Professional Tax

Trust Registration in India

1. What is a Trust?

A trust is a legal arrangement where a person or entity (the settlor) transfers property to trustees, who hold and manage it for the benefit of beneficiaries. Trusts are commonly formed for charitable, religious, or private purposes under the Indian Trusts Act, 1882.

Registration of a trust ensures legal recognition, credibility, and the ability to claim exemptions under tax laws.

2. Types of Trusts

1. Private Trust – Created for specific individuals or family members. Governed by the Indian Trusts Act, 1882, Section 4 onwards.
2. Public Charitable or Religious Trust – Established for public purposes like education, healthcare, or poverty relief. Can claim tax benefits under Income Tax Act, 1961 (Sections 11, 12, and 80G).

3. Applicability

Who can form a trust:

• Any individual (settlor) with legal capacity to contract (Section 3 of the Indian Trusts Act, 1882).
• Minimum two trustees required for a public trust; one trustee sufficient for a private trust.
• Trust property can include movable or immovable assets, cash, or other valuables.

Mandatory Registration:

• Registration is not mandatory for private trusts, but recommended for legal recognition and dispute prevention.
• Public trusts must be registered under the Indian Trusts Act, 1882 (Section 7) or relevant state trust acts to obtain tax exemptions and to function legally.

4. Key Documents Required

• Trust Deed / Instrument – Containing name, objectives, details of settlor and trustees, and property particulars.
• PAN and Aadhaar of trustees
• Identity and address proof of settlor and trustees (Passport, Voter ID, Driver’s License)
• Property proof contributed to the trust (sale deed, donation receipts)
• NOC / No Encumbrance Certificate if property is mortgaged
• Affidavit of trustees accepting responsibilities
• Board resolution or consent letter in case of corporate settlors

5. Procedure for Trust Registration

1. Drafting Trust Deed – Prepare a comprehensive deed including objectives, powers of trustees, and succession clauses.
2. Payment of Stamp Duty – Stamp duty is payable as per the Indian Stamp Act, 1899, and varies by state.
3. Submission to Registrar – Submit deed and documents to the Sub-Registrar / Charity Commissioner for registration.
4. Verification – Authorities verify identity of trustees, genuineness of property, and purpose of the trust.
5. Issuance of Registration Certificate – Trust receives a legal registration certificate, giving it statutory recognition.

6. Tax Exemptions & Compliance

Income Tax Benefits:

• Trusts for charitable purposes can claim exemptions under Section 11 and 12 of the Income Tax Act, 1961.
• Donations to trusts eligible for deduction under Section 80G.
• Annual audit and filing under Section 12A and 12AA required for public trusts.

Compliance Requirements:

• Maintain separate books of accounts for income and expenditure.
• Annual filing of Form 10B / 10A with the Income Tax Department.
• Ensure activities are consistent with trust objectives to retain tax benefits.

7. Advantages of Trust Registration

• Legal Recognition – Provides a statutory framework for management and governance.
• Tax Benefits – Exemptions under Sections 11, 12, and 80G of Income Tax Act.
• Protection of Property – Assets held in trust are legally protected from personal claims of trustees.
• Ease of Administration – Clearly defined powers and responsibilities of trustees.
• Credibility & Fundraising – Registered trusts are more credible for donors and funding institutions.
• Succession & Continuity – Trust deed ensures smooth transfer of assets and continuity of objectives.

8. Advisory & Support by India Stat Filing

• Drafting of Trust Deed – Ensure deed complies with Indian Trusts Act, 1882 and applicable state laws.
• Stamp Duty Guidance – Assist in calculating and paying stamp duty as per state rules.
• Registration Assistance – End-to-end submission to Sub-Registrar or Charity Commissioner.
• PAN & TAN Application – Obtain PAN for the trust for tax compliance.
• 80G / 12A Registration – Guidance for obtaining tax exemptions.
• Annual Compliance – Maintain books, file returns, and advisory for audits.
• Bookkeeping Services – Maintain accurate accounts for donations, grants, and expenditures.

📞 Get Started Today

Establish your trust legally and efficiently with India Stat Filing. Secure your charitable or private objectives, claim tax exemptions, and ensure proper compliance with Indian Trusts Act, 1882 and Income Tax regulations.