An Overview of Trust Annual Compliance
A Trust is defined in Section 3 of the Trust Act, 1882, it’s a legally formed organisation where the owner is the Trustor & Beneficiary is the Trustee. The main objective of establishing a Trust is to ensure an effortless transfer of the property owner of the Trust in the Trustees' name as per the provisions mentioned under the Trust Deed. In India, all the registered Trusts are governed & managed by the Indian Trust Act, 1882. The registered Trusts in India must follow the legal provisions of the said Act. Apart from the provisions and Trust Registration, there are some Trust Annual Compliances that should be complied time to time and avoid unnecessary penalties.
Different Types of Trust in India
There are two different types of Trust:
- Public Trust: It is created for a large group (the public in large). For example, Non-Profit NGO's Charitable Institutions for the general public.
- Private Trusts: A Private Trust is for a closed group. In simple terms, the beneficiaries can be identified. For example, Trust is created for the friends & relatives of the author.
Who can establish Trust in India?
A Trust can be created by:
- Any individual who is competent to contracts, this includes an individual, AOP. HUF (Hindu Undivided Family), Company, etc.;
- If a Trust is to be set up on behalf of a minor, then the permission of a Principal Civil Court (PCC) of original jurisdiction is required.
Moreover, it also depends on the law in force that is prevailing at that particular point of time & the extent to which the Trust author may intend to dispose of his property.
Registration of a Private Trust in India
To register as a Private Trust, the following are the important steps that should be followed:
- A Trust Deed should be prepared on stamp paper of the requisite value. The Trust Deed must include the Trust Name, address, the object of the Trust (whether charitable/religious), the Settlor, 2 Trustees, as well as the property in question, i.e., either immovable or movable property.
- Under the Act, Private Trusts who wish to be registered are required to submit the following documents with the Local Registrar:
- Trust Deed on stamp paper of requisite value;
- One passport-size photo and copy of the identity proof of the Settlor, each of the 2 Trustees & each of the 2 witnesses individually;
- Settlor’s signature on all the pages of the Trust Deed;
- Two individuals must be called in as witnesses to sign the Trust Deed;
- Trust Deed should be submitted to the respective Registrar along with one photocopy for Registration of Trust. The photocopy should also include the signature of the Settlor on all the pages. During the Actual Registration, the Settlor & the two witnesses are required to be personally present, along with their original identity proof;
- The Registrar will retain the photocopy and return the original registered copy of the Trust Deed to the concerned parties.
What are the Trust Annual Compliances?
Private Trusts in India need to comply with the provisions under the Act, IT Act, its Rules & Regulations and other relevant legislation. As far as Trust Annual Compliances go, the general Trust Annual Compliances are as follows:
- Auditing of Accounts: When the overall income of a Trust exceeds the threshold limits that have been prescribed under the Income Tax Act, 1961 for non-taxable income, then the Trust must be audited compulsorily by a CA (Chartered Accountant).
- Filing the Annual Returns: After the Trust accounts are audited by a Chartered Accountant, the audit report must be made. The report of Audit of Account must be in Form No. 10B. The report should be filed along with the Annual Return of Income under Form ITR-7.
- Foreign Contributions Report: Every Trust in India needs to submit a Foreign Contributions Report. There are 2 types of Trusts, one that receives Foreign Contributions and one which doesn't. When a Trust receives Foreign Contributions, it needs to submit a report to the Secretary, Ministry of Home Affairs (MHA), Government of India (GoI), New Delhi. The report should be duly certified by a Chartered Accountant and accompanied by the Income & Expenditure Statement, the Receipts & Payments Account and the Balance Sheet within 9 months of the closure of the Financial Year (F.Y). If no such contribution is received during the last F.Y; then a “Nil” report needs to be submitted.
- Publication of Accounts: Publication of Accounts in the newspaper if the annual income/the receipts of the Trust which have been created from the Trust property exceed Rs. 1 crore.
- Filing of GST Returns: If the Trust has GSTIN, then it is required to provide GST Returns monthly or quarterly (as may be applicable).
- Filing of TDS Return & Issuance of TDS Certificates: If any Private Trust in India is deducting tax at source for salaries paid to the staff/employees. It needs to provide Certificates of TDS to the persons on whose behalf TDS was being collected. It should be done within one month from the closure date of the Financial Year. Apart from this, quarterly TDS Returns are also required to be filed.
Trust Annual Compliance
Vital Documents Required for Filing Trust Annual Compliance
Following are some essential documents required for filing Trust Annual Compliance in India:
- Name and Address of the Trust;
- Name & Address and Aadhar Card of the Trustees;
- PAN Card of the Trust;
- Audit Report prepared by CA (including Audit Report, Income & Expenditure Statement, Contribution Calculation, Balance Sheet, etc.);
- Membership Certificate of the CA issued by ICAI;
- Affidavit of the Trustees;
- Other documents, if required.
How to File Trust Annual Compliance Online with Corpbiz?
Step 1: Simple Checklist: Our compliance expert will get in touch with you to remind you regarding your due date of various due dates for Trust Annual Compliance filing forms & obtain your documents along with a simple checklist. You need to fill up the checklist and submit it along with your documents for processing.
Step 2: Verify Documents: Once we have all the documents for the processing of Trust Annual Compliance, our expert team will verify documents & proceed with return preparation.
Step 3: Filing Completed: We will get your compliance filing forms reviewed from you before filing the Annual Compliance with the appropriate authorities. Once you approve it, we will file the Trust Annual Return Forms online. After successfully filing, we will send you the acknowledgement receipt through email to your registered email ID.
The entire team of Corpbiz consists of highly qualified CS, CA, and Lawyers. Corpbiz would be a one-stop destination for compliance & filing and professional & advisory services in India. Our Experts will guide and assist you in the whole compliance process and also ensures the timely and effective completion of your work. For any queries related to Trust Annual Compliance, feel free to contact our experienced and trained professionals at Corpbiz.
Frequently Asked Questions
A Trust is generally referred to as a legal arrangement where the owner of the Trust transfers the property to the concerned Trustee (or beneficiary).
The due date of Trust's ITR filing for accounts not required to be audited is 31st July. While for the Trusts whose accounts need to be audited, the due date to file ITR filing would be 31st October.
A Trust is a legal agreement between parties whereby one party holds an asset for the benefit of another party. Whereas a Society is a collection of individuals who come together to initiate any scientific, literary, or charitable purpose. The purpose of Society and Trust may be the same, but the organisational structure is different in both cases.
If the income of a Privet Trust exceeds Rs. 1,50,000, which is the limit for non-taxable income provided under the IT Act, 1961, then the Private Trust should be mandatorily audited by CA.