Trust / Society REGISTRATION

As per section 3 of the Indian Trust Act, 1882, "A trust is an obligation annexed to the ownership of property, and arising out of the confidence reposed in and accepted by the owner; or declared and accepted by him, for the benefit of another, or of another and the owner."

Trust registration refers to a legalizing procedure of the trust deed (A legal contract between the Trustee and the settlor) from the respective jurisdiction’s registrar. If you are planning to obtain a registration of trust, then we are here to help at The Startup Trends.

Here are some of the ways we can help in Trust Registration:

1. Clients need screening related to trust set-up in the country.

2. Selecting names for the Trust as per the prevailing bylaws.

3. Identifying the applicable provisions followed by legalities.

4. Inserting Relevant classes in the Trust Deed based on its nature.

5. Obtaining required authorization from the Sub-Registrar

Parties involved in the Trust Registration Process

The trust registration process involves the following parties:

1. Trustor: The trustor is the person who establishes the trust. They are typically the owner of the assets or property being placed in the trust.

2. Trustee: The trustee is an individual or entity entrusted with the responsibility of managing and overseeing the trust. They hold and administer the trust property on behalf of the trustor and for the benefit of the beneficiary.

3. Beneficiary: The beneficiary is the person for whom the trust is created. They are the intended recipient of the benefits, assets, or property held within the trust. The beneficiary can be a third party, known to both the trustor and trustee, and they are entitled to receive the benefits according to the terms and conditions of the trust.

Types of Trusts

Trusts can be classified into various categories based on the activities they undertake. Here are the different types of trusts:

1. Public Trust

2. Private Trust

3. Public Cum-Private Trust

Private Limited Trusts- Private Limited Trusts are established to carry out activities for specific individuals, families, or close associates. These trusts can have beneficiaries closely related to the trust's founders. Private limited trusts are governed by The Trusts Act of 1882.

Public Limited Trusts- Public limited trusts are typically created to benefit the general public. They are often established for charitable, educational, and religious purposes and are governed by specific statutes such as the Religious Endowments Act of 1863, the Charitable and Religious Trust Act of 1920, or the Bombay Public Trust Act of 1950. Charitable and religious trusts are the most common types of public trusts in India.

Public Cum-Private Trust- This type of trust serves both public and private purposes. It can utilize its income for the benefit of the public and specific individuals or families. The beneficiaries of a public cum-private trust can be a combination of public and private individuals.

Benefits of registering as a Trust 

1. Trusts can get land from the Government

2. There is no federal law that governs public charitable trusts in India. However, it is important to note that some Indian states, such as Madhya Pradesh, Maharashtra, Gujarat, and Rajasthan do have a Public Trusts Act.

3. An NGO registered under the Trusts Act can bring into practice the word “Govt. Regd.” or ‘Regd.’

Avail tax benefits.

4. 80G certificate advantage under the Income Tax Act.

5. Trusts can get white capital – money or other assets owned by a person or organization or used for starting a company or investing for building construction.

6. Benefits under Goods & Service Tax (GST)

Reasons for Trust Registration

Trust registration is necessary for the following reasons:

1. Trust registration ensures proper regulation of trust activities, ensuring compliance with laws and regulations.

2. Trusts aim to promote non-commercial activities in areas like arts, science, education, and the environment, contributing to a better society.

3. Registered trusts can claim income tax benefits under sections 12A and 80G, encouraging donations and support.

4. Public trusts serve the general public, and registration ensures they act in the public’s best interests.

5. Trust registration provides a license to conduct trust-related businesses within the legal framework.

6. Trusts contribute to the development of sectors like education, healthcare, social welfare, and the environment.

7. By registering, trusts fulfill their objectives, gain legal recognition, and access government benefits and opportunities.

Society Registration

A society is an association of several individuals combined using a mutual accord to deliberate, govern and act cooperatively for some communal purpose. Societies are usually registered for the advancement of charitable activities like sports, music, culture, religion, art, education, etc.

Society Registration, under, The Society Registration Act, in India, lays down certain procedures for the sake of society registration & operation. This act was implemented with the purpose of augmenting the legal stipulations of society registration for the advancement of literature, fine arts, science or distribution of awareness for bountiful purposes. The society registration act, 1860 has been accepted by several state governments without or with further amendments.

Benefits of registering as a Society

NGOs registering under the Society Registration Act, 1860 can avail the following benefits:

1. Exemption from income tax: Society registration is a kind of NGO registration where the firm is saved from paying income taxes.

2. Separate legal identity: An NGO is a separate legal entity in the eyes of the law. A separate legal entity is a The entity has its own legal rights and obligations, separate to those running and/or owning the entity.

The NGO  getting itself registered u/s 12A of the Act  needs to apply  to the Director of Exemption, Income Tax in the prescribed form (10A) along with following documents:-

1. Memorandum and Articles of Association of the Company /Trust Deed. /Society Certificate of Registration.

2. Rent Agreement/ NOC from the landlord   of the premises of Registered Office. 

3. PAN card of NGO;

4. Evidence of welfare activities carried out & Progress Report since inception 

5. Balance Sheet & ITR (if any), since inception or last 3years;

6. List of donors along with their address and PAN;

7. List of Governing Body/ Board of Trustees /Board of Directors with their contact details & PAN;

8. Original RC and MOA /Trust Deed for verification;

9. The Income Tax Department on being satisfied about the charitable character of the NGO will grant registration certificate u/s 12A of the Act. The Registrar may also verify the original documents as submitted. The registration so granted is valid   for indefinite period until unless it is cancelled by the Issuing Authority.   

NGO Registration procedure for a Trust

The procedure for Trust registration involves the below steps:

1. Choosing a name for Society- While selecting a name for the Society, it is essential to keep in mind that as per the Societies Act, 1860, the name should be unique and non-identical. Further, the name proposed by the applicant must not suggest patronage of the Government of India or any State Government or attract the provisions of Emblem and Names Act, 1950.

2. Preparing the Memorandum of a Society- While registering the society, an applicant shall prepare the Memorandum of Society. The Memorandum of the Society along with the Rules and Regulations of the Society must then be signed by each of the founding members, witnessed by:

An Oath Commissioner;

Notary Public;

Gazetted Officer;

Advocate;

Chartered Accountant; or

Magistrate 1st Class with their official stamp and complete address.

3. Prepare documents-An applicant shall prepare the below-mentioned documents required for Society registration. The documents shall be duly signed.

Name of the society

Address proof of the working space

Identity proof of all the members

2 copies of the Memorandum of Association and by-laws of the Society

4. Filing of application- An applicant shall file the signed Memorandum and Rules and Regulations with the concerned Registrar of Societies in the State with the prescribed fee

5. Get Society certification- Once the documents are submitted and the Registrar is satisfied with application for Society Registration, they would certify to deem the Society to be registered.

Society Registration procedure

Registration can be done either at the state level (i.e. in the office of the Registrar of societies) or at the districts (In the office of the District Magistrate or the Local office of the Registrar of Societies)

The procedure varies from state to state. However, generally, the application should be submitted together with the following:

1. Memorandum of association;

2. Rules and regulation;

3. Consent letters of all the members of the managing committee authority letter duly signed by all the members of the organizing committee;

4. An affidavit was sworn by the president or secretary of the society on non-judicial stamp paper, together with a court fee stamp;

5. Declaration by the members of the managing committee that the funds of the society will be used only to further the aims and objects of the society.

6. All the previous documents which are required for the application for registration should be submitted in duplicate, together, with the necessary registration fee. Unlike the trust deed, memorandum of Association & Rules and Regulation need not be executed on stamp paper.

Conclusion

After discussing the difference between Society vs Trust Registration, it is clear that the purpose behind establishing a Trust is that an individual will hold another individual’s property for the benefit of a 3rd individual. In contrast, Society is created to promote any literary, charitable and other similar objective.

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