What is trust?
The trust is registered under the Indian Trust Act of 1882 and makes provisions related to trusts. A trust is a type of cooperation in which the owner of the trust transfers ownership to the trustee. The purpose of ownership transfer here is to provide benefits to third parties. The property is transferred to the trustee by the trustor together with the announcement that the property is held by the trustee for the beneficiary of the trust.
Primarily Trust will be formed with an intention of carrying out charitable work.
What are the benefits of trust?
Enables you to get involved with a charitable organisation
Registered trusts are eligible for certain tax exemptions
Trusts help preserve the family's wealth (family assets can be split between various members, allowing everyone to benefit without direct ownership)
Trusts allow people to avoid the Probate Court (transfer of ownership of assets from the settler to the trustee can be done without having to go through a court of law)
Can avoid taxation in the destination nation if the family wants to emigrate to a different country
What are the types of trusts?
Private Trust - A private trust is a trust established for the benefit of one or more persons who can or can be ascertained within a certain period. Private trusts are regulated by the Indian Trust Act of 1882.
Public Trust - Public trusts are established solely for the benefit of the public at large. They may be charitable or religious and are not subject to the same regulations as a private trust.
Public-cum-private Trust - In this situation, a part of the income can be used for public purposes while the rest can be used for private interests.
What documents are required for trust registration?
Proof of Identity for Trustor & Trustee- Aadhaar Card, Voter ID, Passport, Driving License.
Address Proof of Registered Office- Copy of Certificate of Property/Utility Bills (Telephone, Water, Electricity Bill)
Duly drafted Trust deed.
Particulars of the Trustee and Settlor (Self-attested copy Id and Address Proof along with the information related to occupation).
The trust deed must also contain information regarding the number of trustees, their registered addresses, proposed name of the trust, and rules and regulations of the trust.
What is the procedure for trust registration?
Name selection - The first step in registering a trust is to choose a suitable name for the trust. The applicant must consider that the name so proposed should not be included in the list of name restrictions set out in theEmblems and Names Act of 1950.
Drafting of Trust Deed - A trust deed should be prepared for the trust registration. The trust deed is a document containing all the important information related to registration and must be submitted to the registrar at the time of registration.
Selecting the Settlors and Trustees - The next step is to choose the settlor and trustee of the trust. However, there are no specific regulations on the number of settlers/authors. In addition, there must be at least two trustees to establish a trust. Trustees must visit nearby Registrar office for the purpose of Trust registration.
Paying the requisite fee - The fee associated with registration must be paid.
Collect the copy of the Trust Deed - The copy can be collected within one week from the registrar's office.
Submission Of Trust Deed To Registrar - Once the trust deed is collected, it must be submitted to the local registrar.
Income Tax Exemption and FCRA Registration:
In order to continue to take advantage of the exemptions under Section 10 or Section 11 of Income Tax Act, 1961, trust must be registered with Income Tax Department too. Following are the registrations which trust must obtain from the Income Tax Department:
If a Trust gets 12AA registration, then the income earned by the trust will be exempted from Tax. If a Trust gets 80G recognition, then any person who gives a donation to the trust will be getting deductions in his income Tax return.
If a Trust is in process of receiving donation or contribution from a Foreign source, then before receiving the amount, Trust should seek a prior permission from FCRA Authorities.
For further information please contact firstname.lastname@example.org