What is Trust Registration?
A trust is a legal arrangement where one person (the "settlor") transfers property to another person (the "trustee") to hold and manage for the benefit of a third person or group (the "beneficiary") or a specific purpose. This registration provides legal recognition, enables tax benefits, and ensures the trust operates as intended.
Types of Trusts in India
- Public Trusts: Established for public benefit purposes like education, healthcare, and poverty alleviation
- Private Trusts: Created for specific beneficiaries, often family members
- Religious Trusts: Focused on religious activities and maintenance of places of worship
- Charitable Trusts: Dedicated to charitable causes like relief for the poor, education, and medical relief
Benefits of Trust Registration
- Legal Recognition: Formal status under Indian law as a distinct legal entity
- Asset Protection: Shields trust property from unauthorized claims and disputes
- Tax Benefits: Eligible for exemptions under Sections 11, 12, 12A, and 80G of Income Tax Act
- Credibility: Enhanced reputation among donors, beneficiaries, and partners
- Property Ownership: Can legally purchase, hold, and transfer assets in trust's name
- Grant Funding: Access to domestic and international grant funding
- Perpetual Existence: Continues regardless of changes in trustees or beneficiaries
Eligibility Criteria
- Minimum 2 trustees required
- Must have trust property or assets
- Legal and charitable/religious purpose (for charitable trusts)
- Written trust deed specifying terms, objectives, trustees, and beneficiaries
- Voluntary act of the settlor
- Registration under Indian Trusts Act, 1882 or state-specific Trust Acts
Documents Required
- Original signed trust deed on prescribed stamp paper
- Identity proof of settlor and trustees (Aadhaar, PAN, Voter ID, Passport, or Driving License)
- Address proof of settlor and trustees (Aadhaar, utility bill, or bank statement)
- PAN card application for the trust
- Passport-size photographs of settlor and trustees
- Registered office address proof (property title deed or lease agreement/NOC)
- Details of trust assets (list of movable and immovable properties)
- Digital Signature Certificates (DSC) for authorized signatories
Registration Process
- Draft Trust Deed: Include settlor details, trustee names, beneficiaries, trust name and address, objectives, and management rules
- Procure Stamp Paper: Execute deed on non-judicial stamp paper (value varies by state)
- Signatures & Witnesses: Settlor and trustees sign in presence of 2 independent witnesses
- Obtain DSC: Get Digital Signature Certificate for online filings
- Approach Sub-Registrar: Submit deed for registration (immovable property must be registered)
- Pay Registration Fees: Pay applicable fees to Sub-Registrar
- Obtain Registered Deed: Receive registered trust deed from Sub-Registrar
- Download Certificate: Access certificate through state trust portal
Fees & Penalties
Registration Costs:
- Registration Fees: ₹1,000-₹2,000 (urban: ₹2,000, rural: ₹1,000)
- Stamp Duty: ₹500-₹1,000 (varies by state and asset value)
Penalties for Non-Registration:
- Cannot legally own property or hold bank accounts in trust's name
- Cannot file cases in court as legal entity
- Lose eligibility for tax benefits
- Trustees may face personal liability for trust operations
Post-Registration Compliance
- PAN Card: Apply for trust's PAN
- Bank Account: Open dedicated account in trust's name
- Accounting: Maintain double-entry accounting records
- Annual Filing: File ITR-5 before November 30th
- Form 10B: Submit with audited accounts if holding 12A/80G approvals
- Trustee Meetings: Hold regular meetings and maintain minutes
- Audit: Mandatory if annual receipts exceed ₹10 lakh (Section 44AB)
- Record Keeping: Store documents for 8 years