Violations of Trust Registration Compliance Penalties

Penalties for civil and criminal offenses

There is both a civil and criminal penalty for violating the provisions of the Trust deed. Sections 405 to 409 of the Indian Penal Code 1860 specify the punishment for criminal breaches of Trust.

An application for a Tax Deduction Account Number

Upon registration, a Trust or Institution should apply to the Assessing Officer for a tax deduction account number. For this purpose, the Trust or Institution can use form 49B provided by the IT department. All challans for payment of sum u/s 200 and TDS certificate, as well as returns u/s 206, 206A, and 206B, should include the Tax Deduction Account Number.

According to Section 272BB, a penalty of Rs 10000 is imposed on the trust registration certificate that fails to apply for the Tax Deduction Account Number.

Income Tax Return Not Filled

Taxpayers are subject to significant penalties under the Act if they fail to facilitate the return of income. As long as the taxpayer has not rendered the TDS certificate along with the return of income due to the default of the taxpayer, the return of income will not be invalidated. Within two years from the end of the assessment year, taxpayers are required to provide this certificate.

How Does Section 12AB Relate to Registered Trusts?

All existing charitable trusts or institutions must obtain the new registration u/s Section 12AB in order to maintain their continuous exemption u/s 10 or 100;

Section 12A
Section 12AA
Section 10(23C)
Section 80G

Also, trusts registered under Section 10 (23C) or 12AA must renew their registration under Section 12AB. In place of section 12AA, which specifies how trusts or institutions must register, a new section 12AB will be functional with effect from the given timeframe, whichever is earlier.

According to Section 12AB, the date on which the registration was granted

The deadline for submitting registration and permission applications.

Are Registered Trusts Helpful?

Having to comply with legal requirements and compliance rules can lead to a client’s application being rejected and re-filed, which is time-consuming and cumbersome. Corpbiz can assist you in overcoming such issues.
First step: screening requirements for Indian trusts
In consideration of prevailing bylaws, step 2 is to select the trust’s name
Identifying applicable provisions and legalities
Incorporating relevant clauses into the trust deed according to its nature
Obtaining Sub-Registrar’s authorization

Frequently Asked Question

Are societies able to be registered as trusts?

According to the Bombay Public Trusts Act of 1950, all societies in Maharashtra and Gujarat must be registered with the Bombay Public Trusts Authority in order to continue operating. A society has greater democratic and flexible limitations.

NGO vs. trust: what’s the difference?

The mission of NGOs is to fulfill the philanthropic functions of a government. Trusts, on the other hand, are self-sufficient since they can be private or public.

Are trusts considered NGO’s?

NGOs, trusts, and societies are all considered NGOs. The only difference between them is the registration and management processes.

Can a trust electronically file its return? Is it a legal requirement?

All registered trusts are required to e-file IT returns. If the Trust wishes to audit its accounting, then the IT return must be filed along with the Digital Signature of the CA who will perform the audit.

Legal Advisor