The Indian Trust Act, 1882 identify as Trust as an organization where the owner of the trust, who is known as the "Trustor" transfers his/her rights over the property to a second party who is known as "Trustee" for the reason that the third party known as the "Beneficiary" can avail the benefit out of it. In this article, we will discuss the process of Trust Registration.
Overview of Trust Registration
Trust means transferring property such as shares, valuable assets, cash, or land from the owner to another person. A society can be registered as a private trust or as a public trust. The main objective of a private trust is to benefit specific people, and the main objective of public trust is to provide benefits to the general public.
Trust deed is the most relevant document for trust registration. A trust deed is prepared on a non-judicial stamp paper; the stamp duty rate is fixed by the respective state where the applicant wants to form a trust. After drafting the trust deed, the applicant has to make an appointment with the sub-registrar office. It is mandatory for all the trustees to be present before the sub-registrar, along with two witnesses and the trust deed at the time of the registration.
What is a Trust?
The Indian Trust Act, 1882 identify as Trust as an organization where the owner of the trust, who is known as the "Trustor" transfers his/her rights over the property to a second party who is known as "Trustee" for the reason that the third party known as the "Beneficiary" can avail the benefit out of it.
Such a property is moved to the trustee by the trustor along with a declaration stating that the trustee will hold the property for the beneficiary of the trust.
Trust is classified into two categories:
Advantages of Trust Registration
The main objective of forming any trust is to get involved in the charitable activities and same time take the benefit of tax exemption under the Income Tax Act. These charitable trusts are known as a non-profit organization.
In order to avail benefits offered by the government, a trust should be registered as per the provisions of the Indian Trust Act. The provisions of Federal laws make it necessary for such entities to get registered as charitable trusts.
The state and central law departments offer an assortment of assets to manage the common people and charitable associations. This process largely facilitates the donors who wish to lend their assets to the trust, making the donors trustee of the trust and expecting tax benefits.
At the time of registering a charitable trust, it is essential that the applicant identity is aware of the fundamental knowledge regarding the regulation of trust registration and the fees payable for registration. Clear laws such as the Indian Trust of 1882 have been proclaiming, and the application form is introduced to promote the registration procedure.
What are the Documents required for Trust Registration?
A Trust deed is an essential document required for registering a Non-Government Organization (NGO) as Trust. The following information is stated in the Trust Deed.
The motive of the Trust.
Information regarding trustees and settlers such as Name, Father's Name, Age, Mobile Number, E-mail Address, Occupation, Designation, and other relevant information if asked by the authorities.
Registered office’s address of the trust.
The total number of trustees involved in the trust.
Proposed name of the trust.
Rules and regulations that will be followed by the trust.
A certified copy of the Identity proof of the trustee and settler.
Passport-sized photograph of the trustee and settler.
At the time of the registration, the settler must be present along with the two witnesses and original identity proof. In some of the states, the presence of a trustee is also mandatory.
Things to know before Trust Registration
Below-mentioned is the points that must be kept in mind before registering a trust:
Public Trust Vs. Private Trust
Public trusts control their functions on their own except in Maharashtra, where the functioning of public trust is governed by the Bombay Public Trusts Act of 1950. On the other hand, private trust's functioning is governed by the Indian Trust Act of 1950.
Number of Trustees
At the time of registration, a minimum of two trustees are required, and there are no guidelines on the maximum limit of trustees in a trust. In the trust deed, there must be arrangements regarding the administration of the trust and the strategy of removing or delegating the members.
Trust Deed
A Trust deed is the most essential document required for registering a Non-Government Organization (NGO) as Trust. The trust deed explains the reason behind the formation of trust. The Trust deed also contains the list of the beneficiary and tells the power of trustees. A minimum of two members must be present at the time of signing the trust deed.
Tax Benefit
After the registration of a Non-Government Organization (NGO) as a Trust, it can enjoy the government's benefits such as tax exemption under the Income Tax Act.
What is the process of Trust Registration?
An applicant has to follow the below-mentioned steps for registering a Non-Government Organization (NGO) as a Trust:
Selection of Name
The trustor and trustees have to select a unique name for the trust. The proposed name must be new and does not lead to any kind of infringement.
Drafting of Trust Deed
A Trust deed is an essential document required for registering a Non-Government Organization (NGO) as Trust. A trust contains all the essential details regarding the registration, and it must be presented before the registrar of the trusts.
PAN, TAN, and Bank Account
The trust registration process's final step is applying for a PAN card and TAN number, and after the PAN card and TAN number is received, the trust can open its bank account in its name.
Conclusion
Trust means the transfer of property such as shares, valuable assets, cash, or land from the owner to another person. The Indian Trust Act, 1882 identify as Trust as an organization where the owner of the trust, who is known as the "Trustor" transfers his/her rights over the property to a second party who is known as "Trustee" for the reason that the third party known as the "Beneficiary" can avail the benefit out of it.
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