’s terms.
Affix Attested Photographs of All Trustees: Attach duly attested recent photographs of all trustees to the deed as part of the documentation requirements.
Register the Trust Deed with Registrar/Sub-Registrar: Submit the signed and completed trust deed to the local registrar or sub-registrar’s office. The choice of office depends on where the trust operates or holds property.
File Application for Registration of Trust: Lodge a formal registration application with the Assistant/Deputy Charity Commissioner along with all necessary documents and the prescribed fees.
Attend Hearing in Response to Inquiry: Attend a hearing where the Assistant/Deputy Commissioner will conduct inquiries about the trust to verify the information provided and assess the trust’s compliance with legal requirements.
Obtain Registration Certificate: After the hearing, if the trust is found compliant, a registration certificate will be issued, marking the trust’s formal recognition and enabling it to commence operations.
Note on Private Trust Registration in India: Registration of private trusts, especially those holding immovable property, is not mandatory under the Indian Trusts Act, 1882, but is advisable for legal clarity and to prevent disputes.
Registrations Required After Creation of a Trust
After establishing a trust in India, obtaining the following registrations is essential to ensure legal compliance and access to various benefits and funding opportunities
Section 12AB Registration: Provides income tax exemption on the trust’s income, improving financial efficiency and sustainability.
Section 80G Registration: Allows donors to claim tax deductions on their donations, encouraging greater contributions to the trust.
Purpose: Managed by NITI Aayog, this registration provides a unique ID to the trust, facilitating access to government schemes and fostering transparency and accountability. It is also often required when opening a bank account for the trust.
Purpose: Specifically for applying to central and state government grants. This registration ensures that trusts can access various government funding opportunities efficiently.
Purpose: Mandatory for receiving foreign contributions, this registration ensures proper utilization and accounting of foreign funds, thereby enhancing regulatory compliance and international funding opportunities.
Purpose: Necessary for undertaking Corporate Social Responsibility (CSR) activities on behalf of companies, allowing the trust to receive CSR funds from corporates, thereby contributing to community development and social initiatives.
Section 12AB Registration: Provides income tax exemption on the trust’s income, improving financial efficiency and sustainability.
Section 80G Registration: Allows donors to claim tax deductions on their donations, encouraging greater contributions to the trust.
Purpose: Managed by NITI Aayog, this registration provides a unique ID to the trust, facilitating access to government schemes and fostering transparency and accountability. It is also often required when opening a bank account for the trust.
Purpose: Specifically for applying to central and state government grants. This registration ensures that trusts can access various government funding opportunities efficiently.
Purpose: Mandatory for receiving foreign contributions, this registration ensures proper utilization and accounting of foreign funds, thereby enhancing regulatory compliance and international funding opportunities.
Purpose: Necessary for undertaking Corporate Social Responsibility (CSR) activities on behalf of companies, allowing the trust to receive CSR funds from corporates, thereby contributing to community development and social initiatives.
Differences
comparison of Trusts, Societies, and Section 8 Companies in India
