Anyone who is competent to contract in India can establish a public charity Trust for objectives such as poverty relief, education, medical treatment, and the advancement of any cause of public value, among others. “Trusts can be registered or unregistered”.
Introduction
The composition of a Trust Deed is the initial phase in registering a Trust in India. In India, the essential requirement for registering a Trust is a Trust deed. Trust Deeds are written on non-judicial stamp paper and each state in India has set its stamp duty rate. When the applicant has finished the Trust Deed preparation, the individual should schedule a meeting in the workplace of the sub-registrar. On the date of appointment, all the Trust’s Trustees, as well as the Trust Deed and two witnesses, must appear before the sub-registrar.
What does trust mean?
An arrangement in which property is transferred to a Trustee by the owner, Trust, or Trustees. When a property is transferred to the benefit of a third party, such as a trust, or when the trustee is appointed to manage the property for the benefit of the beneficiaries, the Trustee receives the property as trustee. “The Indian Trust Act of 1882 established the legal framework for Trusts in India”. To benefit from Trust registration in India, the two categories below are defined;
Public Trust – A public trust has the public as a beneficiary. In India, public trusts can also be classified into two types: public religious trusts and public charitable trusts.
Private Trust – In India, a Private Trust has individuals or families as beneficiaries. In addition, in India, a Private Trust can be classified into the following categories:
– A private trust that is easily determined both by its beneficiaries and its shares.
– It is difficult to determine the beneficiaries of a private trust or the number of shares required.
Benefits of Trust Registration in India
- In its charity operations, the Trust gives much-needed financial assistance to the poor and needy.
- Trusts are particularly beneficial for ensuring capital and income tax relief. A trust can provide better protection for the settler, beneficiaries, and trust assets against more stringent tax laws.
- A provision in the Indian Trusts Act of 1882 provides extensive legal protection for the Trust and, at the same time, prohibits any third party from making frivolous claims that would jeopardize its legal standing.
- It is the ideal time to form a Trust for a person and his or her family when they move to another country to avoid paying taxes in the new country, safeguarding their assets while allowing for greater organizational flexibility.
What is the procedure for forming a trust in India?
The official in each state who has the authority to register a charity trust will accept the application for registration. Among other things, a Trust Registration application must contain information regarding the name of the Trust, the names of the Trustees, and the mode of succession.
With the application, there is a court charge stamp of INR 2 as well as a small Trust registration fee, which varies depending on the Trust property and the State of registration. The application must also contain a certified copy of the Trust Deed. When completed, the application must be signed in the presence of a Regional Officer or Superintendent of the Charity Commissioner’s Regional Office or a Notary Public.
Documents Required for India Trust Registration:
- Aadhaar cards, voter IDs, passports, and DL addresses are examples of proof of identity for the Trustor and Trustee. Proof of Registered Office can be represented by a copy of the property certificate or utility bills.
- A landlord must certify that there are no objections to renting a property.
- In a trust deed, the trustee and settlor are identified, along with their address and proof of their employment history.
- A trust deed with an accurate stamp value.
- Photographs of the Trustee and the Settler.
- Trustee and settlor PAN information.
- The Trust Deed must include the following details:
- The number of Trustees and the address of the Trust
- The proposed name of the Trust.
- Proposed rules for the Trust.
- The settler and two witnesses must be present at the time of Trust registration.
The following compliances must be met after a Trust has been registered:
- Filing your annual IT (Income Tax) return,
- Registration for GST (if applicable),
- License for Establishment – (If there is a need for employment),
- Accounting and bookkeeping,
- Registration for Professional Taxes (if applicable).
Tax Exemption Information:
It is widely believed that because Trusts work to benefit the public, they do not need to pay taxes. However, this is not always the case. Trusts are required to pay taxes, just like any other legal entity. In order for a Trust to qualify for tax exemption, the Internal Revenue Service must certify it for exemptions such as 80G, Section 12A, and others.