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
Steps to Register the Trust
1. Preparation of the Trust Deed
The first step is to draft the Trust deed. Trust deed is nonmandatory but is desired as it is enforceable by law. The following details should be mentioned in Deed:
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 benefitted 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.
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.
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