What does the term "Trust" refer to?

In accordance with the Indian Trust Act of 1882, a trust is a legal arrangement where the owner of a property or asset (known as the trustor) decides to transfer the rights and control of that property or asset to another person, known as the trustee. The purpose of this transfer is to ensure that a third party, known as the beneficiary, can receive the benefits from the trust. The trust register formalizes this transfer by declaring that the trustee will hold the property or asset for the benefit of the recipients of the trust.

Different Types of Trust

There are different categories of trust, each serving a specific purpose and benefiting different groups of people. Let's explore these categories:

1. Public Trust

Public trust is established to benefit the general public on a large scale. It is further divided into two parts:

a) Public Charitable Trust: This type of trust is created to provide charitable benefits to the public.

b) Public Religious Trust: This trust is established for religious purposes and benefits the public in matters related to religion.

2. Private Trust

Private trust, on the other hand, benefits specific individuals or family members. It can be further categorized into two types:

a) Private Trusts with Resolved Beneficiaries: In this type of trust, the beneficiaries and their immediate needs are clearly defined.

b) Private Trusts with Unresolved Beneficiaries: These trusts do not have clearly defined beneficiaries or their immediate needs.

What is the systematic Stepwise Registration Process for NGO Trust Registration?

Step 1:

To begin the registration process, you need to fill out the NGO Registration Form. Make sure to provide all the necessary details in the simple application form.

Step 2:

Next, gather all the required documents as per the given specifications. This step typically takes about 2 working days.

Step 3:

Once you have collected the necessary documents, a Trust deed will be compiled based on the information provided. This process usually takes around 4 to 5 working days.

Step 4:

The compiled Trust deed will then be presented to the local registrar for registration. This step can take approximately 12-13 working days to complete.

Step 5:

Upon completion of the Trust NGO registration process, you will receive the registered Trust Deed through courier, along with the Trust NGO registration certificate.

Procedures and Requirements for Income Tax Compliance

When you have successfully registered your trust, the next important step is to obtain the 12A and 80G registrations, which will allow you to enjoy tax benefits. To apply for these registrations, you will need to use Form 10A.

If the total payment made by your trust or establishment in a year exceeds INR 50,000 without considering the provisions of Section 11 and 12, you must have a qualified chartered accountant or other qualified bookkeeper examine the trust's records and statements for that year. The findings should be recorded in Form No. 10B as per the Income Tax Rules of 1962 and must be submitted along with your income tax return.

Essential Considerations before Registering a Trust

Comparison of Private and Public Trusts

In India, Private Trusts are regulated by the Indian Trusts Act, 1882, while public trusts manage their own operations and functions, with the exception of Maharashtra, where the Bombay Public Trusts Act, 1950, oversees their activities.

Importance of Trust Deed

A trust cannot be registered without a trust deed, which serves as a crucial document. It states the purpose of the trust formation, identifies the beneficiaries, and outlines the powers and rights of the trustees. The trust deed must be signed in the presence of at least two witnesses.

Number of Trustees

There is no set maximum limit for the number of trustees, but a minimum of two trustees is required to register the trust foundation. The trust deed should comprehensively outline all details and arrangements pertaining to the administration, as well as the strategy and procedures for appointing or removing members.

 Benefit of tax:

Upon successfully completing the registration process, public trusts are eligible to enjoy the exclusive rights and advantages provided by the government. Public trusts can also take advantage of tax exemption.

Final draft:

The online registration certificate for your charitable trust will be issued. Once the registration process for your Trust NGO is completed, you will receive the registered Trust Deed via courier.

Benefits of Trust Registration    
•    The main purpose of establishing a trust is to engage in charitable activities while also enjoying the advantage of tax exemption. These charitable trusts are commonly referred to as non-profit organizations.
•    By registering as a trust, it gains legal entity status and can access all the benefits provided to trusts by the government. The Trust Act and Federal laws mandate that such organizations must be registered as charitable trusts.
•    In India, the Federal and State Law Departments offer various resources to manage and regulate charitable organizations and serve the general public. This process greatly benefits donors who wish to contribute their assets to trusts, as it provides tax benefits by appointing them as trustees.
•    During the registration of a charitable trust, it is essential to have a basic understanding of trust company registration and the associated fees. Specific laws, such as the Trust Act 1882, have been introduced, and a certified application form is available to facilitate the registration process.