NGO Trust

How to Get Trust Registration under the Indian Trust Act, 1882?

A Trust can be either private or public. Private trusts are governed as per the Indian Trusts Act 1882. In this article we have described about how to get Trust Registration under the Indian Trust Act, 1882.

What is a Trust?

Trust is governed by the Indian Trust Act. Under this, there is a transfer of a property from its owner to a trust for a lawful purpose. In other words trust is an organization where the owner decides to transfer the right of his property to a second person who is called as trustee.

For the purpose of NGO Registration one needs to make a decision on the following matters:

• Name and Address of the trust;
• The object of the Trust whether it is for a charitable purpose or for religious purpose;
• Settler of the trust;
• Two trustees;
• Trust property whether it is movable or immovable.

What is a Trust Deed?

It is an instrument of trust by which trust is declared.  A trust deed has many clauses such as Name clause, registered office clause, settler and trustee clause general body member clause and other rules and regulations.

Requirements for Registration of Trust Deed

Here are all Requirements for Trust Registration Deed:

• Trust Deed on stamp paper with requisite stamp duty;
• Passport size photograph & Identity Proof of settlor;
• Passport size photograph & Identity Proof of two trustees;
• Passport size photograph & Identity Proof of two witnesses;
• On each page of trust deed, signature of the settlor;
• Two witnesses on the trust deed.

Process of Trust Registration

The process of trust registration is as mentioned below:

• Selection of name

First of all select a unique name for your trust. Such name should be new and should not lead to any infringement.

• Determine the number of trustees

Determine the number of trustees for your trust. Minimum 2.

• Draft trust deed

The trust deed is drafted afterwards.

• Register with sub-registrar

For registration of trust deed, trustees and author of the trust must be present with the sub registrar office along with 2 witnesses. There must be properly attested copy of trust deed and registration fee also have to be paid.

• Apply for PAN and TAN

On trust deed registration, apply for PAN and TAN of the trust thereafter apply for a bank account.

What are the benefits of Trust Registration?

Trust is created to indulge in charitable activities and also avail of tax exemption. It may be noted that income of registered NGOs as public trust or society or Section 8 company is exempted from tax.

Tax exemptions can be granted to the registered trust under section 12A and 80G of the Income Tax Act^[1]. It may also be noted that income tax registration is mandatory to avail tax exemptions.

Credibility would be more when the trust is registered as it involves individuals money in donations form.

If we are to sum up the benefits of trust registration in one line, then it would include the following:

• Trusts get land from the government;
• Tax benefits;
• 80G certificate benefit;
• Benefit on service tax or income tax.

Application for the 80 G Certificate

Following documents are required to be submitted for 80G:

• Form 10G;
• Registration Certificate;
• Copy of PAN Card;
• Copy of Utility Bill;
• NOC from landlord;
• Copy of Trust Deed;
• Books of accounts for past three years;
• Copy of Trust Deed;
• Evidence of welfare activities.

An Overview on public and private trust

A public trust is a trust whose beneficiaries are the common public at large. A public trust may be divided into two- public charitable trust and public religious trust.

In case of a private trust, its beneficiaries include individuals or families. Private trust can also be divided into two- a private trust whose recipients and their imperative offers may be resolved and private trust whose both or either beneficiaries or requisite shares can’t be determined. 

Conclusion

It may be noted that trust must meet certain eligibility criteria in case the trust is interested in obtaining funds. A trust should have a legitimate enlisted trust deed. In case you need more information on trust registration or related laws, consider reading our blogs.

Read our article:Trust Registration Process and Complete Checklist of Documents Required