Trust as per Indian Trust Act, 1882 is an organization where a person transfers all the rights to his property to another person for the benefits of the third person.
A person who transfers all the rights of his property to another person is the owner of the property and known as trustor. A person on whom name property has been transferred is known as trustee. A person for whose benefit, this transfer of rights of property has been takes place is known as Beneficiary. Minimum two trustees are required for registration and there is no maximum limit mentioned.
There has been certain provisions for appointment of trustee, removal of trustee, some necessary requirements for the creation of Trust, especially Public Charitable Trust. All the statutory things governed by Indian Trust Act, 1882. Doctrine of Cypres also applies to Public Charitable Trust.
Trust must be created for a lawful purpose. Registration of Trust needs an important instrument called as Trust Deed, it has all the main objectives of the trust and it requires to be signed in the presence of 2 witnesses.
It can be categorised into:
1. Public Trust
Public Trust is an organization which is made for providing benefit to public at large. In this, beneficiaries are the general public. It may be divided into further two :
Public Charitable Trust
Public Religious Trust
2. Private Trust
Private Trust is an organization which is created to benefit an individual as in families. Family members are the beneficiaries here.
There is an issuance of 12A Certificate by Department of Income Tax. It is generally issues to Trusts or NGOs. This Certificate exempts from the liability of paying tax for the income lifetime.
Trust is a separate legal entity after registration, it can take benefits of the schemes introduced by Government.
Land is provided by Government as Trust land
Get benefits as tax exemptions
80G & 12A certificate benefit
Legal money for the construction purpose of any building
Government registered name is used as Trust, so legal protection is provided.
Private Trust helps in proper estate planning
Flexibility has been increased
Trust assists in protection of assets
Step 1 : select a name for trust and it must be according to the described provisions.
Step 2 : A Trust Deed is required to be drafted, for registration
Step 3 : take an appointment with sub registrar of the place where registered office of trust is situated. Fees must be paid along with mandatory documents.
Step 4 : a Trust Deed needs to be present before Sub-Registrar along with two witnesses.
Step 5 : to obtain registered Trust Deed, it may take a period of week.
Step 6 : After getting registration of Trust, PAN and TAN number must be obtained. Then open a Bank Account on the name of Trust.
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