Trust Registration Overview
Trust Registration in India is a process of obtaining permission for a Trust Deed from the Registrar of the respective jurisdiction. A Trust Deed is a legal contract between the Settlor and Trustee, and this is the primary requirement in the process. Trust registration in India is done by the Trust Act, 1882, and the majority of trusts are incorporated as Public Charitable Trusts, a form of a non-profit organization in India. These trusts can be set up for various purposes, such as providing social services, health care, education, recreation facilities, and other public welfare services.
Exactly What is Trust?
It is an arrangement in which a property is transferred from an owner to a trustee on behalf of a third party. The trust or a proclamation stating that the property should be held by the Trustee for the benefit of the trust beneficiaries is used to transfer the property to the Trustee. In India, the Indian Trust Act, 1882, specifies the provisions related to trusts. In order to reap the benefits of the trust, it is recommended that you register your trust.
Trust Registration Requires a Few Vital Documents
In India, the following documents are required for trust registration:
- The Trustee and Trustor must provide identification proof, such as a driving license, an Aadhar card, a voter ID, a passport, etc.
- Trust Deeds’ objectives;
- Images of the Trustee & Settlor;
- Information about PANs;
- In the case of rented properties, the landlord must provide a No Objection Certificate (NOC);
- A copy of the most recent utility bill or a copy of the property documenting the address of the registered office;
- Ensure the stamp value is correct in the trust deed;
- The identity and address proof as well as the occupation of the Trustee & Settlor;
- Listed below are the details that must be included in a trust deed:
- Trustee number;
- The proposed name of the Trust;
- Address of the Trust’s registered office;
- Trustees’ proposed rules;
- Registration of the trust in the presence of the settlor and two witnesses.
Breaching Compliance with Trust Registration Penalties
- Upon registration, the Trust must apply to the Assessing officer for the allotment of the Tax Deduction Account Number. It is possible for the Trust to use Form-49B facilitated by the IT Department to make such an application. On all challans for the payment of sum u/s 200, TDS certificate, as well as returns u/s 206, 206A & 206B, the TD Account Number must be quoted. It is stated in Section 272BB that the Trust is to be penalized for failing to avail of the TD Account Number. This section imposed a penalty of Rs. 10,000/-.
- Penalties For the violation of the Trust Deed provisions, both civil and criminal penalties apply to the defaulter. Sections 405 to 409 of the IPC 1860 define the criminal penalties for trust violations.
- ITR Filing Failure: Under the Act, a failure to file an income tax return attracts severe penalties. In spite of the fact that the TDS certificate may not have been provided along with the income return due to the default of the taxpayer, the income return shall remain valid. Within two years of the end of the assessment year, taxpayers must produce this certificate.
- Before Registering a Trust, You Should Know the Following