Wednesday, 19 December 2018

What is trust and how to register trust in India?

Trust, if going by the business dictionary, is a legal entity which is created by a party (the trustor) by which a second party known as the trustee holds the right to manage the trustor's assets or property which is for the benefit of a third party (the beneficiary). Also, in the era of speed and technology when everything is becoming so fast, you can also have the trust registration online which will save you a lot of time. There are many types of trusts which are defined but the idea of this three party system is constant in them. Now looking at some points of trust in India which are stated below:

1. Private and public trust
The private trusts in India are regulated and administered by the Indian Trusts Act, 1882 while on the other hand; the public trusts direct the functioning of public trusts. But this is different for the states of Maharashtra and Gujarat as public trusts here are governed by the Bombay Public Trusts Act, 1950.

2. Number of trustees
Although, there is no upper limit for the trustees, but for the registration, a minimum of two trustees are always required. The provision is present in the trust deed which concerns the management of the trust and also the procedure of appointing or removing the members.

3. Trust Deed
The aim and objective of the trust must be specified in the trust deed. It is mandatory that both the settler and trustee should sign the trust deed which will be done in the presence of two witnesses.

4. Tax benefits
The public trusts after having the registration with the income tax can go for the tax exemptions whereas, there are no privileges and tax benefits available to the private trusts. 

Now if you are thinking of registering your trust, then you need to follow these steps as per guided by the government:

• The first step would be to choose the name of the trust. There are certain things which are needed to be kept in mind while choosing the name of the trust. The name should not suggest any kind of patronage against any government. And also, it should not be under the names suggested under the Emblems and Name Act 1950.

• Determine the Settler and the trustee of the trust. The trustee can be any person which is an individual or body corporate which is capable of holding property and competent to enter into a valid contract.

• The deed should be signed by both of them in the front of two witnesses.

• If the trust is about the charitable or religious trust and includes an immovable property, then it is mandatory to register the trust deed properly with the government.  You can go for online trust registration in India to save some time.

• It is to be kept in mind that the trust can be registered in the state only in which its registered office is going to be operated. However, the trust can operate on all India basis as well.

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