Form 10A is a necessary document for the re-registration of trust in India. It is a necessary step that the trust or the organization must follow in order to keep its activities valid and lawful. Trust re-registration is required to guarantee that the trust stays in accordance with the Government’s rules and regulations. Trust re-registering is a required process, and failing to comply with the requirements can result in penalties and legal consequences.
The amendment of the laws of governing the registration and authorization of trusts under the Income Tax Act of 1961 was done by the Finance Acts of the year 2020 and 2021, respectively. Section 12AB was added to make trust registration more effective.
According to this, the trust must transfer from the previous Section 12AA to the new Section 12AB and get a new registration, which took effect on April 1, 2021.
What is Trust?
The British colonial administration in India adopted the Indian Trust Act in 1882[1] to provide a legal framework for the creation and management of trusts in India. A trust is a legal document in which one person, known as the settler, transfers the ownership of his property to another person or group of people, known as trustees, who holds and manages the property for the benefit of another person, known as the beneficiary. The trustee is in charge of managing the trust property and making sure that the terms and conditions laid down by the settler are obeyed.
The Indian Trusts Act, of 1882 governs trusts in India. The legislation establishes a legal framework for the formation and administration of trusts in India. The statute specifies the trustee’s obligation and the authority over trust property. It also serves as a mechanism for settling disputes between the trustees and the trust’s beneficiaries. The agreement must also outline the property that will be kept in trust and how the trustee will manage it.
In India, trusts are a common way to manage and preserve wealth. They are frequently used in estate planning, tax planning and charitable giving. Trusts allow you to save wealth for future generations while also guaranteeing that the property is used for its intended purpose.
Types of Trust
There are two types of trust:
- Private Trust
- Public Trust
The public trusts are further divided into two parts
- Public Charitable Trust
- Public Religious Trust
Why is Trust Registration necessary?
- The registration of the trust gives the trust a legal recognition, which provides a separate legal entity to the trust, which is essential to carry out various activities of the trust.
- The registration of the trust ensures that the trust is in compliance with all the rules and regulations provided by the Government.
- The trusts are subject to taxes. The registration of the trust helps in determining the tax liability of the trust.
- By registering the trust, its activities and financial truncations become public, which aids accountability and ensures that the trusts are utilized for their original purpose.
- Registering the trust gives evidence of ownership of the trust property, which is required for the trustees to administer the property efficiently.
- Because the trust has a separate legal identity, it is easier for trustees to carry out transactions and access resources.
What is Form 10A?
The legislation was revised to incorporate provisions for the trust re-registration and the introduction of the Form 10A. To offer a consistent and expedited method for the registration of trusts in India, Form 10A was added to the Indian Trusts Act of 1882. The form was introduced to guarantee that all the trust in India is in accordance with the rules and regulations provided by the Indian Government. This form allows the trust to update its records and ensure that all relevant information is correct and up-to-date. The form was added to simply the re-registration procedure and to offer a standard method of updating trust records in India.
The form’s goal is to provide the Indian Government with the relevant information regarding the trusts, such as the trustees, beneficiaries and the property owned by the trust. The form also allows the trust to update its record. The trustees of the trust must complete the form. The trustees are in charge of ensuring that the form is filled out correctly and completely and that all the required information is given.
When the trusts are already registered, Form 10A is used to make a re-application for the re-registration of the trust. While on the other hand, when the trust is newly formed, they can use Form 10A to make an application for the first time. There are six sections in the form, which are all to be filled in. They are all related to different information, like incorporation and constitution of the trust, information about all the important persons, the trust’s assets and liabilities, information about other registrations if done, and the income and religious activities if present.
What is the process to Re-register a Trust?
- Documents required for Form 10A:
Following are the documents required for the Form 10A:-
- The Registration and Incorporation certificate of trust
- PAN Card
- Digital signatures of trustee
- Trust Deed
- Memorandum of Association (MoA) and Article of Association (AoA)
- Annual Accounts since the incorporation of the trust or the preceding three financial years
- Report of Audit in accordance with section 44AB (self-certified copy)
- 12A,12AA and 80G Certificates
- Registration certificate under the Foreign Contribution (Regulation) Act, 2010(42 of 2010), if applicable.
- The steps to fill the Form 10A online:
Step 1: Go to the website – www.incometax.gov.in.
Step 2: Log in with the Pan Card number and the password.
Step 3: Click on ‘File’ and select ‘File Income Tax Form’.
Step 4: Click on ‘Persons not dependent on any Source of Income (Source of Income not relevant)’.
Step 5: Then Select ‘Form 10A – Application for registration or provisional registration or intimation’. The option will be visible; select it.
Step 6: Select the Assessment Year option from the drop-down menu.
Step 7: Click on continue and then on the ‘Let’s Get Started’ button to proceed further.
Step 8: Fill in all the required information. And click the save button also.
Step 9: Click the “Submit” button to finish.
What happens when the Form 10A needs to be duly filled, or some documents attached need to be completed?
If necessary, the Principal Commissioner of Income-tax (PCIT) or Commissioner of Income-tax (CIT) will give a chance for an application to be heard or will request more papers from the applicant. If the said office discovers any inconsistency, they may rescind the approval given in the Form 10A. Such approval in Form 10AC shall be regarded as never to have been granted or issued.
Conclusion
In brief, the trust re-registration procedure entails submitting Form 10A to the Registrar of Trusts. The procedure is required for trusts that have suffered structural changes, such as changes in trustees or beneficiaries or changes in trust property. The re-registration procedure guarantees that the trust is in accordance with the applicable rules and regulations and that the trust property is being utilized for its intended purpose. Trust registration gives the trust a distinct legal personality, which is required for it to carry out its operations and get access to resources. Finally, the trust re-registration procedure and the significance of trust registration are critical parts of asset management and preservation in India. The trustees of the trust must fill out the form, and it is essential to ensure that it is filled out correctly to avoid any penalties or legal consequences.
Read Our Article: Know The Advantage Of Trust Registration In India
