Introduction: Understanding the intricacies of registering a charitable trust in India is essential for those aiming to contribute to social welfare. From defining the parties involved in a trust to outlining the categories and significance of charitable trusts, this guide provides comprehensive insights. It delves into the registration process, including obtaining a digital signature certificate, drafting the trust deed, filing with the Registrar of Trusts, and securing the registration certificate.
Q.1 What is a Trust?
Ans. The Indian Trust Act of 1882 defines a Trust as an arrangement where the owner or can say trustor transfers the property to someone else that is known as the trustee for the benefit of another person who is the beneficiary along with a declaration that the trustee should hold the property for the beneficiaries of the Trust or a beneficiary.
Q.2 Who are the parties under Trust?
Ans. The first one is the Trustee who is a person who accepts the confidence for the creation of the trust, the next one is the Author/Trustor who is a person who wants to transfer its property and reposes confidence in another for the creation of the trust. The third one is the Beneficiary who is a person who will be benefited from the trust in the near future.
Q.3 Are there any categories of trust?
Ans. Yes, there are two types of trust. One is a public trust and the other is a private trust, Public trust is formed for public, religious, or charitable purposes or both and includes a temple, or any religious or charitable institution and is formed either for a religious or charitable purpose or for both. and other is private trust which is for a closed group. In other words, the beneficiaries can be identified. For example: Trust is created for the relatives and friends of the author.
Q.4 What is a Charitable trust?
Ans. A charitable trust is a way to hold and protect assets that is money, property, etc for charitable purposes. The trust’s assets are managed according to the purpose set out in a trust deed, or an agreed set of rules, it is formed for the benefit of the general public, such as the relief of poverty, education, etc
Q.5 What is the Significance of Charitable trust?
Ans. In India, charitable trusts are regulated by the Indian Trusts Act, of 1882, and are required to register with the Registrar of Trusts in the state where the trust is located. The registration process and the requirements for eligibility can vary depending on the state in which the trust is located.
The process of registering a charitable trust in India generally involves the following steps:
Step 1: Obtaining the digital signature certificate(DSC) of the trustees
Q.1 What is DSC?
Ans. A Digital Signature Certificate is a secure digital key that verifies the identity of the person who holds it. It’s the electronic equivalent of a physical certificate, like a driver’s license or passport. DSCs use encryption technology to enhance security and can be used to sign documents, emails, and other digitally transmitted documents. They can also provide cyber security assistance to confidential data exchanged and online transactions
The trustees of the trust must obtain the same, by contacting a Chartered Accountant or a Company secretory and also obtain a director identification number (DIN) to complete the registration process.
Q.2 Now why I am saying Chartered Accountant or a Company secretory?
Ans. To obtain it you are required to submit your important documents, hence in that case and as per my point of view only professionals can be trusted, to save costs people seek the help of external agents which might expose them to various scams
Step 2: Drafting the trust deed
The trust deed is the document that outlines the objectives, rules, and regulations of the trust. It is similar to the constitution of the trust, hence should be drafted by a legal professional or Chartered Accountant or a Company secretory and must be signed by all the trustees along with a notary on a stamp paper.
Q.3 How can I get a stamp paper?
Ans. In India, you can buy e-stamp paper online through the official website of the State’s Treasury Department, it is the most easy and convenient way to get the stamp paper
Q.4 How much value stamp paper should it be?
Ans. The value of this stamp paper is a certain percentage of the total value of the property of the trust. also, this percentage varies from state to state. Also, you need to pay a fee of Rs. 1100, I would bifurcate it as Rs. 100 for the registration fee of the trust and Rs. 1000 will be the charges of keeping a copy of the Trust Deed with a sub – registrar.
Q.5 Who is a sub-registrar?
Ans. A sub-registrar is an entry-level officer of the state revenue department. He is appointed as a public servant under Section 6 of the Registration Act.
Step 3: Filing the trust deed with the Registrar of Trusts
The trust deed must be filed with the Registrar of Trusts in the state where the trust is located, along with the necessary forms and documents.
Step 4: Obtaining the registration certificate
Once the trust deed has been filed, the Registrar of Trusts will review the application, he may ask for additional information or documents which shall be provided to him in a timely manner. If the application is approved by the Registrar of Trusts, then he will issue a registration certificate to the trust.
Q.6 What are the documents required for Trust Registration?
Ans. Self-attested copies of Identity Proof (Trustor, Trustee, Beneficiary), Photograph of Trustor, Trustee, Beneficiary, Address Proof of Registered Office, and PAN Card of Trustor, Trustee, Beneficiary
Apart from these documents, there might be some internal documents of the professional who is guiding you in the formation of trust.
Q.7 What are the Advantages of Trust Registration?
Ans. Each Trust possesses its own distinct legal identity apart from its members, enabling it to initiate legal proceedings against individuals or any of its members. Registered Trusts hold the authority to file lawsuits across India, even in states where they are not registered.
Registration of a Trust confers upon it a legal standing that is crucial for several purposes such as opening bank accounts, securing registrations and approvals under the Income Tax Act, and legally transferring ownership of properties.
Upon obtaining the 12AA/80G Certificate, a Trust becomes eligible for tax benefits. Both the Trust and its investors enjoy tax exemptions as a result.
Q.8 What are 12A and 80G Certificates?
Ans. The income Tax Department issues 12A certificates to the trusts or NGOs that are involved in social welfare. Such a certificate is issued for a period of 5 years(Provisionally 3 years) and can be renewed after making an application and is not liable to pay Income tax for the entire lifetime on its surplus income, Additionally, an NGO can also apply for an 80G certificate. This certification provides the donor benefit under the Income Tax Act as a deduction to the extent of 50% or 100% depending on the objectives of the trust.
Q.9 Is there any annual compliance?
Ans. The answer to it is, that there is no requirement for annual filing, but the data has to be provided to the Income tax department as per prescribed formats.
Conclusion:
Once a charitable trust is registered, it must maintain certain records and submit annual returns to the Registrar of Trusts. It is also subject to periodic inspection by the Registrar, and the trust should always be in compliance with the rules and regulations set by the government. The registration process involves filing the trust deed with the Registrar of Trusts along with the necessary forms and documents and obtaining the registration certificate.
Disclaimer: The above main motive is to share information and spread awareness, I thank you for reading/referring to it, and Will happy to see your comments below
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