Acts of Trust Registration in india
The Indian Trusts Act, 1882, a specific law that takes effect statewide, governs the registration of trusts in India. The following are the key steps involved in registering a trust in India:
Prepare a trust deed: The goals, guidelines, and rules of the trust are set out in the trust deed, a legal instrument. It must list the trust's name, the trustees' names and addresses, and the reason the trust is being established.
Get the trust deed notarized: The trust deed must be notarized by a notary public to ensure its legal validity.
Submit the trust deed: The trust deed must be submitted to the local Registrar of Trusts, along with an application for registration.
Pay the registration fees : Depending on the state in which a trust is being registered, there are different registration fees.
Obtain the registration certificate: Once the Registrar of Trusts is satisfied that the trust deed meets all the legal requirements, a registration certificate will be issued. The trust is now officially registered and can begin its activities. It's important to note that the process of trust registration may vary slightly depending on the state in which the trust is being registered, and additional registrations and licenses may be required depending on the nature of the trust's activities.
There are several benefits of trust registration, including:
Trust registration gives the trust a legal identity and recognition, which can help in gaining credibility and public trust.
The Income Tax Act and the Goods and Services Tax (GST) Act are just two of the legislation in India that offer registered trusts tax benefits and reductions.
Registered trusts can apply for grants, donations, and other forms of funding from government bodies, corporates, and individuals, which can help in carrying out their social objectives.
Trust registration can provide protection to trustees and members from legal liabilities and lawsuits, as the trust is considered a separate legal entity.
Trusts can have perpetual existence, which means they can continue to exist even if the trustees change or pass away. Overall, trust registration can provide a strong legal foundation for non-profit organizations, and can help in achieving their social objectives while enjoying various benefits provided by the government.
The following are the documents that are generally required for trust registration in India:
Public Trust: The term "public trust" refers to a trust that is created for the benefit of the entire public or specific Community. A public trust's trustees are chosen to oversee the trust and its resources on behalf of the beneficiaries. The registration of a public trust is governed by state-specific trust laws. Private Trust: A trust that was established with a particular person or group of people in mind is considered private. A private trust's trustees are chosen to oversee the trust and its funds on behalf of the beneficiaries. The registration of a private trust is governed by the Indian Trusts Act, 1882. It's important to note that the registration process and requirements for public and private trusts may differ slightly. In addition, there can be additional trust categories, such as charitable, religious, educational, and others, that have particular rules and procedures for registration. It is recommended to consult a legal expert or a chartered accountant for guidance on the registration process and requirements for the specific type of trust being considered.
Loss of tax benefits: One of the primary benefits of trust registration is the tax exemption and benefits that the trust can avail. If the trust is not registered or fails to comply with the relevant tax laws, it may lose these benefits. Legal liabilities: Non-compliance of trust registration and relevant laws may make the trust and its trustees liable for legal action and penalties, including fines and imprisonment. Cancellation of registration: The government has the right to revoke a trust's registration if it doesn't adhere to the requirements for registration. This could lead to the trust losing its ability to function and its legal identity. Damage to reputation: Non-compliance of trust registration and relevant laws may damage the reputation and credibility of the trust, which may impact its ability to receive donations and grants from the public and other stakeholders. To ensure compliance with the pertinent rules and regulations and avoid the above penalties, it is advised to consult a legal professional
Registered trusts can avail of tax exemption on their income, which can help in reducing their tax liability.
Credibility: 12A registration is considered a mark of credibility for a trust, as it is an indication that the trust has fulfilled the necessary compliance requirements.
Access to funding: Registered trusts are eligible for funding from government bodies, corporates, and individuals, as they are perceived as more trustworthy and credible.
Better governance: The process of getting 12A registration involves the submission of documents and compliance requirements, which can help a trust establish better governance practices and processes.
Enhanced transparency: Registered trusts are required to maintain and submit audited financial statements, which can improve transparency and accountability to the stakeholders. In summary, 12A registration is an important requirement for trusts to be eligible for tax exemption and can provide several advantages that can help them in their social objectives.