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TRUST REGISTRATION

 

The non profit organizations in India can register as Trust

These organizations work for companies at large and undertake public welfare activities with a charitable purpose. Such purposes may include social contribution in the form of education, medical help or undertaking activities of public utility that promote public welfare.

Thus, the most preferred way to run an NGO or a non – profit organization is to form a Public Charitable Trust.


What is a Trust?


1. Legal Meaning


: As per the Indian Trust Act 1882, "trust" is an obligation annexed to the ownership of property, and arising out of a confidence reposed in and accepted by the owner, or declared and accepted by him, for the benefit of another, or of another and the owner.

2. General Meaning


As per the Indian Trust Act 1882, a Trust is an arrangement where the owner (trustor) transfers the property to someone else (trustee) for the benefit of a third person (beneficiary).

3. Trust


A trust is a fiduciary relationship in which one party, known as a trustor, gives another party, the trustee, the right to hold title to property or assets for the benefit of a third party, the beneficiary. Trusts are established to provide legal protection for the trustor’s assets, to make sure those assets are distributed according to the wishes of the trustor, and to save time, reduce paperwork and, in some cases, avoid or reduce inheritance or estate taxes.




Characteristics of Trust


1. Vulnerability/Risk


There must be an element of vulnerability or risk in order for trust to exist, whether it be a situation that a client finds themselves in (such as divorce or inheritance) or a lack of knowledge.

2. Best interests:


Clients trust their planner when they perceive that the planner acts in the client’s best interests.

3. Honesty


When clients were asked to explain what trust meant, they often referred to honesty with financial information provided and honesty with fees and commissions earned by the planner.

4. Accountability


Clients trust planners if they believe their planners are accountable to their employer, regulatory authority and professional body.

5. Faith


A client must have confidence, or faith that their financial planner can be relied upon to provide the right advice.


6. Competence:


Clients who trust their planner rated the behavioural competencies of their planner more highly than those who did not trust their planner




Benefits of Trust


1. Asset Protection


Trusts can be one of the most effective ways of protecting assets. In simple terms, assets transferred to a trust no longer form part of the Settlor’s property, so the trust assets cannot be seized if a Settlor gets into financial difficulties.

2. Tax Planning


Assets transferred into trust are no longer considered as belonging to the Settlor, so the income and capital gains generated by those assets are taxed according to the rules governing the legal owner – the Trustee.

3. Confidentiality


The only other legal form of transfer is via a trust and this would generally save estate duty and keep the trust assets confidential.

4. Estate Planning


A trust is probably the most satisfactory and flexible way of making arrangements of this kind.

5. Protecting the Weak


A trust provides a vehicle by which a person can provide for those who may be unable to manage their own affairs such as infant children, the aged, the disabled or persons suffering from illness.

6. Obtaining 12A and 80G Certificates


A Trust or an NGO can acquire 12A certificate from the Income Tax Department. Thus, a Trust acquiring such a certificate is exempted to pay income tax for the entire lifetime on its surplus income. Also, an NGO must obtain 80G certificate. This certificate allows donors, that is persons or organizations making donations to an 80G certified NGO, to avail deduction. Thus, such a deduction is given to the donors under section 80G of the Income Tax Act.




Registration Process for Public Charitable Trust


Step 1 : Selection of Name


This is the first step in registering the Trust. Additionally, the name so suggested should not come under the restricted list of names as per the provisions of the Emblems and Names Act, 1950.

Step 2 : Decide the Settlers or Authors and Trustees of the Trust


There is no defined provision with regards to the number of settlers/authors. However, in most of the cases there is typically one author. Further, there is no limit on the maximum number of trustees. But a minimum of two trustees are necessary to form a Trust. Also, the author generally cannot be the trustee. And he needs to be a resident of India.

Step 3 : Documents Required to be Submitted at the Time of Registration


Trust Deed
Self attested copy of the proof of identity of the settler (Aadhaar card, passport, voter ID, driving license or any such photo ID)
Self attested copy of the proof of identity of each trustee
PAN card
Proof of the registered office address of the Trust (electricity/water bill or registration certificate)

Step 4 : Prepare Trust Deed on a Stamp Paper


As a Trust, you need to prepare the Trust Deed on stamp paper. The value of this stamp paper is of a certain percentage of the total value of the Trust’s property. Further, this percentage varies from state to state.
In addition to this, you need to pay a fee of Rs. 1100. Out of this amount Rs. 100 is the registration fee and Rs. 1000 are the charges of keeping a copy of the Trust Deed with a sub – registrar.

Step 5: : Submit the Trust Deed with The Registrar


After receiving a certified copy of the Trust Deed, submit the same along with properly attested photocopies with the local registrar. Further, the settler must put his signatures on every page of the photocopy of the Trust Deed. Also, it is mandatory for the settlers as well as two other witnesses to be physically present along with their identity proof at the time of registration. However, physical presence of Trustees is debatable.

Step 6 : Obtain the Registration Certificate


After submitting the Trust Deed with the registrar, the registrar retains the photocopy and returns the original registered copy of the Trust Deed. Then, after completing all the formalities registration certificate is issued within a minimum of seven working days.




PROCEDURE FOR REGISTRATION OF SOCIETY


Selection of Name


The Indian Societies act make it mandatory to have a unique name for registering the societies. It is also important that the name of the society decided should be accepted by all the members of society. The society name has to be unique in all sense and in any way makes an impression of any other society or the name is already taken by any other society it makes the other society (prior registration holder) to oppose the newer registration.

Memorandum Of Association


The next rules make it mandatory for the societies to have a memorandum of association. This also has another condition of making it mandatory for the societies to frame rules and regulations for the societies. The societies with their memorandum, rules and regulations have to be signed and attested by every registered member of the society witnessed by the oath commissioner, notary, first class magistrate.

Purpose of Society Registration


A society registration can be done for the development of fine arts, science, or literature or else for diffusion of purposeful knowledge or charitable purposes of political education. According to section 20 of Society Act, 1860,



Classification of Trust

Public Trust Private Trust
It is a trust whose beneficiaries include the public at large. Further, a Public Trust can be further subdivided into Public Charitable Trust and Public Religious Trust A private Trust is the one whose beneficiaries include families or individuals. Further, a Private Trust can be subdivided into:
Private Trusts whose beneficiaries and their requisite shares both can be determined
The Private Trusts whose both or either the beneficiaries and their requisite shares cannot be determined.

SOCIETY REGISTRATION IN INDIA

A society is an association of several individuals combined using a mutual accord to deliberate, govern and act cooperatively for some communal purpose. Societies are usually registered for the advancement of charitable activities like sports, music, culture, religion, art, education, etc.
Society Registration, under, The Society Registration Act, in India, lays down certain procedures for the sake of society registration & operation. This act was implemented with the purpose of augmenting the legal stipulations of society registration for the advancement of literature, fine arts, science or distribution of awareness for bountiful purposes. The society registration act, 1860 has been accepted by several state governments without or with further amendments.