Trust registration in India

A trust can be understood to be an arrangement wherein a property is handed over to or vested in a person so as to be used and later on disposed of for the benefit of another person referred to as the beneficiary.

As per the Indian law, trusts are registered under the Trust Act, 1882. The Trust Act, 1882 defines trust as “an obligation annexed to the ownership of property, and arising out of a confidence reposed in and accepted by the owner, or declared and accepted by him, for the benefit of another, or of another and the owner. Simply, it is a transfer of property by the owner to another person for the benefit of the third person.

Types of trusts

Public Charitable Trust 

the objectives of charitable trusts are as follows:-

  • For education purposes i.e. to set up school or education institutions
  • For providing medical facilities such as hospitals or nursing homes
  • To take care of senior citizens, widows, children and handicapped people.
  • To promote children and women empowerment
  • Social welfare
  • Providing spiritual and cultural activities
  • Associations to protect the environment
  • Providing basic amenities for the poor and disadvantaged sections of the society

Private Trusts

The objectives of such type of trusts are as follows:-

  • To provide for the welfare and benefit of a particular member of the family
  • To manage and preserve a particular property

Documents required for registration

  • A properly and completely drafted trust deed
  • Proof of register office (Rent Agreement or ownership document)
  • ID proof of the founder of the trust
  • Two witnesses

Registration and Contents of the trust deed

The trust deed should be executed on the stamp paper of the value to be determined as per the valuation of the trust property. The application for the registration should be made to the concerned sub-registrar on the basis of the jurisdiction of the region where the trust is desired to be registered.

It is mandatory to get the trust deed registered in case of a charitable or religious trust, for claiming an exemption under section 11 of the Income Tax Act in relation to immovable property. Essential contents of a trust deed are as follows:-

  • Name of the trust
  • Name of the author/settlor of the trust
  • Name of the trustees
  • Name of the beneficiary
  • The place where the registered office is situated
  • The property is transferred to the trustee for the welfare of the beneficiary
  • The intent to divest the trust property upon the trustee
  • The objects of the trust, both main and incidental
  • The procedures for the appointment, removal or replacement of a trustee and stating their rights, powers, and duties.
  • Rights and duties of beneficiaries
  • Mode and method of determination of trust

12 A registration and Form 10-A Income Tax

Charitable and religious trusts which claim exemption u/s 11 and 12, Income Tax Act, have to mandatorily obtain 12A registration. Since the private and family trusts are not given any such exemptions and hence cannot obtain 12A registration. The process has been made online for applying for 12A registration and Form 10A filling using the digital signature of the signatory. So in order to obtain 12A registration, you have to make an online application to the Income Tax Commissioner in Form 10A for registration of Charitable or religious trust or institution. Documents to be furnished for registration are as follows:-

  1. Documents evidencing the creation of a trust or the establishment
  2. Two copies of the accounts of the trust (for a period of not more than three years).
  3. Self- certified copy of the trust deed registered with registrar of public trusts.
  4. Copy of the PAN Number of the trust

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