🏛️Trust Registration

Introduction to Trust Registration

A Trust is a legal arrangement in which the owner (author or settlor) transfers property or assets to a trustee, who holds and manages it for the benefit of a third party (beneficiary). This structure ensures that the assets are used as intended by the settlor for charitable or specific lawful purposes.

In India, Trusts are governed by the Indian Trusts Act, 1882. As per the Act, all private trusts must be registered under this legislation. Public charitable trusts, although not mandated under the Act in every state, are generally required to be registered for legal recognition and availing benefits such as tax exemptions.

🔹 What is a Trust?

A Trust is a legal arrangement where a Settlor (or Author) transfers property to a Trustee, to be managed for the benefit of a third party (Beneficiary). This transfer is governed by clear terms, with the trustee holding the property for the purpose stated in the Trust Deed.

🔹 Governing Law

Trusts in India are primarily regulated by the Indian Trusts Act, 1882.

• Private Trusts are governed under this Act.
• Public Trusts are governed by various state laws such as:
  • Bombay Public Trust Act, 1950
  • Charitable and Religious Trusts Act, 1920
  • Religious Endowments Act, 1863
  • Charitable Endowments Act, 1890

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✅ Advantages of Trust Registration

• Legal structure to conduct charitable or religious activities
• Tax exemptions for the Trust and donors (upon Section 12AB and 80G registration)
• Helps in asset protection and wealth preservation
• Enables succession planning and avoids family disputes
• Can be used for immigration/emigration and forced heirship protection
• Allows professional management of family or charitable assets
• Provides compliance with Indian laws and safeguards from legal disputes

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👥 Parties Involved in a Trust

1. Settlor / Trustor – The person who creates the trust and transfers the property
2. Trustee – The person or group entrusted to manage the trust
3. Beneficiary – The person(s) for whose benefit the trust is created

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🗂️ Types of Trusts in India

Based on Beneficiaries:

• Private Trust: Created for specific individuals
• Public Trust: Created for the benefit of the general public
• Public-Cum-Private Trust: Serves both public and private beneficiaries

Based on Purpose:

• Simple Trust: Trustee has passive duties only
• Special Trust: Trustee has active roles in executing wishes
• Express Trust: Created via written instruments (will or deed)
• Implied Trust: Arises from implied intent, even if not formally documented

Based on Use:

• Trusts can be vehicles for investment, such as:
  • Mutual Funds
  • Venture Capital Funds
  • Governed by SEBI regulations

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📋 Documents Required for Trust Registration (Jaipur Example)

• Aadhaar Card / Voter ID / Passport / DL of Settlor & Trustees
• Address Proof of Registered Office (Utility Bill or Rent Agreement + NOC)
• Passport-size Photos of Settlor & Trustees
• PAN Cards of Settlor & Trustees
• Draft Trust Deed (on Stamp Paper of applicable value)
• Objective of the Trust
• Details of all trustees and settlors (name, address, occupation, ID)

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📜 What Should a Trust Deed Include?

• Name of the Trust
• Registered office address
• Objectives of the Trust
• Details of Settlor and Trustees
• Rules for operation, management, removal of trustees, etc.
• Signature of Settlor and Two Witnesses
• Rights and duties of the trustees
• Procedure for amendments or dissolution

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📝 Step-by-Step Trust Registration Process

1. Choose an Appropriate Name

• Must not violate the Emblems and Names (Prevention of Improper Use) Act, 1950

2. Decide Trustees and Settlor

• Minimum: 2 Trustees
• Generally, the Settlor is not a Trustee
• Settlor must be an Indian resident

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

• Trust Deed: Legal rules and framework
• MoA: Objectives, roles of trustees, and organizational structure

4. Execute Trust Deed on Stamp Paper

• Stamp Duty: Varies by state (Jaipur Example: Rs. 1100)
  • Rs. 100 – Registration Fee
  • Rs. 1000 – For certified copy with Sub-Registrar

5. Submit to Registrar

• Settlor signs every page of the deed
• Physical presence of Settlor + 2 Witnesses (with IDs) required
• Trustees’ presence may be optional (varies by registrar)

6. Receive Certificate of Registration

• Registered copy of Trust Deed is returned
• Certificate issued within 7 working days (approx.)

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⚖️ Non-Compliance & Penalties

1. Breach of Trust (Sections 405–409 IPC)

• Can result in civil and criminal liability

2. Non-compliance under TDS Provisions

• Failure to apply for TAN or quote TDS number → Penalty: ₹10,000 (Section 272BB)

3. Failure to File Income Tax Return

• Penalties under Income Tax Act apply
• TDS certificate must be produced within 2 years from end of AY if initially unavailable

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🔐 Impact of Section 12AB on Trusts

To continue availing tax exemptions under Sections 10 or 11, existing trusts must re-register under Section 12AB if previously registered under:

• Section 12A
• Section 12AA
• Section 10(23C)
• Section 80G

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💻 Is E-Filing of ITR Mandatory for Trusts?

Yes, trusts must file ITR electronically:

• With or without a digital signature
• Or through Electronic Verification Code (EVC)

Trusts liable for audit under Section 44AB must file only through digital signature.

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