Trust Registration

For Charitable Public Welfare activities the Tax exemption was granted in the section 11, 12 and 13 of the Income Tax 1961. Government of India has made the amendment in the Income Tax Act in 2015 and cleared the “Charitable” purpose.

Charitable Activities

In the amendment the expression “Charitable Purpose” has been defined under Section 2(15) of the Act to include Promotion of

  • Commerce
  • Arts
  • Science
  • Sports
  • Education
  • Research
  • Social Welfare
  • Religion
  • Charity
  • Protection of Environment
  • Advancement of any other object of general public utility

Types of Trust

Trusts are classified into two categories:

1. Public Trust

A public trust is the one whose beneficiaries include general public at large or a sizeable portion of it. A public trust categorized into-

  • Public charitable trust
  • Public religious trust

Public Trust is known as Non Profit Charitable Organization or Non-Governmental Organization (NGO).

2. Private Trust

A private trust is the one whose beneficiaries are individuals or families. A private trust is further categorized into-

  • Private specific trust /Private DiscretionaryTrust: in this case beneficiaries and shares both are determined.
  • Where both or either of the beneficiaries and their share are indeterminate.

Information about the basic concept behind a trust and few terms related to it

Author of Trust
The person reposing or declaring the confidence is the “author” or “settler” of the trust According to the Indian Trust Act any person competent to contract, and/ or with the permission of a principal civil court of original jurisdiction, by or on behalf of a minor can create a Trust.

Trustee
The person accepting the confidence shown reposed or declared by the author/settler is called the “trustee”. Unlike societies, all or some of the trustees of the Trust can be closely related (i.e. they may belong to the same family.

Beneficiaries
People who are benefited by the confidence reposed by the author/settler and accepted by the trustee are called the “Beneficiaries”. According to the Indian Trust Act beneficiary can be any person capable of holding property.

Trust property
‘Trust Property/Trust Money” is the subject matter of trust Instrument of Trust-“Instrument of Trust” is the instrument (if any) by which the trust is declared.

Trust Deed
To register a Trust a memorandum has to be prepared first. This memorandum of understanding is called as the Trust Deed. It is the document stating and containing essential things with reasonable certainty. These are

  • Theintention on the part of the author / settler to create a trust.
  • Purpose of the trust
  • Beneficiary
  • Trust property, and
  • Transfer of the property to the trustee.

Registration Process of Trust

The Indian Trust act defines creating a Trust as “A trust is created when the author of the trust indicates with reasonable certainty by any words or acts:

  • An intention on his part to create thereby a trust,
  • The purpose of the trust.
  • The beneficiary, and
  • The trust-property, and (unless the trust is declared by will or the author of the trust is himself to be the trustee) transferred the trust-property to the trustee”. A Public Charitable Trust has to be registered with the office of the Charity Commissioner who has jurisdiction over the trust. To register your trust you need to follow the steps described below:
  • Step 1: Choose an appropriate name for Trust. While choosing name take care that the proposed name should not suggest any kind of patronage by the government of India or any State government. It should not be under the restricted list of names as per the provisions of Emblems and Names Act, 1950. However, there is no restriction in using names that are already registered as Trust in the Registrar office.
  • Step 2: Determine the settler/author and Trustees of the intended Trust.. Settler/Author generally are not trustees. It depends upon the choice, will and understanding of other Trustees. There is no Educational qualification needed to become a Trustee
  • Step 3: Prepare a Memorandum of Association and Rules & Regulations of the Trust. This is known as Trust deed and is extremely essential as the legal evidence of your Trust’s existence. The Trust Deed contains various Clauses. These are:
    • Name Clause
    • Settler and Trustee Clause
    • Registered Office Clause
    • Object Clause and Beneficiaries
    • General Body Member Clause
  • Step 4 : Prepare all the document that will be required at the time of submission. There is a trust deed that is required. Trusts are irrevocable unless it is mentioned in the trust deed. This means that the trust cannot be wound up.
  • Step 5. Submit the Trust Deed, along with properly attested photocopies with the local registrar. Photocopy of the Trust Deed must be signed by the settler on every page. At the time of registration, the settler & two witnesses must be physically present, along with their identity proofs.
  • Step 6. The registrar will retain the photocopy & return the original registered copy of the Trust Deed.
  • Step 7. After submitting all the required document and completing all formalities it takes a minimum 7 working days to obtain registration certificate.

Documents Required for Trust Registration

Self attested PAN Card of all the Trustee/ Author/ Beneficiary

Self attested Aadhaar Card of all the Trustee/ Author/ Beneficiary

Passport size Photograph of all the Trustee/ Author/ Beneficiary

Their respective designation in the Trust Structure to be created

Proof of registered office address to be kept (NOC and Rent Agreement Required)

Utility Bill of registered office address (Not older than 2 Months)

3 to 4 Suggestions of Names to be provided

Brief Note on Activities to be conducted is to be Mentioned

Process of Incorporation

Step 1.

Collection of Documents Required

Step 2.

Drafting of Trust Deed/ Memorandum

Step 3.

Filing of Incorporation Documents with Registrar of Trust

Step 4.

Approval Granted

Pricing

Normal

Starting at Rs. 9,499 /- Onwards
  • PAN Application
  • Trust Deed Formation
  • Trust Registration under Trust Act

Standard

Starting at Rs. 27,499 /- Onwards
  • PAN Application
  • Trust Deed Formation
  • Trust Registration under Trust Act
  • Annual Accounting and Bookkeeping
  • Annual ITR Filing

Executive

Starting at Rs. 32,999 /- Onwards
  • PAN Application
  • Trust Deed Formation
  • Trust Registration under Trust Act
  • Annual Accounting and Bookkeeping
  • Annual ITR Filing
  • GST Registration
  • GST 3B and GSTR -1 Filing

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Frequently Asked Questions

Is it mandatory to have Trust Deed?

A deed isn’t mandatory for the formation of a trust. A trust can be formed by a deed or a mere oral agreement. However, it is advisable for charitable trusts and trusts with immovable property to have a trust deed. In some cases where trust deed is not available, documents such as revenue records for lands, property tax receipts, affidavits and other such documents, may be accepted in the place of a formal trust deed.

Can the property of the Trust be sold?

The Trustees do not have the right to sell the property, however, the trust properties can be sold after obtaining prior permission from the appropriate civil court.

In what other Ways an NGO can be registered in India?

Based on the cause and objectives, NGOs can be registered online as Trust or Section 8 companies.

Is there any certificate for registration of a Trust?

There is no specific certificate for a trust registration. On the other hand, getting the trust deed registered with the appropriate authorities would suffice.

How are public Trust Controlled?

A trust can be public even if the control of the trust property was not vested in the public but was retained by the settlors, provided that the funds are utilized for the welfare of the public, which makes it clear that the public trust can be headed and controlled by a private entity.