Trust registration in India

Public Trust is the most convenient way of starting an non-governmental organization or NGO. A trust functions on the objective of eradicating poverty, providing education to the underprivileged and offering medical relief apart from the generalized aim of promoting arts, science and literature. It is to be noted that trusts are irrevocable which means they cannot be amended or terminated without the permission of the court.
In India, there are no specific laws to govern the public trust, however, some states like Maharashtra and Tamil Nadu have their own public trust Act.

Online Trust registration – A detailed process

As an initial step in registering the trust, the founder of the trust or the “Author of the Trust” or the “Settlor of the Trust” has to figure out in a document the objectives of the trust and the manner in which the trustees have to work towards achieving the goals of the Trust. This document that contains all such details is called a Trust Deed.

Once this is made, thereafter, an application for registration of the trust shall be moved before the Registrar of Trust along with the Trust Deed. The appropriate jurisdiction for registration of the trust is usually where the registered office of the trust is located.

Content of the Trust Deed

The trust deed is the primary and the most essential document of the trust which states the reason for forming a trust, its functions, to its working, and until its closure. Following are the important clauses in the Trust Deed:

Name of the trust
The registered office of the trust
Area of operation of the trust
Objectives of the trust
Details of the Author of the Trust
Corpus/Assets of the Trust
Details of the Board of Trustees
Quorum of the Board with their qualification, terms and tenure
Powers and functions of the Managing Trustee and other Trustees
Closure and amendment of the trust deed and the applicability of the Act

Documents Required

The following documents are required during the registration of the Trust:
A completely drafted trust deed
Proof of registered office – (Rental Agreement or ownership document)
ID proof of the Founder of the Trust
Two witnesses

Constitution of the Trust

The Trust constitutes the Board of Trustees. The Board constitutes the following:

Author/Founder/Settlor of the trust
Managing trustee(s)
Other trustees

The quorum of the Board of Trustees shall not exceed a maximum of 21 members.

Why register a trust?

As per the Public Trust Act of all states, registration of Trust is mandatory if it involves charitable purpose or when there is a transfer of immovable property in the name of the trust.
Only registered trust is eligible for tax exemptions provided under Section 12 A and 80G of the Income Tax Act.
Registering a trust adds more credibility to the same as it involves public money in the form of donations.

Trust Compliances

A trust shall after its registration shall do the following:-

Obtain PAN card
Book Keeping and Accounts
Annual IT filings
Shops and Establishment License – in case of employment
Professional Tax Registration – if applicable
GST registration – if applicable

Applicability of tax exemption

There is a general notion that trust need not have to pay tax as they work towards the welfare of the public at large. But this is not true. A trust, like any other legal entity, is liable to pay tax. In order to be exempted from tax, trust is required to obtain certification for the said exemptions such as Section 12 A, 80G etc. from the Income Tax authorities.

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