TRUST in English it means belief, reliability,truth.In the same way, in legal terms the trust has a meaning based on belief of some people.
In legal terms, Trust is a legal entity created by a party called trustor or settler through which a second party called trustees hold right to manage trustor’s assets or property for the benefit of third party called beneficiary.
Now a days, there are various trusts which are formed for a purpose and for the benefit of a particular sections of the society. Be it would be a School which used to be registered as an educational trust or any institute or an NGO whatever.
Here in this article, we would try to understand the concept of Registration of Trusts.
REGISTRATION OF TRUST
FOR STARTING UP A TRUST, WE NEED SOME IMPORTANT DOCUMENTS TO BE COLLECTED:-:
- Collation of the Essential details.Before you register your trust you will need to decide the following:-
- Name of the trust
- Address of the trust
- Objects of the trust (charitable or Religious)
- One settler of the trust
- Two trustees of the trust
- Property of the trust-movable or immovable property (normally a small amount of cash/cheque is given to be the initial property of the trust, in order to save on the stamp duty).
- Prepare a Trust Deed on stamp paper of the requisite value (8% of the value of property of the trust in Delhi. The rate varies from state to state).
- Requirement for registration of Trust Deed with the Local Registrar under the Indian Trusts Act, 1882:
- Trust Deed on stamp paper of requisite value (as stated on point no.2 above)
- One passport size photograph & copy of the proof of identity of the settler.
- One passport size photograph & copy of the proof of identity of each of the two trustees.
- One passport size photograph & copy of the proof of identity of each of the two witnesses.
- Signature of settler on all the pages of the Trust Deed
- Witness by two persons on the Trust Deed.
- Go to the local registrar & submit the Trust Deed, along with one Photocopy, for registration. The photocopy of the Deed should also contain the signature of settler on all the pages. At the time of registration,the settler & two witnesses are required to be personally present,alongwith their identity proof in the original.
- The Registrar retains the photocopy & returns the original registered copy of the Trust Deed.TRUST DEED: IT IS AN IMPORTANT DOCUMENT TO BE PREPARED.Trust deed consists of objects of the trust, Operation of Trust, Trustee information, Trustee powers, rights, duties and liabilities. There are some procedures in creation of a trust deed.
- After creation of Trust deed, That organization TRUST shall be registered with the Registrar or Sub-registrar office as per the laws relevant to the specific states.
- After the registration of trust, you shall get the copy of the registration from the Registrar and you shall apply for PAN card, and you have to apply for proper Income tax registration with Income tax department ( Here the 12 A plays the role).
- After you have properly got the Income tax certificate for the Trust (12A), you can also apply for tax exemption certificates like 80g, 35ac and so many other forms of income tax exemption as per the objects of your trust and as per the applicable rules.
- A trust shall be a public charitable trust or Private trust. Public charitable trust is able to raise funds from public to serve the social causes of the nation.
- A trust must be registered whether with movable or immovable properties.
- Trust should be registered with a “Registered office address of the trust” with proper landmarks.
- A Trust shall be registered by the founder only with the minimum of 2 members.
TRUST Registration Explained once more:
Trust are formed under a Trust deed and registered with Registrar office and Income Tax Authority. In general a Trust deed will be created (Trust bye-law or instrument of trust) with the objects of Trust.
Trust deeds are created and declared either by will or inter-vivos by agreement and as testamentary instrument or a non testamentary instrument. Some type of trust may be created even verbally. However, it’s advisable to have written trust deed. The basic need of a trust deed is must to be in writing and registered with the Registrar of the Trust ( In local Registrar office or as per the law related to Trust), which is the only prima facie evidence for the existence of trust It also simplifies devolution of trust property. The written trust and trust deed is the essential for registration towards conveyance of Immovable property. It helps to claim income tax exemption as per Income tax act. It is useful to control, regulate and manage the works and operations of the trust. It spells several procedures for appointment and removal of the trustees, and their powers, rights and duties. That is, a Trust is created in written by a will which is related to movable or immovable property, whether it may be a public or private trust, duly registered with Registrar of local office and Income tax department.
12A registration of TRUST
Under Income Tax Act 1961
A Trust has to get registered with Income Tax department under Income Tax Act 1961, to claim tax exemption for their income, it called the 12A registration.
From the Date of establishment of a trust, it should apply for registration with Income tax department to get 12A certificate. If delayed in applying for registration then the trust should submit Audit Reports as may be available.
To get registered with Income tax department TRUST have to fill a FORM 10A and it has to produce to the Commissioner of Income Tax, Income Tax Department office of your district. If your TRUST is established in metropolitan cities like Delhi,Calcutta, Mumbai and Chennai, then you have to produce the FORM 10A to the Director of Income Tax (Exemption), Income tax department office.
Before submitting FORM 10A, please make sure that you have received PAN CARD for your TRUST.
When you produce the form 10A to the Income tax department, you have also required to enclose the copies of the following.
- Original basic documents of organization, like Trust deed / Bye laws / Rules and Regulations / Memorandum and Articles of Association as per the shape of your TRUST.
- Copies of the accounts of last couple of years may also be submitted.
After you have produced the above FORM 10A either through registered post with acknowledgement due or directly in the Income Tax office. The Commissioner of Income Tax, on receipt of an application for registration of a TRUST, shall call for such documents or information, as he thinks necessary. While processing such application, the concerned authority normally concentrates on the genuineness of the TRUST. Once the genuineness of the activities & creation is established, then it is incumbent upon the authority to pass an order in writing, registering theTRUST..
The Income tax officers have the rights to grant or to refuse registration to your application. Also, note that, 12A registration of an TRUST shall be cancelled by the Income tax department, if it feels that itis not fit as per law at any point of time.
Income Tax form 10A(Sample Format)
Application for registration of charitable or religious trust or
Institution under section 12A (a) of the
Income -tax Act, 1961
The Chief Commissioner of Income Tax,
I, (your name), on behalf of (your organization name) hereby apply for the registration of the said trust/institution under section 12A of the Income-tax Act, 1961. The following particulars are furnished herewith:
- Name of the trust / institution in full
[In block letters]:
- Name(s) and address (es) of author(s)/
- Date of creation of the trust or
Establishment of the institution:
- Name(s) and address (es) of trustee(s)
I also enclose the following documents:
- (a) *Original / Certified copy of the instrument under which the trust/institution was created / established, together with a copy thereof.
(b) *Original / Certified copy of document evidencing the creation of the trust or the establishment of the institution, together with a copy thereof. (The originals, if enclosed, will be returned).
- Two copies of the accounts of the *trust / institution for the latest *one / two / three years.
I undertake to communicate forthwith any alteration in the terms of the trust, or in the rules governing the institution, made at any time hereafter.
* Strike out whichever is not applicable. * Note: This is a model form, when you type in this form the number of pages may increase. After completion of this form perfectly please delete this sentence.
for formation of Trust or NGO or Society anywhere in India contact us 9971504105