Trust Registration

A trust is a legal arrangement where one person transfers property (the "settlor") to another person to hold and manage (the "trustee") for the benefit of a third person or group (the "beneficiary") or a specific purpose.
Trust Registration is the formal process of legally establishing a trust under various trust registration acts. This registration provides legal recognition, enables tax benefits, and ensures the trust operates as intended.

Registering a trust provides legal recognition, asset protection, and potential tax advantages. 

Legal Recognition: A registered trust is a recognized legal entity that can own property, enter contracts, and sue or be sued in court.
Tax Benefits: Public charitable trusts can claim exemptions on their income under Section 12A/12AB of the Income Tax Act, 1961. Donors to these trusts can also claim deductions under Section 80G.
Asset Protection & Succession: Assets placed in an irrevocable trust are generally protected from personal creditors and lawsuits against the settlor or beneficiaries. Trusts also facilitate smooth wealth transfer, avoiding the lengthy probate process associated with wills.
Enhanced Credibility: Registration boosts the trust's transparency and credibility, making it easier to secure grants, donations, and Corporate Social Responsibility (CSR) funds. 

Any person competent to contract, including individuals, companies, or associations, can create a trust for a lawful purpose. Key criteria include: 

Parties Involved: A minimum of one settlor and two trustees are required. At least one trustee should ideally be a resident of India.
Lawful Objective: The trust's objectives must be for a legal purpose and not against public policy. Public trusts are for general public welfare (education, healthcare, etc.), while private trusts benefit specific individuals/families.
Trust Deed: A trust deed must be executed on non-judicial stamp paper with the appropriate stamp duty paid, varying by state. 

The general process involves several steps: 

Choose a Name: Select a unique name that does not violate any existing laws or trademarks.
Draft the Trust Deed: Prepare a detailed trust deed outlining the objectives, rules, trustees' powers and duties, and dissolution procedures.
Execute the Deed: The trust deed must be signed by the settlor and trustees in the presence of two witnesses.
Register with Sub-Registrar: Submit the executed trust deed and required documents (ID/address proofs, photographs, etc.) to the local Sub-Registrar's office.
Obtain PAN and TAN: Apply for a Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) in the trust's name.
Open a Bank Account: Open a dedicated bank account for the trust using the registration certificate and PAN.
Apply for 12A & 80G: For charitable trusts, apply for registrations under Section 12A and 80G of the Income Tax Act to avail tax benefits. 

Registered trusts must adhere to ongoing compliance obligations: 

Maintain Accounts: Proper books of accounts must be maintained.
Mandatory Audit: If a charitable trust's income exceeds the basic exemption limit (currently ₹2.5 lakhs before exemptions for audit cases) or it receives any foreign contribution, its accounts must be audited by a Chartered Accountant.
File Annual Returns: All registered trusts must file annual income tax returns (ITR-7 for charitable/religious trusts) by the specified due date (usually October 31 for audited trusts).
FCRA Compliance: Trusts receiving foreign donations must register under the Foreign Contribution Regulation Act (FCRA) and file an annual return (Form FC-4).
State-Specific Filings: Public trusts in states with a Charity Commissioner must also comply with state-specific filing requirements. 
Cancellation of Registration

Trust registration can be revoked or cancelled under specific circumstances: 

Violation of Trust Deed Terms: If the trust violates the conditions outlined in its deed, it can be dissolved.
Unlawful Activities: A court can order cancellation if the trust is found to be involved in illegal activities or operating against public interest. The Commissioner of Income Tax can also cancel the registration if the activities are found not to be genuine or not in accordance with the trust's objectives.
Mutual Agreement: A trust may be dissolved by mutual agreement of all trustees and beneficiaries, provided all beneficiaries are legally competent.
Fulfillment/Impossibility of Purpose: If the trust has achieved its purpose or its goals become impossible to achieve, it can be wound up.
Express Power: If the trust deed explicitly reserves a power of revocation for the settlor, the trust can be revoked under those terms. 

Key Documents Required for Trust Registration

A list of documents you need to have for trust registration:

Original signed trust deed on the prescribed stamp paper
Identity proof of settlor and trustees (Aadhaar, PAN, Voter ID, Passport, or Driving License)
Address proof of settlor and trustees (Aadhaar, recent utility bill, or bank statement)
PAN card application for the trust (to be obtained post-registration)
Passport-size photographs of the settlor and trustees
Registered office address proof (property title deed or lease agreement/NOC)
Details of trust assets (list of movable and immovable properties)
Digital Signature Certificates (DSC) for authorized signatories.