TRUST

A trust can be made by completing a trust deed; the trusts are of two types. A private trust which is created for the benefit of an individual also know as a beneficiary or particular group and the second one is a public trust also known as charitable trust is created or made for the benefit of the general public.

The first and foremost step to register a trust starts from drafting a good trust deed. IT is important that any trust deed is to be created on appropriate non-judicial stamp paper, every state has its rate of stamp duty. The second step is to book an appointment based on the registered office of the trust jurisdiction with the sub-registrar office, along with the government registration fee.

As per the appointed date assigned by the sub-registrar all trustees along with trust deed need to be present with two witnesses. It takes approx. two weeks for the registration process by the office of the sub-registrar, after that collect Registered deed can be collected. The third and most important step is to get the PAN Number and TAN Number allotted for the trust and then you can open a Bank A/c with any bank for your registered trust.

Who can form a Trust?

Trust for any legal purpose(s) can be formed or created by Any individual over 18 years of age. . Apart from individuals, an association of persons, a company, society or firm is also eligible for creating trust. In a special case of a minor, the permission of a principal civil court of original jurisdiction is required to create a trust on behalf of a minor.

you are looking for Trust registration anywhere in India, then you are at the right place VALCUS has a team of professionals who can provide you with all the assistance about the registration of this entity. Our professionals will make sure that your trust gets registered with minimum effort and in proper time.

Our panel of professionals at VALCUS with their sound professional knowledge helped many organizations to meet their requirement to register themselves as one licensed charitable or non-profit institutions.

Trust – advantages and disadvantages

A Trust is formed when a trustee holds the assets and runs the business, distributes incomes to beneficiaries, and follows the provisions in the trust deed. Consider a Trust if more than one family is involved in running the business.

Advantages of a Trust include that:

• limited liability is possible if a corporate trustee is appointed
• the structure provides more privacy than a company
• there can be flexibility in distributions among beneficiaries
• trust income is generally taxed as income of an individual.

Disadvantages of a Trust include that:

• the structure is complex
• the Trust can be expensive to establish and maintain
• problems can be encountered when borrowing due to additional complexities of loan structures
• the powers of trustees are restricted by the trust deed.

Registration Process for Public Charitable Trust

• Choose an Appropriate Name for the Trust: This is the first step in registering the Trust. Additionally, the name so suggested should not come under the restricted list of names as per the provisions of the Emblems and Names Act, 1950.
• Decide the Settlers or Authors and Trustees of the Trust: There is no defined provision with regards to the number of settlers/authors. However, in most of the cases there is typically one author.
  Further, there is no limit on the maximum number of trustees. But a minimum of two trustees are necessary to form a Trust. Also, the author generally cannot be the trustee. And he needs to be a resident of India.
• Formulate Memorandum of Association (MOA) and Trust Deed of your Trust: A Trust Deed is legal evidence of your Trust’s existence and it contains the rules and regulations of your Trust. This document also contains the bylaws regarding the changes, removal or addition of the Trustees.
  Memorandum Of Association (MOA)on the other hand represents the charter of the Trust. It defines the relationship of the Trustor with the Trustees and specifies the objectives for which such a Trust is formed. Such a document should contain the names, addresses and occupations of all the members along with their signatures.
• Documents Required to be Submitted at the Time of Registration.
• Trust Deed
• Self attested copy of the proof of identity of the settler (Aadhaar card, passport, voter ID, driving license or any such photo ID).
• Self attested copy of the proof of identity of each trustee (Aadhaar card, passport, voter ID, driving license or any such photo ID).
• PAN card.
• Proof of the registered office address of the Trust (electricity/water bill or registration certificate).
• Non Objection letter signed by the landowner.
• Prepare Trust Deed on a Stamp Paper: As a Trust, you need to prepare the Trust Deed on stamp paper. The value of this stamp paper is of a certain percentage of the total value of the Trust’s property. Further, this percentage varies from state to state.
  In addition to this, you need to pay a fee of Rs. 1100. Out of this amount Rs. 100 is the registration fee and Rs. 1000 are the charges of keeping a copy of the Trust Deed with a sub – registrar.
  Once you submit the papers, you can collect a certified copy of the Trust Deed within one week’s time from the registrar’s office.
• Submit the Trust Deed with The Registrar: After receiving a certified copy of the Trust Deed, submit the same along with properly attested photocopies with the local registrar.
  Further, the settler must put his signatures on every page of the photocopy of the Trust Deed. Also, it is mandatory for the settlers as well as two other witnesses to be physically present along with their identity proof (original as well as self attested photocopy) at the time of registration. However, physical presence of Trustees is debatable.
• Obtain the Registration Certificate: After submitting the Trust Deed with the registrar, the registrar retains the photocopy and returns the original registered copy of the Trust Deed.
  Then, after completing all the formalities registration certificate is issued within a minimum of seven working days.

Annual Compliance

Private trusts need to comply with the provisions under the Indian Trusts Act, 1882, the Income Tax Act, its Rules and Regulations and other relevant legislations. As far as annual compliances go, the general compliances for all private trusts are as follows:

1. Auditing of Accounts

When the total income of a Private Trust exceeds Rs. 1, 50,000(for FY 2016-17) which is the limit that has been given under the Income Tax Act, 1961 for non-taxable income, then the private trust must be audited compulsorily by a Chartered Accountant. [9]

2. Filing the Annual Returns

After the accounts of the Trust are audited by a CA, the audit report must be made. The report of audit of accounts must be in Form No. 10B. [10] The report must be filed along with the Annual Return of Income under Form ITR-7.

3. Foreign Contributions Report

Every Trust needs to submit a Foreign Contributions Report. There are two kinds of trusts, one which receives foreign contributions and one which does not. When a trust receives foreign contribution, it needs to submit a report to the Secretary, Ministry of Home Affairs, Government of India, New Delhi. The report must be duly certified by a CA and accompanied by the Income and Expenditure Statement, the Receipts and Payments Account and the Balance Sheet within 9 months of the closure of the financial year. If no such contribution is received during the last financial year then a ‘Nil’ Report needs to be submitted. [11]

Exemption to a trust

Income of a charitable and religious trust is exempt from tax subject to certain conditions. The exemptions are provided to the trusts under various provisions, inter-alia, Section 10, Section 11, etc. Some of the exemptions allowed to a trust are as under:

• 1) Section 11 provides exemption for income derived from property held under trust wholly for charitable or religious purposes to the extent such income is applied for charitable or religious purpose in India. However, this exemption shall be subject to certain conditions.
• 2) In view of Section 12, income in the form of voluntary contributions received by a trust created wholly for charitable or religious purposes or by an institution established wholly for such purposes shall also be exempt from tax (subject to certain conditions).
• 3) Any voluntary contributions received by an electoral trust shall not be included in its total income (subject to certain conditions).
• 4) Income of an educational institute is subject to exemption under Sections 10(23C)(iiiab)/(iiiad)/(vi).
• 5) Income of a hospital or other institution shall be eligible for exemption if it satisfies the conditions prescribed under Sections 10(23C)(iiiab)/(iiiad)/(vi).