1. Trust Registration Overview:

♦ Public trust is most convenient way of starting a non-governmental organisation (NGO).

♦ Main objectives of trust are eradicating poverty, offering medical support, and promoting art, science and literature.

♦ Trusts are irrevocable i.e. they cannot be terminated without permission of court.

2. Trust Registration – Detailed Process:

  • An initial step in registering the trust, the founder of trust has to figure out in a document -objectives of trust and manner in which trustees have to work towards achieving goals of trust.
  • The above document is called “Trust Deed”.
  • Once the trust deed is made, application for registration of trust shall be moved before “Registrar of Trust” along with Trust Deed.
  • Application to Registrar is to be made in the jurisdiction in which registered office of the trust is located.

3. Contents of Trust Deed:

  • Name of Trust
  • Registered office of Trust
  • Area of operation of Trust
  • Objectives of Trust
  • Details of Author of Trust
  • Assets of Trust
  • Details of Board of Trust
  • Quorum of board with their qualification, terms & tenure
  • Powers & functions of Managing Trustee and Other Trustees

4. Documents Required:

  • A complete drafted trust deed
  • Proof of Registered office – Rental Agreement
  • ID proof (PAN & Aadhar) of Founder of Trust
  • Two witnesses

5. Constitution of Trust:

Trustee constitutes Board of Trustees. The Board constitutes the following:

  • Founder
  • Managing Trustees
  • Other Trustees

The quorum of the board of trustees shall not exceed maximum of 21 members.

6. Trust Benefits and Compliance’s:

  • Only registered trust is eligible for tax exemptions provided u/s 12A and 80G of Income Tax Act.
  • A trust after its registration shall do following:

1. Obtain PAN Card

2. Book Keeping and Accounts

3. Annual Income Tax Filing

4. Shops and Establishment License – in case of employment

5. Professional Tax Registration – if applicable

6. GST Registration – if applicable

  • There is general assumption that trust need not pay tax as they work towards welfare of society, but it’s not true. Like any other legal entity, it is liable to pay tax.
  • In order to get certain exemptions from tax, trust is required to obtain certification for said exemption such as Section 12A, 80G etc; from Income Tax Authorities.

 7. Registration process u/s 12A

  • The application for registration has to be filed with Jurisdictional Commissioner of IT Act
  • Documents to be furnished:-

1. Application in form 10A

2. Trust Deed

3. Two copies of accounts of trust, for not more than 3 Years

4. PAN of Trust

  • Registration will be granted within 6 Months of application
  • Once registration is granted it will hold good till cancellation of registration.

Note: Before claiming exemption u/s 11 and 12 of Income Tax Act, 1961, if the income of trust exceeds Rs. 2,50,000 in any financial year, then accounts of trust need to be audited by a CA in practice.

8. Section 80G Registration

The main benefit of registration u/s 80G of Income Tax act, 1961 is when donor makes donation to the trust, based on the receipt of donation given by trust, the donor can claim deduction u/s 80G of Income Tax Act, 1961 while filing his/her Income Tax Returns for that Financial Year.

  • The application has to be made in form 10G
  • Documents to be furnished:

1. Copy of registration u/s 12A

2. Note on activites of institution since its inception

3. Copies of accounts of institution

  • Registration will be granted within 6 months of application
  • Once registration is obtained, it will hold good tills its cancellation
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Qualification: CA in Practice
Company: Akshay Consultancy
Location: BANGALORE, Karnataka, IN
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4 Comments

  1. Anil Kumar says:

    What is the difference between Public & Private trust?
    And what are the tax benefits of creating a private trust rather than holding properties on individual name?

    1. Akshayh07 says:

      1. Difference between Private and Public Trust:
      Public Trust is created for charitable purpose and for the benefit of society at large. For Eg: eradication of poverty, education, medical welfare, promotion of sports.
      Where as Private trust is created for a closed group like family, relatives where the benefit is passed on within the group i.e. it is created for the financial benefit of one or more designated beneficiaries.
      2. Tax benefits of Private Trust
      With respect to benefits and taxation of private trust, I am coming up with another article as it requires a detailed explanation. It will put up on tax guru within next 2-3 days

  2. Akhilesh says:

    required acknowledge related to NGO…Who can run private NGO how which compliance need to follow ..what benefit available etc .full detail related to private NGO.

    1. Akshayh07 says:

      Private trust is created for managing trust properties for private or religious purpose. A private trust does not enjoy the privileges and tax benefits that are available for public trusts or NGOs.
      If your planning to open a trust for charitable trust it is advisable to go for Public Trust as it has multiple benefits as listed in above article.

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