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Overview
A Trust is a legal arrangement where the owner (author or settlor) transfers property to a trustee to manage and use it for the benefit of others (beneficiaries). Private trusts are governed by the Indian Trusts Act, 1882, while public charitable trusts are governed by respective state laws, as there is no central law for public trusts. A trust can be public or private, depending on the purpose and beneficiary class.
Public trusts are commonly formed for charitable or religious purposes like education, medical relief, poverty relief, environmental protection, or other public causes. Registering a trust gives it legal recognition, builds public credibility, and enables benefits such as tax exemptions under sections 12A and 80G of the Income Tax Act.
Why?
Registration of trust offers several advantages as follow: -
- Legal Status: Registration gives a trust a recognized legal entity.
- Tax Benefits: Registered trusts can apply for tax exemptions under 12A and 80G.
- Transparency: A registered trust promotes transparency and accountability.
- Credibility: It improves the trust’s reputation among donors and government bodies.
- Perpetual Succession: Trust continues to operate even if the founder passes away.
- Asset Protection: Assets are legally protected under the trust's name.
- Fundraising: Easier to secure grants, donations, and CSR funding.
Process
Process of Trust registration involves following steps: -
- Choose Trust Name: Select a unique and non-offensive name for the trust.
- Draft Trust Deed: Prepare the trust deed with objectives of the trust, details of trustees, mode of succession, management structure, powers and duties of trustees, asset usage, and dissolution clause.
- Trustees Appointment: Decide on the settlor, trustees, and beneficiaries.
- Get Trust Deed Printed on Stamp Paper: The deed must be printed on non-judicial stamp paper of the value prescribed by the respective state.
- Registration with Sub-Registrar: Submit the deed to the local Sub-Registrar office.
- Pay Registration Fee: Fee depends on state regulations and trust property value.
- Obtain Registered Copy: Once verified, you will receive a registered copy of the trust deed.
Note: After registration, the trust should apply for a PAN card in the trust's name and subsequently apply for 12AB registration (replacing 12A) and 80G exemption with the Income Tax Department.
Documents
Documents Required for Trust Registration:
- Trust Deed (in original, duly signed by settlor and two witnesses)
- ID Proofs of settlor and trustees (Aadhaar, PAN, Passport, etc.)
- Address Proof of registered office (rent agreement/ownership documents)
- Photographs of settlor and trustees
- NOC from Owner (if the property is rented)
- Electricity Bill and Utility Bill (as address proof of the trust office)
Fees
The cost of Trust registration depends on various factors: -
- Stamp Duty: Varies by state and is based on the trust property value (usually 1%-4%).
- Registration Fee: It is also, state-specific; can range from ₹500 to ₹5,000.
- Notarization Charges: It may range around ₹100–₹500 (may vary) if notarization is done before registration.
There are no recurring fees for maintaining the trust post-registration, but separate applications and fees apply for 12A and 80G registration.
Note: Professional and legal consultation fees are separate and vary based on service provider.
Timeline
Trust registration typically takes around 5 to 10 working days, depending on the state and Sub-Registrar office workload. This includes time for drafting the trust deed, purchasing stamp paper, and completing the registration process.
FAQs
Yes, registration is mandatory for public charitable trusts to gain legal recognition and tax benefits under Section 12A and 80G. Private trusts may function without registration, but they lack enforceability in legal disputes.
No, a trust requires at least one settlor and two trustees. The settlor can also be one of the trustees, but there must be a minimum of two trustees to legally manage the trust.
A trust deed is a legal document that outlines the objectives, structure, duties of trustees, and operation of the trust. It serves as the constitution of the trust and must be registered with the Sub-Registrar.
Yes, once registered, a trust can legally acquire, hold, and manage property in its name. Trustees manage such assets on behalf of the trust and its beneficiaries.
A public trust serves the general public (e.g., for education, relief, religion), while a private trust is formed for specific individuals, such as family members. Only public trusts qualify for tax exemptions.
Registered charitable trusts can apply for:
- Section 12A: Exemption from income tax.
- Section 80G: Allows donors to claim tax deductions on donations.
Yes, but only if the trust is registered under the FCRA (Foreign Contribution Regulation Act). This allows legal acceptance and utilization of foreign contributions.
Yes, a trust can be dissolved if permitted in the trust deed or by a civil court. On dissolution, trust assets must be transferred to another trust with similar objectives, not to individual trustees.
No, a trust cannot be directly converted. A new entity must be formed, and assets transferred lawfully with proper approvals.
Parts of the process—like deed drafting and PAN application—can be done online. But Final registration must be done in person at the Sub-Registrar’s office, as biometric authentication and physical signatures are required.
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