The word trust here signifies an organization which is created for a social cause. In India, registration for trust- nonprofit is well known and it can be formed by 2 or more people. Here I will be discussing about all the requirements and procedure for a trust registration.
What is meant by trust registration?
A trust is registered and governed by Indian Trust Act. It can be said that, it is a financial vehicle which transfers property of the owner to a trust for lawful purposes. The word trust can be used by a trust which is meant for religious purposes or for any sports academy. In India there are many public trusts, often the wealthy people transfer their property in name of a trust by forming one. This is done because, a registering a trust has become much easier, also transferring a property in name of trust does not involve much effort than to write a will. Also trust helps in saving tax. Dividend distribution tax or minimum alternate tax does not apply.
Documents required for registration of a trust
- Personal details of the trustees, like, name, age, occupation, contact details, address, father’s name and 2 passport size photographs.
- Address proof of trustees and settler- voter’s id/ aadhar card/ driving license/ passport.
- Electricity bill or house tax receipt or water bill or ownership proof of property required.
- In case the property is rented, the rent deed which is notarized with rent receipt and NOC (No objection certificate) at Rs.10 stamp paper from the landlord is required. Along with this you have to submit details of landlord- name, address, father’s name.
- Physical presence of settler/ all is required at the time of registration along with original id proofs.
- Physical presence of two witnesses is required along with their original identity proofs.
STEPS TO REGISTER A TRUST
Preparation of trust deed-
The very first step in registering a trust is to draft the trust deed. Trust deed is as such not mandatory but desirable because it will be enforceable in court of law. Details to be mentioned in trust deed are-
- Name and address of settler (who is setting up the trust)
- Name and address of other trustees.
- Name of the trust- to be given 3 names according to preference.
- Minimum and maximum of trustees
- Objectives of trust.
- Rules and regulations of trust.
- Parties to trust- 3 parties are required to form a trust.
- Applicant/ Author of the trust- the author is regarded to person who declares confidence in trust. Name and address of the author shall be mentioned in the trust.
- Details of trustees and members- all the details and capacity of trustees and members is to be mentioned. Also whether they are sound mind, and major to form the trust.
- The beneficiary of the trust- the person who is getting benefit by formation of the trust. It is usually the author or the public at large.
- Objects of the trust- it is for charity purpose only, and also the details of what the trust will do is to be specified.
- Subject matter- it is the property in respect of which the trust is created and it should be mentioned.
Registration of trust by trust deed-
After preparation of a trust deed the next step is to get trust registered. Though there is no compulsion to get registration done, but it is useful for its legal existence and to come under income tax exemption. The registration application is to be submitted to local registrar along with photocopy and settler shall sign all the pages.
- Address for correspondence and evidence- for this recent electricity bill/ telephone bill or property card of trust location to be submitted.
- Tenure of trustees- it shall be fixed from 1 year to maximum of 5 years.
- Application for tax benefit- after valid registration, to get benefit from income tax that is exemption you should go for 12A and 80G certificate.
Summary: trust is formed for charity purposes and also by forming this; you can get income tax exemption from the government. Registration of trust requires few basic documents and though its registration is not compulsory but to get income tax exemption and for its proof of existence registration is necessary. With Company Vakil all your registrations are in safe hands of experts, get in touch to get your trust registered.