Overview
A trust is a legal entity, in which a person or group of persons (known as trustees) hold property or assets for the benefit of another person or group of persons (known as beneficiaries) with a specific purpose or objective. The primary objective of a trust is to ensure that the assets or property held in trust are managed and utilized for the benefit of the beneficiaries in accordance with the terms and conditions of the trust.
Trusts can be established for various purposes, such as charitable, religious, educational, cultural, social, or economic, and can be of different types, such as public or private, charitable or non-charitable, express or implied, revocable or irrevocable, etc.
In India, trusts are governed by the Indian Trusts Act, 1882, which sets out the legal framework for the formation, administration, and dissolution of trusts.
Minimum Requirement
01
Registered Address
The trust must have a registered office which is located within the jurisdiction of the Registrar of Trusts. Trust Premises can either be owned or rented.
02
Trust Deed
The trust deed is the most important instrument in a trust, it prescribes the main objectives for which the trust is set up.
03
Minimum 2 Trustees
Minimum of 2 trustees are always required for registration.
04
Minimum 1 Settlor
Minimum of 1 settlor is always required for registration.
Documents Requirements
Required in Soft Copy Only
Documents of Trustees
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PAN & AadharCard
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Other ID Proof Driving license, Voter Id or Passport
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Address Proof Bank Statement or Utility Bills - E.g.- Electricity Bill / Water Bill / Property Tax]
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Colour Photo
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Email id and Mobile Number
Required in Soft Copy Only
Business Address Proof
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Address Proof (owned) Sale Deed ( Ownership Documents), Electricity Bill / Propert Tax
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Address Proof (Rented) Rent Agreement , Electricity bill, NOC from Owner of the premises
Advantages
Separate Legal Entity
A Trust is a separate legal entity under law, which means it can enter into contracts and own assets in its own name.
Perpetual Succession
A registered trust has perpetual existence and can continue to exist even after the death or retirement of its trustees. This ensures continuity and stability of the trust’s activities and objectives.
Easy Transfer of Assets
A registered trust can easily transfer its assets to another registered trust or a charitable organization, which can help in the effective implementation of its objectives.
Donations and Grants
A registered trust can receive donations and grants from individuals, corporates, and other sources, which can be used for the benefit of the beneficiaries.
Limited Liability of Members
A registered trust provides limited liability protection to its trustees, which means they are not personally liable for the debts or obligations of the trust.
Better Fundraising Opportunities
Registered trusts are eligible to receive foreign contributions and donations under the Foreign Contribution Regulation Act, 2010 (FCRA), which can increase their fundraising opportunities.
Tax Exemption
A registered trust can apply for tax exemption under Section 12A and 80G of the Income Tax Act, 1961, which allows donors to claim tax benefits for donations made to the trust.
Credibility and Trustworthiness
Registration adds credibility and trustworthiness to the trust, as it demonstrates compliance with legal and regulatory requirements and increases transparency and accountability.
Steps
Verification of Documents provided for registration by you.
Identifying the Settlor,Determining the Objectives and Choosing of the Trustees
Drafting of Trust Deed, which sets out the terms and conditions of the trust, the objectives and purposes for which the trust is established.
Printing the Trust Deed: The Trust Deed should be printed on non-judicial stamp paper, the value of which varies from state to state.
Registration of Trust Deed with the Registrar of Societies or the Registrar of Trusts in the state where the trust is located.
Your Takeouts
Certificate of Trust Registration
Trust Deed
PAN of Trust
TAN of Turst ( If required seperately chargeble )
Professional Tax Registration ( In Maharasthra )
GST Registration ( If required seperately chargeble )
Shop and Establishment Registration (Chargeable separately)
Compliances
To promote transparency, sound governance, and safeguard the interests of all stakeholders, certain compliance requirements and related filings must be fulfilled within established timelines.
Our company assists in fulfilling these obligations with ease and efficiency. Compliance requirements can be broadly categorized into four types
For further details and expert guidance, kindly seek the consultation of our seasoned startup consultants.
One Time Compliances
One Time after incorporation like appointment of Auditor, Declaration for Commencement of business, Issuance of share certificate etc
Event Based Compliances
Change of Directors, Change of regd. Address,Allotment of shares etc.
Regular Compliance
Accounting , Tax Filing , Maintenance of records and registers etc
Annual Compliance
ROC Annual filing, Audit of financial statement, ITR filing etc
Frequently Asked Question
1. Public Trust
2. Private Trust
3. Charitable Trust
4. Religious Trust
5. Educational Trust
2. Private Trust
3. Charitable Trust
4. Religious Trust
5. Educational Trust
A trust deed is a legal document that outlines the terms and conditions of a trust. It specifies the purpose of the trust, the rights and duties of the trustees, the beneficiaries of the trust, and the rules for administering and managing the trust. The trust deed is created by the settlor (the person who creates the trust) and is registered with the relevant authority. It serves as a blueprint for the trustees and ensures that the trust is managed and administered in accordance with the settlor's wishes.
Any individual or organization can be a trustee as long as they are legally competent to act as a trustee.
Yes, a trustee can be removed if they breach their fiduciary duties or fail to properly manage the trust. The process for removing a trustee varies depending on the terms of the trust agreement and the laws of the jurisdiction.
Yes, a trust can be amended or revoked by the settlor or as specified in the trust deed.
When the settlor dies, the trust becomes irrevocable, and the trustee continues to manage the trust and distribute assets to the beneficiaries according to the terms of the trust agreement. The trust may also become subject to estate tax.
The terms of a trust agreement generally determine who the beneficiaries are, and changes to the beneficiaries may require an amendment to the trust agreement. The process for changing the beneficiaries varies depending on the laws of the jurisdiction.
When a trust ends, the assets are distributed to the beneficiaries as specified in the trust deed.
No, it is not mandatory for a trust to obtain 12A and 80G registration. However, obtaining these registrations can provide various benefits and exemptions under the Income Tax Act of India.