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OVERVIEW

About Trust Registration in India

In India, trusts can be registered under the Indian Trusts Act, 1882, or the Public Trusts Act of the respective states. Trusts can be set up for a variety of purposes, such as charitable, religious, educational, or cultural. Trust registration can provide legal recognition, tax benefits, and other advantages that can help the trust to achieve its objectives and serve its beneficiaries in a responsible and efficient manner.

Registering a Trust as an NGO (Non-Governmental Organization) in India involves the same process as registering any other trust. The registration can be done under the Indian Trusts Act, 1882, or the Public Trusts Act of the respective states.

To register a trust as an NGO, the trust must have charitable or social objectives and must work towards promoting the welfare of the society.

Types of Trust Registration in India

In India, there are two types of trust registrations – private trusts and public trusts.

    Private Trusts: Private trusts are set up for the benefit of a specific group of individuals or families. Private trusts are usually set up to manage and protect the assets of a family or a group of individuals. Private trusts do not have to register with the government or file annual returns. The registration process for a private trust is optional.

    Public Trusts: Public trusts, also known as charitable trusts, are set up for the benefit of the public or a section of the public. Public trusts are registered under the Indian Trusts Act, 1882, or the Public Trusts Act of the respective states. Public trusts are typically set up to promote charitable, religious, educational, or cultural activities for the public benefit. Public trusts must register with the relevant authorities and comply with various legal and regulatory requirements, such as filing annual returns and maintaining proper accounting records.


DOCUMENTS REQUIRED

Checklist and Document Requirement for Trust Registration:

  • Trust Deed: A trust deed is a legal document that outlines the objectives, beneficiaries, trustees, and other important details of the trust. The trust deed must be signed by the trustees and registered with the relevant authorities.
  • Trust Name: The trust must choose a name that is unique and not similar to any existing trust or company. The name must be approved by the relevant authorities before registration.
  • Trustees: The trust must have a minimum of two trustees who are Indian citizens and over the age of 18. The trustees must have a sound mind and should not have been convicted of any criminal offence.
  • Address Proof: The trust must provide address proof for all trustees, such as a copy of the passport, voter ID, Aadhaar card, or driving license.
  • PAN and TAN: The trust must obtain a Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) from the Income Tax Department.
  • Bank Account: The trust must open a bank account in the name of the trust, and all transactions related to the trust must be carried out through this account.
  • Affidavit: The trustees must submit an affidavit stating that they have read and understood the trust deed, and that the details provided in the trust deed are true and correct.
  • Registration Fees: The trust must pay the required registration fees, which vary from state to state.

REGISTRATION PROCESS

Registration Process of Trust in India

The registration process for a trust in India involves the following steps:

  • Drafting the Trust Deed: The first step in registering a trust is to draft a trust deed that outlines the objectives, beneficiaries, trustees, and other important details of the trust.
  • Selecting Trustees: The trust must have a minimum of two trustees who are Indian citizens and over the age of 18. The trustees must have a sound mind and should not have been convicted of any criminal offense.
  • Choosing a Trust Name: The trust must choose a name that is unique and not similar to any existing trust or company. The name must be approved by the relevant authorities before registration.
  • Stamp Duty: The trust deed must be stamped with the appropriate stamp duty, which varies from state to state.
  • Notarization: The trust deed must be notarized by a notary public or a magistrate.
  • Filing the Application: The application for trust registration must be submitted to the Registrar of Trusts along with the necessary documents, such as the trust deed, address proof, PAN and TAN, and affidavit.
  • Verification and Registration: The Registrar of Trusts will verify the application and documents, and if everything is in order, the trust will be registered and a certificate of registration will be issued.

Compliance to do After Obtaining Trust Registration

After obtaining trust registration in India, there are several compliance requirements that the trust must fulfill to maintain its legal status and avoid penalties. Some of the key compliance requirements for a registered trust are:

  • Maintenance of Accounts: The trust must maintain proper books of accounts and financial records, including income and expenditure statements, balance sheets, and audit reports.
  • Filing of Income Tax Returns: The trust must file its income tax returns annually with the Income Tax Department, even if it has not generated any income.
  • Renewal of Registration: The trust registration certificate is valid for a specified period, usually 10 years. The trust must apply for renewal of registration before the expiry of the certificate.
  • Changes in Trust Deed: If there are any changes in the trust deed, such as changes in objectives or trustees, the trust must inform the Registrar of Trusts and make the necessary amendments.
  • Compliance with Legal Requirements: The trust must comply with all legal requirements, such as filing of annual returns and maintaining proper records, as per the Indian Trusts Act, 1882.
  • Timely Payment of Taxes: The trust must pay all applicable taxes, such as income tax and property tax, on time to avoid penalties.
  • Compliance with Foreign Contribution Regulations: If the trust receives any foreign contributions, it must comply with the Foreign Contribution (Regulation) Act, 2010, and file the necessary reports with the Ministry of Home Affairs.

Top 10 advantages to register as Trust In India

  • Legal Recognition: A registered trust has legal recognition and can own property, enter into contracts, and sue or be sued in a court of law.
  • Perpetual Existence: A trust has perpetual existence, which means that it can continue to exist even if the original trustees or beneficiaries are no longer associated with it.
  • Tax Benefits: A registered trust is eligible for tax benefits under the Income Tax Act, such as exemption from income tax on the trust’s income if the income is used for charitable purposes.
  • Credibility: A registered trust is viewed as more credible and trustworthy by donors and beneficiaries, which can help in fundraising and fulfilling the objectives of the trust.
  • Limited Liability: The liability of the trustees of a trust is limited to the extent of their contribution to the trust, which provides protection to the trustees in case of any legal or financial disputes.
  • Flexibility: A trust can be structured to suit the specific objectives and requirements of the trustees, which provides flexibility in terms of governance and decision-making.
  • Better Control: A registered trust provides better control over the assets and resources of the trust, which can help in ensuring that the trust’s objectives are fulfilled efficiently.
  • Ease of Transfer: The transfer of assets from one trust to another is relatively easy and does not require extensive legal procedures, which provides ease of transfer of assets.
  • Recognition by Foreign Donors: A registered trust is recognized by foreign donors and can receive foreign contributions for charitable purposes under the Foreign Contribution (Regulation) Act.
  • Social Impact: A registered trust can make a significant social impact by fulfilling its objectives and contributing to the betterment of society.

Overall, registering as a trust provides several advantages in terms of legal recognition, tax benefits, credibility, flexibility, and social impact.

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Frequently Asked Questions ?

The choice of entity depends on circumstance of each case. Private Limited Company has lesser number of compliances requirements. Therefore, generally where there is no requirement of raising of finances through a public issue and the ownership is intended to be closely held by limited number of persons, Private Limited Company is the best choice.

The minimum paid up capital at the time of incorporation of a limited company has to be Indian Rupees 1,00,000 . There is no upper limit on having the authorized capital and the paid up capital. It can be increased any time, by payment of additional stamp duty and registration fee.

The authorized capital is the capital limit authorized by the Registrar of Companies up to which the shares can be issued to the members / public, as the case may be. The paid up share capital is the paid portion of the capital subscribed by the shareholders.

MOA is like a Charter of a Company. Promoter(s) or its/their Authorized Signatory(s) are required to sign MOA in the presence of one or more witnesses stating their full name, father's name, residential address, occupation, number of shares subscribed for, etc

CAOA are byelaws of a company incorporated in India. Promoter(s) or its/their Authorized Signatory(s) are required to sign AOA in the presence of one or more witnesses stating their full name, father's name, residential address, occupation, etc

After filling the above mentioned incorporation documents online, the concerned Registrar of Companies ("ROC") examines all documents. In case the documents are found in order, the concerned ROC issues Certificate of Incorporation ("COI")

On receipt of the certificate of incorporation, a private limited company can start business right away. However, certain local permits are required in most cases.

Yes a foriegn company can incorporate a company or corporation or subsidiary in India. You can give Power of Attorney to an attorney to sign the documents on your behalf. After the Company is incorporated, you can appoint Alternate Directors, to function on your behalf while you are not in India. But at least one director should a resident of India.

You can give Power of Attorney to an attorney to sign the documents on your behalf. After the Company is incorporated, you can appoint Alternate Directors, to function on your behalf while you are not in India. But at least one director should a resident of India.

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