Trust registration is really an important step to completing the formation of a trust. Today, through this article, we will explain all about a trust registration process in detail, along with important factors like corpus fund, the number of members required, requite documents, etc.
So, without further ado. Let’s proceed further. Happy reading.
What is meant by trust registration?
The process to legalize a trust deed as per the law from the registrar is called the trust registration process. The trust becomes recognized after completing the registration process lawfully.
Which act governed the formation of trusts in India?
One of the ancient acts, the Indian Trust Act, 1882 governs the formation of trusts (Private and general public trusts) in India. Although a few states like Gujarat, Maharashtra, etc have their own state acts to govern the formation of trust in the respective states. Also, trusts formed for specific objectives like charitable or religious trusts are governed by the other acts as well like The Charitable and Religious Trust Act, 1920, The Religious Endowments Act, 1863, and so on.
What is the general object to form a trust?
The object of forming a trust is to have a legal arrangement where the trust’s owner transfers property to the beneficiary of the trust. This transfer is done as per the clauses set in a trust deed. Therefore, trust must get registered by its members to legalize its trust deed.
Generally, there are three types of trusts set up in India, which are:-
● Public Trust
● Private Trust
● Public cum Private Trust
What is meant by corpus fund?
Generating a corpus fund is really important for trust. A corpus fund denotes a permanent fund kept aside for specific purposes only. If any donation is received specifically with a written direction of the donor on how it can be utilized then trust is not allowed to apply the donated funds as otherwise. It forms part of the corpus fund. So, you can say corpus funds are generally formed out of corpus donations received by the trust.
What essential details and documents are required for trust registration?
The list of essential details and documents required for trust registration is given below:-
● Certified Trust Deed (along with the objective).
● Trust registered office details and address proof (no objection certificate is also needed if it is rented).
● Trustor and trustee details along with their identity proofs.
● Permanent Account Number (important to avail tax exemption as well).
● Trustees consent letter.
● Application form with stamp fee.
What key factors to keep in mind while registering a trust in India?
Some key factors to keep in mind while registering a trust in India are given as follows:-
● Decide on the name of the trust – Before proceeding ahead decide on a name for your trust. Please make sure that you do not violate any trademark or copyrights while selecting the name for your trust.
● Draft the trust deed – Next important step is to draft a trust deed. You should take the help of professionals to assist you in drafting a suitable trust deed as per the governing act and law because it is a legal document enforceable in court after completing the registration process.
Please note that a trust deed must include the object to form such trust and other rules and clauses related to the acceptance of funds, investments, power of trustees, account and audit, donations, the vacation of the office, maintenance of properties, reimbursement of expenses, winding-up process and other legal matters.
● A number of members – A minimum of two members are required at the time of registration of a trust.
What is the procedure to register a trust?
An application is needed to be made on a stamp paper along with the necessary documents required for trust registration, to the registrar of your jurisdictional area in the state where your trust is located. On successful submission of the application and requisite documents, the registrar will verify the same and upon satisfaction will enter the name of the trust in the registry and also provide a copy of the same to the trustee for reference.
What does trust need to do to claim tax exemption?
To claim a tax exemption a trust needs to get it registered under section 10(23C)/section 12A/section 12AA/section 12AB/section 80G of the Income tax Act as well.
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That’s all, folks. We hope you get a clear understanding of the trust registration process and important facts related to it. If you need any assistance in filing an application to register your trust or completing compliances then feel free to reach out to us. We are always happy to serve you.
