Trust Registration - Documents required and Steps to register
Registration of trust for a non-profit is well known and Trust can be formed by 2 or more people for a social cause. In this article, we will discuss the checklist and documents required for trust registration.
What is the Trust Registration?
Trust is registered and governed by the Indian Trust Act. In simple word, it is a financial vehicle which transfers property from its owner to a trust for the lawful purpose. Normally we hear the word trust for religion purpose; however, there is no such restriction. There are even sports academies registered as trusts.
In India, some societies are registered as a public trust. Often, you’ll even hear of the wealthy creating private trusts; this is done because of the tax-efficient nature of the trust (dividend distribution tax or minimum alternate tax do not apply). It is the easiest way to transfer than making a will. However, it does much involve more effort to register a trust than to write a will.
Documents required for Trust Registration
- The details of trustees like Name, Occupation, Address, Age, Father’s Name, Designation, Mobile Number, Email Address and Two Photograph are required.
- Address Proof of Trustee & Settler required: – Voter I.D / Driving license / Passport.
- Electricity Bill or House Tax Receipt or Water Bill Receipt or Ownership Proof of Property required.
- In the case of Rented, Rent Deed duly notarised with rent receipt and NOC form Land Lord on Rs 10/- Stamp Paper. Name of Landlord, Father’s name, Residence Address.
- Physical Presence of Settler/all required at the time of Registration along with Original ID.
- Physical Presence of Two witnesses with original ID Proof at the time of Registration.
Steps to Register the Trust
Preparation of the Trust Deed
The first step is to draft the Trust deed. Trust deed is non-mandatory but is desired as it is enforceable by law. The following details should be mentioned in Deed:
- Name and address of the Settler (Settler is the person who is setting up the trust)
- Name(s) and address (es) of the other trustees
- Name of the trust (minimum 3 preference shall give)
- Minimum and maximum number of trustees
- Address of the registered office of the trust
- Objectives of the trust
- Rules and Regulations of trust.
Parties to the trust
Three parties are required to form the Trust.
Applicant /Author of the trust
The author is the person who declares confidence in the Trust. The Name & Address of the author shall be mentioned in Deed.
Details of trustees / Members
The trustee should not be a minor & be of sound mind. Mention full Name, Address, Occupation & Age, and designations of the Trustees / Members.
The beneficiary of the Trust
A person who is going to be benefited by the formation of trust. Usually, Author himself is the Beneficiary or it is public at large.
Objects of the Trust
Trust can be formed for charitable purposes only. The detailed objective of Trust shall be incorporated indeed.
Subject matter
The subject matter of the trust is the property in respect of which the trust has been created. The subject matter shall be defined and property of trust shall be capable of disposition to create a valid trust.
Registration of the trust by Trust Deed
After preparation of Trust now another step is to register the Trust deed. NGO Registration is not compulsory but is needed to get the trust registered under the Income Tax Act for availing the exemptions and more over a deed is a prima facie evidence of the existence of a trust. The trust deed shall be submitted to the local registrar along with the one photocopy and settler shall sign all the pages.
Name of the Trust
Give at least 3 options in the order of preference of name of a Trust.
Address for correspondence & Evidence
Recent electricity Bill/ Telephone Bill/ Property Card of the Trust location.
Tenure of Trustees
Tenure shall fix a minimum 1 year to a maximum of 5 years.
Application for 80G and 12A certificate for tax benefits
After valid trust registration, one shall go for 12A and 80G registration to get the Tax advantage.
FAQs
Q. Is it mandatory to have Trust deed?
A deed isn’t mandatory for the formation of a trust. A trust can be formed by a deed or a mere oral agreement. However, it is advisable for charitable trusts and trusts with immovable property to have a trust deed. In some cases where trust deed is not available, documents such as revenue records for lands, property tax receipts, affidavits and other such documents, may be accepted in the place of a formal trust deed.
Q. How are public Trusts controlled?
A trust can be public even if the control of the trust property was not vested in the public but was retained by the settlors, provided that the funds are utilized for the welfare of the public, which makes it clear that the public trust can be headed and controlled by a private entity.
Posted by Pooja
Team Taxaj