Trust must be registered in some cases and not in others. Let’s look at some situations where trust registration is mandatory.

It is mandatory to register a trust in the following cases:

Whenever a trust is declared, it is called the Trust Deed or Instrument of Trust. According to Section 5 of the Indian Trusts Act, a private trust relating to immovable property must be created by a non-testamentary instrument signed by either the author or the trustee. There are a number of documents that are compulsory to be registered as part of Section 17 of the Indian Registration Act 1908. The Indian Registration Act does not exempt a non-testamentary instrument that declares a trust from requiring registration. Hence, the trust must still be registered even if the instrument does not require registration.

If a charitable trust owns the immovable property, it is essential to register the instrument of trust in order to claim exemption under section 11 of the Income Tax Act 1961.

Exceptions to the requirement to register a trust include:

In the case of movable property, a trust does not need to be registered.

Even if a trust involves immovable property, registration is not mandatory if it is declared by a WILL. Even if a trust involves immovable property, registration is not mandatory if it is declared by a WILL.

There is no requirement for registration in the case of Public Trusts, whether those are created under a WILL or inter vivos, and whether they are movable or immovable. In the case of Charitable or Religious Trusts relating to immovable properties, however, it is essential that the instrument of trust be duly registered in order to claim the exemption under section 11 of the I.T. Act 1961.

Although trust registration online is not statutorily required, it is always beneficial due to the following reasons.

  1. Registered trust deeds can be produced whenever needed as evidence of the trust and title to the property held by it;
  2. Possession is transmuted through a registered trust;
  3. Trustee/s can easily acquire trust property;

Trust registration Documents include:

  1. Depending on the value of the Trust property, the stamp paper value of the Trust deed will differ from state to state. It includes the following information: (i) The objectives of the trust; (ii) details on the Settler and trustees, such as their names, occupations, addresses, ages, father’s names, designations, mobile numbers, email addresses; (iii) the number of trustees, the address of the trust’s registered office, the bylaws of the trust, etc.
  2. The proposed name of the trust (at least three references are required)
  3. Settler and trustee photographs and copies of their proof of identity.
  4. Registration may require the presence of trustees and two witnesses with original identification documents. However, in some states, trustee consent and identification documentation are sufficient.

Formalities regarding income tax:

Once a trust has been registered, one must file a 12A and 80G form to qualify for tax benefits. To obtain a registration certificate, one must submit the prescribed form (Form 10A) and manner before the 1st of July 1973 or within one year from the date the trust is created, whichever is later.   The accounts of the trust or institution for that previous year must be audited by a chartered accountant or any other accountant who is authorized to serve as an auditor of companies if the total income of the trust or institution exceeds 50,000/- without giving effect to the provisions of sections 11 and 12. According to the Income-tax Rules, 1962, audit reports should be prepared in Form No. 10B and they must accompany income tax returns.

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