Trust Registration

A Trust is a legal arrangement where the owner (Trustor) transfers property to a Trustee for the benefit of a third party. Trusts in India are regulated by the Indian Trusts Act, 1882, and registration is mandatory under this law. Today, trust registration is an online process that requires executing a Trust Deed, which is the most important document for trust registration.

What is a Trust?

A Trust is a structure where the Trustor (or Settlor) transfers property to a Trustee, who holds it for the benefit of specific individuals or the public. The Indian Trusts Act, 1882, governs trust-related provisions and offers various benefits upon registration.

Advantages of Trust Registration

Registering a Trust provides several benefits, including:

✔ Engagement in Charitable Activities
✔ Tax Exemptions for Registered Trusts
✔ Support for Underprivileged Communities
✔ Legal Compliance and Protection
✔ Preservation of Family Wealth
✔ Avoidance of Court Disputes
✔ Simplified Immigration/Emigration Processes
✔ Protection Against Forced Heirship
✔ Tax Mitigation Benefits
✔ Efficient Asset Management

Parties Involved in Trust Registration

The main parties involved in trust registration are:

  • Trustor (Settlor) – The person who creates the trust and transfers assets.
  • Trustee – The individual/entity responsible for managing the trust assets.
  • Beneficiary – The person or group benefiting from the trust.

Types of Trusts in India

1. Private Trust

  • Created for specific individuals.
  • Governed by the Indian Trusts Act, 1882.
  • Can be established inter vivos (during the Trustor's lifetime) or through a will.

2. Public Trust

  • Created for the benefit of the general public.
  • Includes charitable and religious trusts.
  • Governed by multiple laws such as:
    • Charitable and Religious Trusts Act, 1920
    • Religious Endowments Act, 1863
    • Charitable Endowments Act, 1890
    • Bombay Public Trust Act, 1950

3. Public-Cum-Private Trust

  • Serves both public and private beneficiaries.

4. Other Classifications Based on Purpose

  • Investment Trusts (e.g., Mutual Funds, Venture Capital Funds) regulated by SEBI.
  • Simple Trust – Trustee only holds assets without active duties.
  • Special Trust – Trustee actively manages the trust per the Trustor’s wishes.
  • Express Trust – Established through a formal document.
  • Implied Trust – Created based on the parties' intent rather than a written document.

Documents Required for Trust Registration in Jaipur

To register a Trust, the following documents are required:

✔ Identity Proof of Trustor & Trustee (Aadhaar, Voter ID, Passport, or Driving License)
✔ Address Proof of Registered Office (Property Certificate or Utility Bills – Electricity, Water, Telephone)
✔ No Objection Certificate (NOC) from the property owner (if rented)
✔ Objective Statement of the Trust Deed
✔ Details of Trustees and Settlor (ID, Address Proof, and Occupation Details)
✔ Trust Deed (Stamped as per State Requirements)
✔ Passport-size Photographs of Trustees and Settlor
✔ PAN Cards of Trustees and Settlor

Key Inclusions in a Trust Deed

A Trust Deed must include:

✔ Number of Trustees
✔ Registered Address of the Trust
✔ Proposed Name of the Trust
✔ Rules & Regulations to be Followed
✔ Presence of Settlor and Two Witnesses at Registration

Step-by-Step Process of Trust Registration

1. Choose a Trust Name

  • The name must comply with the Emblems and Names Act, 1950 and should not be restricted.

2. Decide the Trustor and Trustees

  • Minimum one Trustor (Settlor) required.
  • Minimum two Trustees needed (no upper limit).
  • The Trustor cannot be a Trustee.

3. Draft the Trust Deed & Memorandum of Association (MOA)

  • Trust Deed serves as legal proof of the Trust’s existence.
  • MOA outlines the Trust's objectives and operational structure.

4. Execute the Trust Deed on Stamp Paper

  • Must be executed on stamp paper (value varies by state).
  • Registration fee: ₹1,100
    • ₹100 – Trust Registration Fee
    • ₹1,000 – Fee for a Certified Copy of the Trust Deed

5. Submit the Trust Deed to the Local Registrar

  • Settlor must sign each page of the Trust Deed photocopy.
  • All Settlor(s) and two witnesses must be present with original ID proofs.

6. Obtain the Certificate of Registration

  • The Registrar will issue the Trust Registration Certificate within 7 working days.

Penalties for Non-Compliance

1. Civil and Criminal Penalties

  • Breach of Trust is punishable under Sections 405-409 of the Indian Penal Code (IPC), 1860.

2. Non-Compliance with Tax Deduction Account Number (TAN)

  • Failure to obtain a TAN can lead to a ₹10,000 penalty under Section 272BB of the Income Tax Act.

3. Failure to File Income Tax Returns (ITR)

  • Non-filing of ITR attracts penalties, but exemptions apply if the TDS certificate is provided within two years.

Impact of Section 12AB on Trust Registration

  • Charitable trusts must re-register under Section 12AB to continue availing tax exemptions.
  • Applicable to trusts already registered under:
    • Section 12A
    • Section 12AA
    • Section 10(23C)
    • Section 80G

Is It Mandatory to E-File ITR for a Trust?

Yes, trusts must file ITR electronically:

✔ With a Digital Signature
✔ Without a Digital Signature (Using Electronic Verification Code)

  • Trusts subject to Section 44AB Audit must file ITR electronically.

 

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