How to register a Trust in India?
As per the Income Tax Act, 1961, A Trust means an arrangement by which a property is transferred or vested by one person termed as settlor to another person to use and dispose of for another person or group of individuals known as trustees. Basically, trust is divided into two categories:
1) A Private Trust
2) A Public Trust
Ø Important Point to be considered on Trust Registration in India:
1) Whether you have to form a Private Trust or Public Trust?
Indian Trust Act, 1882 regulates and governs the rules of the Private and Public Trust in India except for the state of Maharashtra and Gujarat where the state law prevails. Private Trust means the trust which is formed where the settlor gives an opinion or intention either in written or orally to establish the trust and comply with the required formalities. However, a Public Trust is created for the promotion of social welfare and not for the benefit of one or more individuals.
2) Trust Deed:
The most important document to register a trust is the Trust Deed. It states the aims and the objectives of the trust under which it is executed duly signed by the settlor and the trustees in the existence of the two witnesses. The trust deed should contain the provision related to the management of the trust along with the procedure of appointing or removing the members.
3) Number of Trustees:
There is no upper limit specified for the trustees but minimum two trustees are compulsorily required for registering a trust.
4) Tax Benefit:
Privileges and tax benefits are not available to private trusts whereas public trust after registration with the income tax can avail exemptions for which necessary registration are required to be taken.
Ø Documents required for Trust Registration:
1) The basic details of the settlor and the trustees such as Name, address, occupation, mobile no. email and 2 photographs.
2) Address and ID proof of the Trustees and the Settlor: Aadhar card, Pan Card, Voter ID, etc.
3) Registered address proof where the trust is to register such as electricity bill, Rent agreement and NOC from the owner.
4) The physical presence of the settlor and trustees along with original documents at the time of registration.
5) The physical presence of the witnesses along with their original ID proof.
Ø Procedure to register a Trust:
1) Drafting of Trust deed:
The first step to register a trust is to draft a trust deed. The trust deed shall contain the name of the trust, the details of the settlor and the trustees, address of the trust, objects for which the trust is to be formed, rules and regulations of the Trust. The Trust deed is to drafted on non-judicial stamp paper duly notarized along with the necessary stamp duty paid. The stamp duty rates differ from state to state
2) Registration of the Trust:
After drafting of the trust deed the next step is to register the trust deed under the local registrar. It is not mandatory to register a Trust but for availing the income tax exemption d benefits it is always advisable to register a trust. The Trust deed has to be duly submitted to the local registrar. The physical presence of all the trustees and settlor is required while registering a trust.
3) Issuance of Registration Certificate: After verifying the documents submitted the registrar shall issue the Registration certificate and original trust deed certified by the Charity Commissioner within a period of 30 to 40 days. The Registrar may call for additional documents if required.
Thus for registering a trust, you have to follow the above-mentioned procedure. Once the Trust is registered you can go ahead with 12A and 80G for availing tax benefits