REGISTRATION
REGISTER YOUR TRUST ?
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TRUST
WHAT IS A TRUST?
In a Trust, as the name implies, one person (Founder/ Trustor/ Author / Settlor/ Donor) nominates his/her properties to a 2nd Person(s) (Trustee(s)) for the benefit of a 3rd Person(s) (Beneficiary).
Initially, this whole arrangement was conducted based on Trust (Trust as in trusting someone) alone (from where it derived its name), but sooner, the Indian Government passed Laws and Acts to regulate these arrangements. The first Act passed to regulate a Trust’s activities was the Indian Trust Act of 1882. This Act is still in place, and State Governments have passed further Amendments and individual laws to fortify the Act.
TYPES OF TRUST?
WHAT ARE THE DIFFERENT TYPES OF TRUST?
The Trusts are majorly classified into two main types, namely,
- Private Trusts
- Public Trusts
Public Trusts are further classified into
- Religious Trusts
- Charitable Trusts
- Religious cum Charitable Trusts
All these Trusts are formed to fulfil different objectives, but these institutions’ basic structure and formation remain constant.
PRIVATE TRUST
PRIVATE TRUST
A Trustor forms a Private Trust to pass benefits to specific individuals (in most cases, it will be his/her children or grandchildren). Forming a Private Trust differs from writing a Will Document because a Trustor can define how his property should benefit the beneficiaries.
Example 1:
A Trustor may choose to pass monetary benefits to his children from his property over a period of time if he feels them as Spend-thrift Individuals
Example 2:
A Trustor may choose to pass on the monetary income from his rental properties to his Physically or Mentally Challenged children through a Trustee. The Trustee will handle all the operations and maintenance of the properties using the rental income and pass on the net income for the benefit of the Trustor’s Children.
These Private Trusts are governed according to the Indian Trust Act of 1882, and all their income is taxable by law.
PUBLIC TRUSTS
PUBLIC TRUSTS
Unlike a Private Trust, where the Beneficiaries of the Trusts are clearly defined, a Public trust benefits a particular community or Society (no clear line is drawn to define beneficiaries). Public Trusts are governed by rules and regulations specified in the State Legislature and do not follow the Indian Trusts Act 1882. Public Trusts are classified based on the type of activity they perform.
Public: Religious Trusts
Public Religious Trusts are formed to promote a Particular Religion to the masses. An individual Trustor may donate his/ her properties (or) many Donors may pass on monetary or assets to the Trust. These funds or assets will be managed by a Trustee(s) of the Religious Trust for promoting the religion, like building and operating temples, churches, mosques etc.
Public: Charitable Trusts
Charitable Trusts are formed for the welfare of Society by undertaking philanthropic activities. These welfare and philanthropic activities include women empowerment, social upliftment, community health development, child education, hunger eradication etc. Like any other trust, a charitable trust follows a similar structure consisting of Trustor, Trustee and Beneficiaries. Also, a Charitable Trust should be registered to gain Tax benefits from the Income Tax Department.
Public: Religious Cum Charitable Trusts
A religious cum Charitable Trust, as the name implies, performs both Religious and Charitable activities. If the total expenditure on religious activities does not exceed 5% of the Total donations received by the Trust and if the rest is spent on charitable activities, then these types of Trusts are Religious cum Charitable Trusts. These Trusts are also eligible to apply for Tax Exemption Status from the Income Tax Department..
DOCUMENTS REQUIRED
DOCUMENTS REQUIRED FOR REGISTRATION OF A TRUST
- Trust Deed
- Address & ID Proof of the Founder (or) Author of the Trust. (Aadhar Card, PAN Card, Passport, Ration Card, Driving License)
- Address & ID Proof of the Trustees (Aadhar Card, PAN Card, Passport, Ration Card, Driving License).
- Address & ID proof of the Witness (Aadhar Card, PAN Card, Passport, Ration Card, Driving License).
- Property Documents or Rental Agreements of the office premises of the Trust.
PROCESS OF TRUST REGISTRATION?
WHAT IS THE PROCESS OF TRUST REGISTRATION?
Registration of Public Trusts
As each state has separate laws governing the activities of a Public Trust, the registration process also slightly varies from state to state. In most cases, if a Trust needs to be registered in India, both the Author and Trustees should appear before the Sub-Registrar of that jurisdiction with necessary documents like Trust Deed, ID and Address proof of the members, Assets and Liability details of the Trust etc. The Sub-Registrar registers the Trust, and the Trust can commence its activities.
In Tamil Nadu, an online portal is used to place the Trust Registration application. The following steps clearly define a step-by-step process for registering a Public Trust in Tamil Nadu.
- Step 1: Visit the Tamil Nadu Registration Portal https://tnreginet.gov.in/portal
- Step 2: Login Using your credentials. In case you are a new user, create your profile by navigating to Registration and then User Registration.
- Step 3: Follow the below-mentioned steps carefully to upload the details of your Trust. Once you login into the portal with your credentials, click,
- Step 4: The next session contains five Segments, namely,
- Party Details
- Property Details
- Trust Details
- Supporting Details
- Document
- Validation
- Step 5: After successfully updating your Trust Details, Click,
- Step 6: Choose your Registration Application from the list of your documents.
- Step 7: You can pay the Valuation fee using the Pay tab (You may also choose to pay during the date of Physical Verification of the Documents by the Sub Registrar.)
- Step 8: Click the Initiate Token option at the bottom of the page to book an appointment with the Sub-Registrar for Physical verification.
- Step 9: After the Physical Verification, you’ll receive your Trust Registration Certificate in one or two business days.
BENEFITS OF TRUST
WHAT ARE THE BENEFITS OF TRUST REGISTRATION?
Though not mandatory, Registration is necessary for Public Trusts to avail of Tax Exemption Certificates such as 12A and 80G Certificates.
Also, a Registered Public Trust increases the credibility of the Trust and the activities performed by it, hence attracting more potential donors to contribute to their cause.
The level of Trust and Security increases by registering the Organisation as it is now bound by legal laws.
TAXKEY HELP?
HOW CAN TAXKEY HELP?
Different types of Trust require a different approach for successfully registering the Trust with the Government, and it may be quite daunting and confusing for the parties building the Trust. Taxkey, with 10+ Years of experience in the field, has successfully registered 100+ Trust Organisations (Both Public & Private).
If you are a Trustor or a Founder of a Trust and are looking for help registering your Trust, then Taxkey will be your one-stop solution for all your queries and professional assistance.
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