Trust Registration is a legal process in which a group of individuals creates a trust and gets it registered under the Indian Trusts Act, 1882. A trust is a legal arrangement in which a trustee holds and manages the trust property for the benefit of the beneficiaries.
Advantages of Trust Registration:
- Tax Benefits: A trust is eligible for tax benefits under the Income Tax Act, 1961, such as exemption from income tax on income earned from trust property.
- Limited Liability: Trustees of a trust have limited liability, which means they are not personally liable for any debts or losses incurred by the trust.
- Perpetual Existence: A trust has perpetual existence, which means it continues to exist even if the trustees change or the trust undergoes restructuring.
- Credibility: Registered trusts have legal recognition, which enhances their credibility among donors, partners, and stakeholders.
Disadvantages of Trust Registration:
- Complex Legal Requirements: The registration process for a trust can be complex and requires the submission of various legal documents, such as a trust deed, affidavits, and declarations.
- Restriction on Activities: A trust is established for a specific purpose, and any activity outside the scope of the trust’s objectives is not permitted.
- Limited Control: The trustees of a trust have limited control over the trust property, and they are bound by the terms of the trust deed.
Types of Trusts:
- Public Trust: A public trust is established for promoting charitable or social welfare activities, such as education, health, and poverty alleviation.
- Private Trust: A private trust is established for the benefit of specific individuals, such as family members or employees.
In summary, Trust Registration is a legal process in which a group of individuals creates a trust and gets it registered under the Indian Trusts Act, 1882. The advantages of trust registration include tax benefits, limited liability, perpetual existence, and credibility, while the disadvantages include complex legal requirements, restrictions on activities, and limited control. The types of trusts include Public Trust and Private Trust.