Selection of Trust Type

• Decide whether the trust is a private trust or a public charitable/religious trust.
  
• Private Trusts serve specific individuals or families.
  
• Public Trusts serve the general public or a section of society for charitable or religious purposes.
  
• The legal process and applicable laws differ based on the type selected.
  

Drafting the Trust Deed

• A trust deed is a legal document that establishes the trust and outlines its objectives and management.
  
• Key components include:
  
  • Name of the trust.
    
  • Name and address of the settlor, trustees, and beneficiaries.
    
  • Objectives of the trust.
    
  • Details of trust property or initial capital.
    
  • Mode of appointment, removal, and duties of trustees.
    
  • Procedure for amendment or dissolution of the trust.
    
• The trust deed must be executed on a non-judicial stamp paper with the appropriate value as per the Stamp Act of the respective state.

Execution of the Trust Deed

• The trust deed must be signed by the settlor and the trustees.
  
• It should be executed in the presence of at least two witnesses.
  
• The deed must specify the date of formation and commencement of the trust.

Registration of the Trust

• Private Trusts:
  
  • Registration is optional unless immovable property is transferred.
    
  • Registered under the Indian Registration Act, 1908.
    
  • Application submitted to the local Sub-Registrar’s office.
    
• Public Trusts:
  
  • Mandatory registration with the Charity Commissioner or Registrar of Public Trusts.
    
  • Involves submission of the trust deed along with an application form, ID proof, address proof, photographs, and affidavits.

Obtaining PAN and Opening a Bank Account

• Apply for a Permanent Account Number (PAN) in the name of the trust through the Income Tax Department.
  
• Open a bank account in the name of the trust for handling donations, grants, and other financial transactions.

Compliance with Income Tax Laws

• Apply for 12A registration to avail of income tax exemption on the income of the trust.
  
• Apply for an 80G certificate to allow donors to claim tax deductions.
  
• File annual income tax returns and maintain proper books of accounts.

Other Statutory Registrations (if applicable)

• If the trust receives foreign contributions, registration under the Foreign Contribution (Regulation) Act, 2010 (FCRA) is mandatory.
  
• Trusts involved in education or medical services may require additional permissions from regulatory bodies like the education department or the health ministry.