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Trust Registration in India

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A trust can be for the benefit of a closed group or persons, known as a Private Trust or for the public at large, known as a Public Trust. We advise and assist in Trust Registration, which is mandatory anywhere in India. Call us now.
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Meaning of a Trust

The Indian Trusts Act, 1882, defines a trust as an obligation, annexed by the ownership of property, arising of a confidence reposed in the owner and accepted him, for the benefit of another owner or another person known as its beneficiary. In simple words, the owner of the property / assets, called the ‘author of the trust’, entitles its ‘trustee’ to hold his property / assets for the benefits of other authors and beneficiaries. For this purpose, we can say that the ‘author of the trust’ has reposed his confidence on the Trustee. The beneficiary’s rights against the trustee as the owner of the property / assets is termed as his ‘beneficial interest’ in the Trust.
Play Video about Trust Registration Process | How to apply Online | Fee | Trust deed | Explained By Setindiabiz

Key essential elements of a Trust

  • Who will be the author of the Trust?
  • Who will be the Trustee of the Trust?
  • Who will be the beneficiaries of the Trust?
  • What will the Instrument of the Trust be?
  • What will the object of Trust be?
  • What will the Property / Assets of the Trust be?

Checklist for Trust Registration in India

The first step of trust registration online starts with the drafting of a trust deed. The trust deed is to be drafted on an appropriate non-judicial stamp paper, the cost of which varies across different states in India. Additionally, the trust deed must be stamped for which the stamp duty charges vary for different states in India. Besides a valid trust deed, the necessary prerequisites for Trust formation also include a legitimate objective, beneficiaries based on the type of trust, and the minimum number of trustees as prescribed by law. Follow the table below for detailed information on all such necessary prerequisites of Trust Registration in India.
  • A non-governmental, non-profit entity
  • At least 2 Trustees
  • A lawful purpose for the creation of the Trust
  • A Stamped Trust Deed
  • General public or private individuals as beneficiaries

Stepwise Documents for Trust Registration in India

The NGO Trust registration online is done with the Registrar of Trusts in India. While a private trust is registered under the Indian Trusts Act, 1882, a public trust is registered under the Trust Act specific to the state where it is getting established. The entire process of Trust Registration is centered around the registration of the Trust Deed, drafted and signed by the author of the trust in the presence of the registrar and 2 other witnesses. A detailed stepwise procedure for the registration of Trusts in India has been mentioned below.

STEP 1 – Documentation

Trust Registration in India is incomplete without the proper submission of the documents prescribed under law. Since inadequate or incorrect documentation can even result in the rejection of the entire application of Trust Registration, we always recommend that you arrange all the documents beforehand to prevent any hassle or hindrance in the process of NGO Trust registration online, and to reduce the chances of a complete rejection of your application for Trust registration.

STEP 2 – Draft your Trust Deed

A trust deed is the most important document for Trust registration, as it lays the foundation of Trust formation in India. A trust deed must be drafted with utmost carefulness, in the manner prescribed under law. After drafting the Trust deed, you can submit it to the office of the Registrar of Trusts, along with the required documents, and begin the process of Trust Registration.

STEP 3 – Name selection

The name of trust must be unique and communicative of the purpose it has been established for. It should not be identical to the name of an existing Trust or any other NGO, an applied trademark, or a registered trademark. A name identical to the name of an already existing Trust shall be considered invalid for naming your Trust, whereas a name identical to a registered or applied trademark shall be considered as an infringement with the intellectual property rights of the owner of the trademark.

STEP 4 – Application for Trust Registration

The process for Trust Registration begins with the registration of the Trust Deed. After the deed is drafted, it is submitted to the Office of the Registrar of Trust with the documents of the settlor, and the witnesses. These documents would include their photographs, identity, and address proofs. After examining the deed, the registrar shall ask the settler to appear before him, with two witnesses, and sign the deed in his presence. After the deed has been signed, the registrar begins the process of NGO Trust registration online.

STEP 5 – Issuance of Trust Registration Certificate

The process of registration ends with the issuance of Certificate of Trust Registration to registered Trust. The Certificate of Registration is a document of conclusive proof that the Trust has been registered by the registrar. Usually, it takes nearly a week to complete the process of Trust Registration in India.

Documents Required for Trust Registration in India

The documents required for Trust Registration can be categorized into the Trust Deed, the documents of all signatories to the Trust Deed, and the documents of the principal place or the registered address of the Trust. An elaborate list of all the documents required for Trust Registration in India have been mentioned in the table below. A failure to produce any of these documents during the process of Trust registration may result in the rejection of the entire application of registration. Therefore, it is advised that the process of documentation must be executed with utmost carefulness and sincerity.

Documents of the Trustee & Settlers of the Trust

Documents of the Business Premises
  1. PAN card of all Trustees & Trustors
  2. ID Proofs of all Trustees & Trustors
  3. Address Proofs of all Trustees &Trustors
  4. Coloured Photographs of all Trustees & Trustors
  1. NOC from the owner of the premises
  2. Proof of Registered business address
  3. Copy of Property Registration
  4. Trust deed

What is the Cost of Trust Registration in India?

Before proceeding with the registration of a trust, it is important to consider the associated costs involved. While the exact expenses can vary based on jurisdiction and other factors, the following aspects highlight some of the common costs to consider for trust registration.

Stamp Paper Value & Stamp Duty: The preparation of the Trust Deed typically requires stamp paper, the value of which is a certain percentage of the total value of the trust's property. This percentage can vary from state to state. Moreover, the deed has to be stamped by the concerned authority for which stamp duty and stamping charges will be imposed which also vary according to the state. To determine the exact stamp duty value, it is advisable to consult with a local legal professional or refer to the applicable stamp duty laws in your specific jurisdiction.

Registration and Filing Fees: When registering a trust, there are administrative fees to be paid. For instance, a fee of Rs.100 may be required as a registration fee of the trust deed, along with an additional fee of Rs.1000 for keeping a copy of the registered Trust Deed with yourself.

Professional Fees: Hiring the services of a legal professional can smoothen the process of Trust Registration for you and ensure a 100% accuracy in the filing process. You can avail our services for end-to-end assistance, from drafting the Trust Deed, and preparing all the required documents, to ensuring the grant of Trust Registration Certificate as quickly as possible. Our Professional Charges are quite affordable. For more details, talk to our Startup Advisors.

Benefits of Trust Registration in India

Asset Protection

Trust registration safeguards your assets from risks like lawsuits, creditor claims, and financial downturns. Placing your assets in a trust can help reduce loss in unforeseen circumstances.

Tax Benefits

Trusts being non-profit entities are subject to many tax exemptions under the Income Tax Act. The exact provisions may vary based on the type of trust and jurisdiction of registration

Privacy and Confidentiality

Registering a trust provides a level of privacy and confidentiality. Unlike public entities, trusts are not required to disclose beneficiaries or details about the trust's activities publicly.

Succession Planning

Trusts are excellent tools for succession planning. By transferring assets into a trust, you can outline specific instructions for their distribution to beneficiaries.

Charitable Endeavors

Charitable trusts promote philanthropic endeavors to make a positive impact on society. You can enjoy tax benefits on your personal contributions to registered trusts.

Continuity and Perpetuity

Trusts can exist in perpetuity, allowing you to create a lasting legacy. Through trust registration, you can ensure the continuity of your objectives beyond your lifetime.

What are the Consequences of Non-Compliance with Trust Registration Laws?

Ensuring compliance with Trust Registration laws is extremely important when establishing and administering a trust. Failure to adhere to these laws can lead to significant adverse consequences as discussed below:
  1. Lack of Legal Recognition: Non-compliance with Trust Registration laws can result in the trust being unrecognized in the eyes of the law. Without proper registration, the trust may not be considered a valid legal entity, which can lead to complications in managing and administering it.
  2. Inadequate Asset Protection: Trust Registration laws often provide certain safeguards and legal protections to the trust’s assets. Failing to comply with these laws may weaken or nullify such asset protection benefits and can expose the assets to potential risks, such as claims from creditors and legal disputes.
  3. Tax Implications:Trusts enjoy numerous tax benefits as non-profit entities under the Income Tax Act. So, non-compliance with Trust Registration laws may lead to adverse tax consequences and result in the loss of tax advantages, leading to high tax liabilities, penalties, and audit requirements.
  4. Legal Penalties and Sanctions: Non-compliance with Trust Registration laws can lead to legal penalties and sanctions. These can include fines, financial penalties, or even criminal charges, depending on the severity of the non-compliance and the applicable laws in the jurisdiction.
  5. Limited Rights and Enforcement Options: Without proper trust registration, beneficiaries may face limitations in asserting their rights or seeking legal remedies. Non-compliance can weaken the legal standing of the trust and impact the enforceability of its terms, making it challenging for beneficiaries to protect their interests or challenge any breaches or mismanagement.

Frequently Asked Questions About Trust Registration

Yes, since Trusts are registered entities and have a separate legal identity, a separate PAN card can be issued and a separate bank account can be opened in the name of the Trust.
A public trust is formed for the benefit of the general public. Its purpose must be clearly mentioned in the trust deed. Generally a public trust is created for setting up schools, colleges, other educational institutions, hospitals, old age homes, orphanages, children healthcare centers, institutions for women and child empowerment, welfare of underprivileged sections of the society, and for fulfillment of Corporate Social Responsibilities (CSR) by businesses under section 135 of the Companies Act, 2013.
The registration of Trust and Trust Deed Registration are one and the same thing. While Private trusts are registered under the Indian Trusts Act, Public trusts are registered under state specific laws for trust registration. Therefore, each state has prescribed a distinct process and application for Public trust registration, whereas, for the registration of a private trust, the registration of its deed is enough, and there is no need to file a separate application. As such, there is no uniform trust registration form to register a trust. The basic documents to register a trust deed include the KYC documents of its author, trustee and witnesses to the signature of the trust deed.
For the registration of the Trust deed, you do not require any specific certification from any professional consultant. However, you may require our legal services for the proper drafting of the trust deed, in receiving an appointment with the registrar of trusts, and operational assistance while being present in the registrar’s office for registration of trust deed.
The different classes of Indian Trusts are as follows:
  1. Simple Trusts, where its only purpose is the holding of estate by the trustee
  2. Special Trusts, where the trust is created for a particular purpose
  3. Express Trusts, created by a mutual agreement between parties
  4. Implied Trust, deduced from the conduct of the parties
  5. Public Trust, where the beneficiaries include the general public
  6. Private Trust, where the beneficiaries include a private group of individuals
  7. Constructive Trust, created as a result of the implementation of law
Section 4 of the Indian Trusts Act states that the purpose of a trust is lawful unless it has been:
  1. Forbidden by Law
  2. Defeats the purpose of any law
  3. Is fraudulent
  4. Implies injury to property or person
  5. Is immoral in the opinion of the court
  6. Is opposed to a public policy
A trust can be extinguished,
  1. When its purpose has been fulfilled
  2. When its purpose becomes unlawful
  3. When the trust property has been destroyed
  4. When the trust is being revoked
Yes, it is mandatory for a trust to obtain Income Tax Registration under Section 12AB of the Income Tax Act.
Yes, a trustee can become the beneficiary of a trust, but not its only beneficiary, as that would mean that the beneficiary is owning the property for his sole benefit. This defeats the lawful purpose of trust formation in India.
Public Trusts can either be a charitable trust or a religious trust.
The different types of beneficiaries would include:
  1. Primary beneficiaries, who are explicitly named as beneficiaries
  2. General beneficiaries, who are beneficiaries in relation to the primary beneficiaries
  3. Income beneficiaries, who earn income like interest, rent, etc. from the trust
  4. Capital beneficiaries, who receive capital from the trust
  5. Default beneficiaries, who avail benefits from the trust, by default and unless the trustee exclusively forbids it
Yes, a minor can become the beneficiary of a trust. In fact, the income that a minor receives from the trust is also taxable under relevant sections of the Income Tax Act.
A family trust is where the beneficiaries and the trustee belong to the same family. It is of the nature of a private trust, and can never be classified as public trusts in India.
No. Tax exemptions under Section 11 of the Income Tax Act can only be claimed by charitable and religious public trusts.
Trusts can be formed by:
  1. Every person competent to sign a contract
  2. By or on behalf of minor, with the permission of a principal civil court of original jurisdiction
  3. Hindu Undivided Family
  4. Association of Persons (AOP)
  5. Trust owned by a woman
  6. Company
Yes, since Trusts are registered entities and have a separate legal identity, a separate PAN card can be issued and a separate bank account can be opened in the name of the Trust.