In India, a trust can be registered under the Indian Trusts Act, 1882, which governs the formation and administration of trusts. Trusts are often created for charitable, religious, educational or philanthropic purposes, and registration is not mandatory. However, registering a trust provides several benefits such as tax exemptions, credibility, and legal recognition.
Benefits of Trust Registration in India
- Legal recognition: Registering a trust provides legal recognition to the trust and its activities. This can help to establish the credibility and legitimacy of the trust.
- Tax benefits: Registered trusts are eligible for tax benefits under the Income Tax Act, 1961. These benefits include exemptions on income tax and capital gains tax.
- Perpetual succession: A registered trust has perpetual succession, which means it can continue to exist even if its original trustees pass away or retire. This can help to ensure the continuity of the trust’s activities.
- Limited liability: Trustees of a registered trust have limited liability, which means they are not personally liable for the debts and liabilities of the trust.
- Increased funding opportunities: Registered trusts can apply for funding from various sources, including government grants, corporate social responsibility (CSR) funds, and international funding agencies.
- Better governance: Registering a trust requires the trustees to adhere to certain legal requirements, such as maintaining proper accounts and submitting annual reports to the government. This can help to improve the governance of the trust and ensure transparency in its activities.
- Greater credibility: Registering a trust can enhance its credibility and reputation among donors, beneficiaries, and the general public. This can help to attract more support and funding for the trust’s activities.
Point to Note For Trust Registration
- Choose a name for the trust: The name of the trust should be unique and not identical or similar to the name of any other trust already registered in India. The name should also not violate any laws or offend any religious or cultural sentiments.
- Prepare the trust deed: The trust deed is the legal document that outlines the objectives, rules, and regulations of the trust. The trust deed must be executed on non-judicial stamp paper of appropriate value and signed by the trustees and witnessed by two witnesses.
- Get the trust deed notarized: The trust deed must be notarized by a notary public.
- Obtain PAN and TAN: The trust must obtain a Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) from the Income Tax Department.
- Submit the application for registration: The application for trust registration, along with the trust deed, identity proof and address proof of the trustees, property documents (if applicable), and registration fee, must be submitted to the registrar of the district in which the trust is situated.
- Receive the registration certificate: Once the registrar is satisfied with the documents and all requirements have been met, the trust will be registered, and a registration certificate will be issued.
It is important to note that the registration of a trust is not mandatory, but it does provide several benefits, such as tax exemptions and legal recognition. A registered trust is also considered more credible and trustworthy, which can be helpful in raising funds and carrying out charitable activities.
Document Required for trust registration in India
In India, the following documents are generally required for trust registration:
- Trust deed: A trust deed is a legal document that outlines the objectives, rules, and regulations of the trust. It must be executed on non-judicial stamp paper of appropriate value, signed by the trustees, and witnessed by two witnesses.
- Identity proof of trustees: The trustees must provide their PAN card, Aadhaar card, and passport-size photographs as identity proof.
- Address proof of trustees: The trustees must provide their passport, driving license, voter ID card, or Aadhaar card as address proof.
- Registration fee: A registration fee, based on the valuation of the assets of the trust, must be paid to the registrar at the time of registration.
- Property documents: If the trust owns any immovable property, then the property documents, such as sale deed, gift deed, lease deed, etc., must be submitted along with the trust deed.
- NOC from the landlord: If the trust is operating from a rented property, then a no-objection certificate (NOC) from the landlord must be submitted
Process of Trust Registration In India
- Choose a name for the trust: The first step is to choose a name for the trust that is not already in use. The name should not be similar to an existing trust or any registered company.
- Create a trust deed: A trust deed is a legal document that outlines the objectives of the trust, the names of the trustees, and the rules and regulations of the trust. The trust deed must be signed by the settlor, who is the person who creates the trust.
- Get the trust deed notarized: Once the trust deed is created, it must be notarized by a notary public. This involves verifying the signatures of the settlor and witnesses on the trust deed.
- Prepare an application for registration: The next step is to prepare an application for registration of the trust. The application must be in the prescribed format and must include details such as the name of the trust, its objectives, and the names of the trustees.
- Submit the application: The application must be submitted to the local registrar of trusts along with the following documents:
- Trust deed
- Address proof of the registered office of the trust
- Identity proof of the trustees
- Registration fee
- Verification and registration: The registrar will verify the documents and may ask for additional information or documents if required. Once the verification process is complete, the registrar will register the trust and issue a registration certificate.
It is important to note that the process of trust registration may vary slightly depending on the state in which the trust is being registered. It is also advisable to consult a legal expert or a chartered accountant for guidance on the registration process.
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