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 a 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. A charitable purpose is one designed to benefit, ameliorate, or uplift mankind mentally, morally, or physically.
TrusteesA trust needs a minimum of two trustees; there is no upper limit to the number of trustees. The Board of Management comprises the trustees. The person who accepts the confidence reposed or declared by the author of the trust is called trustee.
BeneficiaryThe person for whose benefit the trust is to be held by the trustee is called the beneficiary
Who is competent to create a trustAny person who has the capacity to enter into a contract is competent to create a trust.
Procedures involved
- Preparation of deed which specifies the
- Objects of the trust
- Name of Managing Trustee/Trustees
- Name of the beneficiaries
- Office of the trust
- Registration
Registration can be done either at the state level (i.e., in the office of the Registrar of Societies) or at the district level (in the office of the District Magistrate or the local office of the Registrar of Societies).
Stamp-dutyA deed of trust is regulated by Article 64 of schedule I to the Indian Stamp Act for the purpose of stamp-duty
Extinction of trustA trust is extinguished: -
- When its purpose is completely fulfilled; or
- When its purpose becomes unlawful; or
- When the fulfillment of its purpose becomes impossible by destruction of the trust property or otherwise; or
- When the trust being revocable is expressly revoked.
Charitable or religious trusts, societies and companies claiming exemption under sections 11 and 12 of the Income-tax Act are required to obtain registration under section 12AA of the Act. Private/family trusts are neither allowed such exemption nor required to seek registration under the Income-tax Act.
Tax deduction under Section 80G (Donation to charitable Trust)Deductions are available under Section 80G to any taxpayer i.e. individual – resident and non-resident, firm, HUF and company.
