Registration of Trust

A trust can be formed as per Section 4 of Indian Trust Act 1882 for a lawful purpose. A trust should have a document written and signed by trustees or a sole trustee. A trust can be formed through a will also. Therefore, there is no definite form to create a trust. Objectives of the trustee should be clear and unambiguous.

A minimum two persons are required to form a trust which can be set up by executing a trust deed on non-judicial stamp paper after paying necessary Stamp duty as applicable. Trust deed enumerates the aims and objects and mode of management of the trust. Minimum two trustees are required to register Trust.

Voluntary organizations (VOs) / Non-Governmental Organizations (NGOs) include organizations engaged in public service, based on ethical, cultural, social, economic, political, religious, spiritual, philanthropic or scientific & technological considerations. VOs include formal as well as informal groups, such as community-based organizations (CBOs); non-governmental development organizations (NGDOs); charitable organizations; support organizations; networks or federations of such organizations; as well as professional membership associations. VOs / NGOs should broadly have the following characteristics:

  1. They are private, i.e., separate from Government
  2. They do not return profits generated to their owners or directors
  3. They are self-governing, i.e., not controlled by Government
  4. They are registered organizations or informal groups, with defined aims and objectives

It is also pertinent to note that Non-Governmental Organisation (NGO) or also known as Non-Profit Organisations can be set up in the form of “Public Charitable Trust” form as well. Forming NGO’s in such form will have the following benefits

  1. Unlike Society or Section 8 Company formation of Trust is Easier, Quicker and less time consuming
  2. Minimum two trustees are required to form a trust whereas in society minimum 7 members are required to form a Society.
  3. There is no maximum limit to the number of trustees on the Board of a trust
  4. Trust can get registered under Section 12A and Section 80G of the Income Tax Act 1961 provided its activities qualifies for such registrations
  5. Registration of the Public Charitable Trust under Section 80G will enable the donor of the NGO/Trust to avail 50% deduction of such donations under this section, from his taxable income.
  6. Registration of the Public Charitable Trust under Section 12A of the Income Tax Act 1961, will enable the Trust to claim income tax exemption under section 11 and 12 of the Act, subject to provision of the act.
  7. The compliance burden is less compared to Society and Section 8 Company.
  8. Compared to Society and Section 8 Company, Management and administration of the Trust are simple.

We Provide the following Services for a Trust

  1. Drafting of Trust Deed and Application for registration
  2. Formation and Registration of Trust with the Registrar
  3. Applying for PAN And TAN
  4. Applying for 12A and 80G Registration for eligible trusts and renewal of the same.
  5. Audit of Trust u/s 12A(1)(b) and filing of Audit Report under Form 10B with Income Tax Department
  6. Filing of Income Tax Returns
  7. Assistance in Accounting, Book Keeping, Payroll Processing, Back Office Management and Other Statutory Compliances
  8. Assistance in Amendment of Trust and updating the same with the registrar

For brief understanding here below, we have enumerated few Frequently Asked Question

Q1 What are the purposes for which a trust can be formed?

Trust cannot be formed for the following purposes under Sec.4 of the Act:

a) Unlawful purposes;

b) Against provisions of Indian Trusts Act, 1932 rules made thereunder;

c) If there are provisions for cheating etc. in the trust;

d) If the trust is intended to cause loss or damage to one's property

Q2 Who can form a trust?

The following can form a trust under Sec.7 of the Indian Trusts Act 1882:

a) A person capable of making a contract can form a trust;

b) Trust can be formed on behalf of minor with permission of the Civil Court.

Q3 What are the Documents for registration of Trust?

  1. Drafting of Trust Deed and Printing and Signing of the same in Stamp Paper after paying Stamp Duty
  2. PAN Card, Photo, Self-Attested ID and Address Proof of the Trustees.
  3. Proof of Registered address (Rental/ Lease Agreement along with Utility Bill and NOC)
  4. Proof of Property Registered in Trust name.

Q4 Can a trust be cancelled?

A trust can be cancelled on the following grounds as per Sec. 78 of The Indian Trust Act 1882:

  1. Trust can be cancelled at the will of the trustees;
  2. Trust can be cancelled if there is provision for cancellation in the deed.
  3. If the author of trust creates trust for the purpose of repayment of his debt and if this is not informed to the creditor, the author can cancel the trust.

Q5 Can the defects in the trust be cured by amendment?

Yes, the amendment can be made by rectification or supplementary deed.