• 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. In finance, a trust can also be a type of closed-end fund built as a public limited company.
  • A trust is a convenient method whereby a limited number of persons may hold property on behalf of other persons, who may be a large or fluctuating body or who may include persons not yet born. Once the property has been vested in the trustees, they own the property, but they are compelled by law to exercise their ownership for the benefits of the beneficiaries and for them only. It means that legal ownership vests in the trustee or trustees but beneficiaries have de facto ownership.
  • 1. There is a founder/settler/author of trust.
  • 2. There should be person(s) called trustee/trustees.
  • 3. There is a property of the trust which the settler gives.
  • 4. There is a person capable to enforce that obligation called cestuique trust.
  • 5. There are beneficiaries who will enjoy benefits out of that property.
  • 6. An intention of the author or founder to create a trust.
  • 7. The purpose of the trust.
  • 8. Transfer of the property to the trustees.
    How to register a Trust / NGO?
  • The steps involved in the Registration of a Trust Deed are as follows:
  • The Trust Deed is drafted / prepared by a legal expert.
  • e-Stamp Paper is purchased for the execution.
  • Date is fixed for the registration in the Sub Registrar office.
  • The Government registration fee is paid.
  • All the trustees and 2 witnesses visit the sub registrar office on the fixed day for the registration of Trust Deed.
  • The Registered Trust Deed is collected after a week. To get a Trust or Non Government Organisation (NGO) registered in Delhi,
    A trust can be of two types
  • Public 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.
    Public Trust or Charitable Trust
  • 1. It is the one which is created mainly for the benefit of the general public at large. The objects could be for public benefit / charitable purposes such as:
  • 2. For setting up a school/educational institute for providing education to children,
  • 3. For setting up a hospital/nursing home for providing medical services and facilities for poor,
  • 4. For taking care of old aged / senior citizens, orphans, handicapped, widows, etc.
  • 5. For promotion of child health & girl / women empowerment
  • 6. For Social welfare of weaker sections of society,
  • 7. For promotion of Spiritual / Yoga / Art, Craft and Cultural activities
  • 8. For providing training to the Backward and poor classes to make them employable
  • 9. For religious activities such as setting up a temple etc.
  • 10. For protection of environment, planting trees, reducing pollution etc.
  • 11. For providing drinking water, food, shelter, clothing to the socially backward and poor.
  • 12. For fulfillment of Corporate Social Responsibility (CSR) by companies under Section 135 of the Indian Companies Act, 2013.
  • 13. For protection of environment, planting trees, reducing pollution etc.
    Private Trust
  • A private Trust is the one whose beneficiaries include families or individuals. Further, a Private Trust can be subdivided into:
  • 1. It is the one which is formed mainly for the benefit and welfare of particular persons/members of a family. A private trust can be made
  • 2. For the benefit and welfare of members of a family
  • 3. For the management & preservation of a property
  • 4. Private Trusts whose beneficiaries and their requisite shares both can be determined
  • 5. The Private Trusts whose both or either the beneficiaries and their requisite shares cannot be determined
    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.
    Legislation Pertaining to Trust
  • A Trust is governed by Indian Trusts Act, 1882 across India. However, each state can formulate its own Trusts Act to govern such non – profit organizations in its own state.
  • Further, a Trust can receive funds and projects much like a Society. However, its quite challenging to get funds or projects immediately after a Trust gets registered.
  • Therefore, to obtain funds or acquire projects, a Trust needs to meet certain eligibility criteria. Such criteria may include relevant experience, performance of a Trust, its age and such other parameters.
  • Furthermore, a Public Charitable Trust has to be registered with the office of the charity commissioner who has jurisdiction over the Trust. Hence, following is the procedure for its registration.
    Registration Process for Public Charitable Trust
  • Choose an Appropriate Name for the Trust
  • 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.
  • 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.
    Formulate Memorandum of Association (MOA) and Trust Deed of your Trust
  • A Trust Deed is legal evidence of your Trust’s existence and it contains the rules and regulations of your Trust. This document also contains the bylaws regarding the changes, removal or addition of the Trustees.
  • Memorandum Of Association (MOA)on the other hand represents the charter of the Trust. It defines the relationship of the Trustor with the Trustees and specifies the objectives for which such a Trust is formed. Such a document should contain the names, addresses and occupations of all the members along with their signatures.
    Documents Required to be Submitted at the Time of Registration
  • 1. Trust Deed
  • 2. Self attested copy of the proof of identity of the settler (Aadhaar card, passport, voter ID, driving license or any such photo ID)
  • 3. Self attested copy of the proof of identity of each trustee (Aadhaar card, passport, voter ID, driving license or any such photo ID)
  • 4. PAN card
  • 5. Proof of the registered office address of the Trust (electricity/water bill or registration certificate)
  • 6. Non Objection letter signed by the landowner
  • 7. 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.
  • Once you submit the papers, you can collect a certified copy of the Trust Deed within one week’s time from the registrar’s office.
    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 (original as well as self attested photocopy) at the time of registration. However, physical presence of Trustees is debatable.
    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.
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