Trust Registration
Indian Trusts Act, 1882 regulates and administers the private trusts in India, whereas the public trusts direct the functioning of public trusts except in the state of Maharashtra and Gujarat where public trusts are governed by Bombay Public Trusts Act, 1950. In public charitable trusts, the most important instrument is the trust deed, and it is important that aims and objectives of the trust should be specified in the trust deed. There is no upper limit for the trustees in a trust, but a minimum of two trustees are always required for trust registration. The trust deed should have provision concerning the management of the trust along with the procedure of appointing or removing the members. Public trusts after registration with the income tax can avail certain tax exemptions.A trust deed is a legal instrument which is used to create a security interest in real property wherein legal title in real property is transferred to a trustee, which holds it as security for a loan between a borrower and lender.
Must Know Before Trust Registration
Section 8 Company can also be registered in India. And One director must be resident of India.
- Private V/S Public Trust
A private Trust is used for the benefit of the personal use.A Public relates back to the origins of democratic government and its seminal idea that within the public lies the true power and future of a society.
- Number of Trustees
A trustee is a person or firm that holds and administers property or assets for the benefit of a third party. A trustee may be appointed for a wide variety of purposes, such as, for a charity, for a trust fund, or for certain types of retirement plans or pensions. There is no upper limit for trustee in a India.
- Trust Deed
A trust deed is a legal instrument which is used to create a security interest in real property wherein legal title in real property is transferred to a trustee, which holds it as security for a loan between a borrower and lender.
- Tax Benefit
Government privileges and tax benefit are not available to a private trust, whereas public trust after registration with the income tax can avail certain tax exemption.
Documents Required For Trust Registration
Documentation of the Trust & Trustee
- Two color passport size photograph of each Partners.
- Pan card copy with self attest of each Partners.
- Identity Proof (Voter ID / Driving License/ Passport) any one of each Partners.
- Address Proof not older than 2 months (Bank Statement / Electricity, Mobile, Telephone Bill) any one of each Partners.
- Signed Declaration (s) from Partners.
- Trust Deed on Proper Stamp value.
Documentation for the Trust Registered Address
- Latest Proof of Registered Office not older than 2 months.
- Latest Utility Bill as Proof of Registered Address not older than 2 months.
- NOC from the owner of the premises.
- If rented then Rent agreement.
Trust Registration Process
Selection of Name (step 1)
The Name of the Trust should be cross-checked with the ROC and the trademark registry to avoid any infringement of someone else Trademark or Other Company /LLP Name. The selection of a proper name should be the starting point.
Drafting of Deed (step 2)
The first step is to create the Trust deed on stamp paper. Trust deed is nonmandatory for trust but is desired as it is enforceable by law.
Trust Registration (step 3)
Under the Indian Trusts Act, 1882,trusts which wish to be registered are required to submit the same with the Local Registrar.
PAN, TAN & Bank A/C (step 4))
The issue of Pan Number and TAN is done automatically at the time of incorporation of the Company. There is no need to make any separate application. The PAN Number and TAN come printed on the certificate of incorporation itself, and after the registration of the Company, E-Pan and Tan letter is sent via email.
Frequently Asked Questions
Ans. 1 Yes, if you have received 80G and/or 12A exemption certificates from the Income Tax Department, you have to get your accounts audited by a qualified CA every year. You also need to file Income Tax Return (ITR) every year.
Ans. 2 You should contact the appropriate ministry / department in the state or central government. There is no general procedure for getting funds from the government. It may vary from department to department. You need to first do some good social work. Then you should go to the appropriate government agency and tell them about your work and request for funding to continue doing your social work.
Ans. 3 80G is a certificate that you get from the Income Tax department. If an NGO has 80G certificate, then the donors of that NGO will get some tax benefit on the donation amount. Some NGOs are allowed to give 100% tax benefit but most of them are eligible for tax benefit on 50% of donation amount.
Ans. 4 If you have 12A exemption certificate from the Income Tax Department, then all the donations you collect for your NGO will remain tax-free. If you do not have this certificate, then you will have to pay income tax on all the donations you are getting. So, it is very important to get 12A certificate.
Ans. 5 When you apply for 80G certificate, you can also apply for 12A at the same time. So, when you apply for 80G, you should fill two forms: one for 80G (the form is called 10g) and the other for 12A (form is called 10a).
Ans. If you provide all the documents and the Income Tax department is satisfied, they will give you an 80G certificate with lifetime validity. Earlier the 80G certificate needed to be renewed every three years.
Ans. 7 You can apply for 80G certificate right after registration of your trust/society. You don't need to wait.
Ans. 8 For applying for 80G certificate, you should go to the Income Tax office under whose jurisdiction your registered address comes.
Ans. 9 Yes, you must open a separate bank account for your NGO. The bank account should be in the name of your NGO and you should receive all the funds/donations in this bank account. You must not receive donations in your personal bank account because in such a case the donation will be considered as your personal income. And you will have to pay income tax on that.
Ans. 10 You must provide a valid address to be registered as the office of your NGO. This address may be a residential address (your own home) or may be a rented house or a rented/own office space. In case of rented property, you would need an NOC certificate from the owner of the property. Having a landline is not must, but it is useful as it gives your NGO a means of communication.