The process of registering a trust is the procedure of formal registration of trust with the appropriate authorities to confirm its legality and legitimacy. A trust is an arrangement legal in which a single party (the trustee) is responsible for managing assets to the benefit of other individuals (the beneficiary).
To establish a trust, a trust deed needs to be drawn up and drafted, which spells out specific terms and provisions of the trust as well as outlines the trustees, beneficiaries, as well as their responsibilities.
When the trust document is complete, it has to be presented to the appropriate authority to be registered, like the Registrar of Trusts. The process for registration usually requires submitting an application form, along with the necessary documents, like the trust deed and proof of the identity of trustees, as well as other pertinent information.
After the registration process is complete, the trust is granted legal recognition and can begin to operate as a legal entity. Trust registration is often a requirement for opening bank accounts, entering into contracts, and engaging in other legal transactions on behalf of the trust.
Advantage Of Trust Registration In India
In India, registration of a trust can have several advantages, including:
Recognizing the legal status of a trust: Registration of a trust with the appropriate authority like the Registrar of Trusts gives legal recognition for the trust and its actions.
Tax benefits: Registered trusts can qualify for tax benefits under the Income Tax Act, such as exemptions or deductions for donations received or made by the trust. Registered charitable trusts can also enjoy tax exemption on their income and property.
Credibility: Registration of a trust can enhance its credibility and reputation, making it easier to attract donors, investors, and other stakeholders. It can also provide greater transparency and accountability to the trust’s beneficiaries and stakeholders.
Perpetual existence: Trusts registered with the IRS have a permanent existence, which means they can remain in existence even following the retirement or death of the trustees or their founders.
Limited liability: Registered trusts have limited liability, meaning that the trustees are not personally liable for the debts or liabilities of the trust, except in cases of fraud or misconduct.
Overall, registering a trust in India can provide a range of benefits that can help the trust achieve its objectives and fulfill its mission.
Process & Documents required to register a Trust registration
To register a trust in India, the following documents are typically required:
Trust Deed: The trust deed is the primary document that establishes the trust and outlines its objectives, governance structure, and rules. The deed should include the name and address of the trust, the names of the trustees and beneficiaries, and their roles and responsibilities. It should also specify the powers and duties of the trustees, as well as the procedures for appointing new trustees and managing the trust’s assets.
Identity Documents: The trustees have to present evidence of identity, like an identity card, passport, Aadhaar card, or voter identification card.
Address Documentation: The trustees should also present evidence of address, like the utility bill, bank statement, or rental agreement.
NOC from the Property Owner: If the trust intends to use a property as its registered office or as part of its operations, it must obtain a No-Objection Certificate (NOC) from the owner of the property.
Affidavit by Trustees: The trustees may be required to submit an affidavit stating that they are willing to act as trustees and that they have not been convicted of any criminal offense.
PAN Card: A trust needs to get a permanent account number (PAN) through the Income Tax Department. The documents needed may differ depending on the location and reason of the trust. It is recommended to speak with an attorney to confirm that all necessary papers are in order prior to applying for registration of trust.
Procedure to Register a Trust in India
To establish trust in India, you will be required to comply with these steps:
Select a name for your trust Name should be distinctive as well should not be identical or identical with the names of any other trust or firm in India.
The trustees and the members of the trust. The trust should have at minimum two trustees. there is no limit on the number of trustees. The trustees should be over 18, of age, and must be Indian citizens.
Make a trust deed: A trust deed is an official document that specifies the purpose and the goals of the trust as well as the powers and obligations of trustees, as well as the rules and guidelines of the trust. The trust deed has to be executed by the trustees in the presence of two witnesses.
Get a PAN card: The trust needs to get a Permanent Account Number (PAN) card from the Income Tax Department.
Trust registration: A trust has to have its trust registered at the Register of Trusts in the specific state in which the trust is situated. The application to register must be submitted alongside the trust’s declaration of trust, PAN card, and any other necessary documents.
Pay the registration fee: The registration fee for a trust varies from state to state, and it can range from a few thousand rupees to several lakhs of rupees.
Receive the certificate of registration: After the trust is registered, the Registrar of Trusts will issue a certificate of registration, which is proof of the trust’s legal existence.
Open a bank account: Once the trust is registered, it can open a bank account in the name of the trust and start accepting donations and other funds.
It is important to note that the process of registering a trust may vary slightly depending on the state where the trust is located. It is also recommended to seek the advice of a legal professional or a chartered accountant to ensure all the requirements are met.