Trust Registration is governed by the Indian Trust Act, 1882 where the author (owner) assigns the rights of the property to a trustee so that the beneficiary i.e. the third person can take benefit out of it. The trust is carried out by way of an instrument called trust deed which is formed on a non-judicial stamp paper as per the stamp rates of the different states.
Trust Deed is the core document which defines the reason for formation of trust, details of the author, trustee and the beneficiary. It lays down all the working and functioning of the trust until its closure. The trust deed is registered with the sub-registrar of the concerned jurisdiction.
Legal Window will provide you all the necessary services and legal advice related to Trust registration. You may get in touch with our team on 072407-51000 or email firstname.lastname@example.org for all charitable trust related compliance.
Advantages of Trust Registration
Parties under Trust
Types of Trust
Process of Trust Registration
12A and 80G Certificates
Income Tax Department issues 12A certificate to the trusts or NGOs that are involved in social welfare. Such certificate is issued for a period of 5 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 80G certificate. This certification provides the donor benefit under Income Tax Act as deduction.
Comparison between Trust, Societies and Section 8 Company
|1.||Governed by||Companies Act, 2013||Indian Trust Act, 1882||Societies Registration Act, 1860|
|2.||Registration Document||The charter documents are MOA and Articles of Association||The main document is the Trust Deed||The Primary instrument for Registration of society its Memorandum of Society.|
|3.||Minimum Requirement||Section-8 Company requires at least two people.||At least two trustees are required.||At least seven members are required to form an society.|
|4.||Revocable/Irrevocable||It can be dissolved in accordance with the provisions of the Companies Act, 2013 and rules made there under||Public Trust are generally irrevocable||Society can be dissolved which shall be approved by at least 3/4 of the Members of the society.|
|5.||Control||It is managed by the Board of Directors and resolutions are passed in accordance with the Companies Act, 2013||Single man may control and prevail in a trust.||Decisions are democratically taken in societies|
|6.||Area of operation||It can operate all over India||It can operate all over India||It can operate in the specific state only.|
|7.||Bank Account Operations||Here, a person can be authorized to operate a Bank Account.||In trust it is controlled by one person mostly trustee||In case of society Bank operations are operated generally by the President and the treasurer.|
|8.||Annual Compliance||Annual Accounts and return of Company are filed with ROC.||There is no requirement of annual filing, but the data has to be provided to the concerned department as per prescribed formats.||Societies are required to file annually with the Registrar of societies, a list of containing name. address and occupation of the managing committee members.|
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FAQs on Trust Registration
Registration of Trust is mandatory in certain cases and not mandatory in some other cases. If Trust wanted to take benefits under section 11 of Income Tax Act, the trust is required to get registered under Indian Trust Act 1882.
Trust is a legal arrangement between 2 or more person in which a person holds property for the sake of some other person on the other hand Society is an association of person, who come together to fulfill any particular purpose, described under the Act.
Family trusts are designed to protect our assets and benefits of members of the family beyond the lifetime of members.
Educational trust can be registered either as a company under the companies act or as a society under societies registration Act.
A Trust can be formed and registered with a minimum number of members 03 and a maximum of 21 members.
A Trust or an NGO has to acquire certificate 12A from the Income Tax Department. This certificate allows donors, to make donations under section 80G in certified NGO, to avail deduction.
NGO is non government organization while a trust can be public private or family. Both NGO and trust works for the benefits of society.
Societies are membership organizations that can be registered for charitable purposes. Societies are as similar to the trusts, although there are some essential differences. While only 3 individuals are required to form a trust, a minimum of 7 individuals are required to form a society.
Section 8 Company gets more benefits over NGO and Trust. Section 8 company is also formed for the charitable purpose but as it is registered under companies Act it gets several exemptions in terms of tax and others.