Trust Registration Procedure is conducted for a number of purposes and has proven to be an effective channel for estate and succession planning. In 1882, the Indian Trust Act regulated the private trust that applied to all of India except for the state of Jammu and Kashmir and the Andaman and Nicobar Islands. Also, this law does not apply to undivided Hindu families, Waqf, charitable funds, etc. The Government of India made some amendments to the Income Tax Law in 2015, emphasizing charitable causes

The introduction of “trust” was discovered in ancient times when people of Dharmshalas, organized educational institutions, medical institutions, planted trees, built water tanks, etc., but after the start of the new era, the concept of trust was visible for many reasons. The word “trust” means to transfer the property from the owner to another person in favour of the third person and the owner. The trust is divided into two categories: public and private. The Trust can be established by the Hindu undivided family, partnership, association of individuals and anyone who is capable of contract. The trustee can be the owner of the property or any other person eligible for the contract.

Why Trust Registration Procedure is Needed?

Trust Registration Procedure, it is very important to legally register the trust. There are many legal procedures to follow for the registration of trusts. Hire a professional attorney to help you complete the Trust Registration Procedure without making any mistakes. The procedure for submitting the registration application and the documents required for the Trust Registration Procedure are described below.

A trust deed must be drawn up and it must contain the names and addresses of all trustees. The owner must submit a clearance certificate.  A trust deed must be drawn up. This document must contain all information about the trust. It should be printed in Rs.100 extrajudicial stamp paper. This document must be signed by the trustee and the witnesses in the presence of a notary.  The Trust Deed must contain the full names and addresses of the trustees; the number of trustees; rules and regulations; and its goals. The owner of the property must provide a no-objection certificate from the location where the escrow office is located.  Documents required for registration of the trust are Form 10G, Certificate of Registration, Copy of Trust PAN card, copy of utility bill, Owner’s NoC, Copy of Trust Deed, Banking Book for the last three years and Proof of Progress Report and Public Welfare activities.

Step-by-Step Procedure for Trust Registration in India

Following are the steps to follow for Trust Registration Procedure in India- 

Step 1: Choose an Apt Name for the Trust 

The first and most important step in the process of registering a trust is the choice of name for the proposed trust. Use care in fulfilling this purpose. The name must comply with the provisions of the Names and Emblems Act 1950. There shall be no violation of the Registered Trademark Act. The name must remain true to its originality.

Step 2: Drafting the Trust Deed
The drafting of a Trust Deed is an important task as it makes the Trust legally enforceable. In general, the trust deed consolidates the following clauses- 

Objective
The object clause reflects the purpose of the trust’s formation. 

Acceptance of Funds
This Clause authorizes the Trust to accept contributions, donations and subscriptions from any person, government agency or charity^[1] in the form of cash or real estate free of charge. Likewise, the clause states that contributions which impede the purpose of the trust are not acceptable. 

Investments 

The investment clause sets out the conditions for the lawful and effective administration of the trust. In addition, this clause also spelled out the conditions for the effective allocation of the additional funds that go unused and could help generate additional income through investments.

The Powers of the Trustees
As the name suggests, this particular clause addresses the responsibilities of the trustees. Generally, such clauses give trustees the following powers-

• Appoint employees 
• Dispose of trust funds 
• Open a bank account on behalf of the trust 
• Sue defaulters in litigation on behalf of the trust 
• Accept gifts or donations from legitimate persons or source
• Investing Additional Funds in Securities 

Accounts and Auditing
This clause require the Trustees to keep the account book on a regular basis. In addition, it also defines the audit obligation that the certified CA must carry out.

Liquidation
A trust is wound up when all of the property or assets of the trust are lawfully distributed to the beneficiaries or to a similar entity, either directly or by relocation. At the time of the dissolution of the trust, the participants must prove the tax obligations arising from the transfer of assets. In addition, this clause sets out the requirement to enter into such a legal obligation with the consent of a charity commissioner/court/other law to mitigate the possibility of litigation.

Conclusion

The Trust Registration Procedure in India is to set up a trust for someone who wants to engage in charitable activities with tax benefits. The restrictions on starting such a company are significantly less compared to other registrars. But when it comes to regulation, things get a bit complicated for the trust. If you want to register your trust but not aware about the Trust Registration Procedure then you can contact BizAdvisors, they will help you for sure.

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