Trust Annual Compliance - Key Areas

A Trust is a legal arrangement where property is transferred by the owner (Trustor) to a Trustee for management. Defined under Section 3 of the Indian Trusts Act, 1882, this law governs all registered Trusts in India, ensuring they comply with the required legal provisions.

In addition to registration, fulfilling annual compliance for trust is essential to maintain legal standing and avoid fines or penalties. These compliance requirements, which must be met periodically, play a vital role in ensuring the smooth functioning and credibility of the Trust.

What are the Benefits of Annual Compliance for Trust?

The benefits of annual compliance for Trust include:

• Prevent potential legal issues and penalties
• Maintain accurate tax reporting and avoid penalties
• Build trust through clear financial goals
• Ensure alignment with Trust’s objectives
• Facilitate tax benefits and improve beneficiary satisfaction
• Prevent legal penalties and actions for non-compliance
• Enhance the smooth functioning of management and document handling
• Improve reputation with financial and legal professionals
• Support adaptability and stability over time
• Provide reassurance to all parties involved

Who Requires Trust Annual Compliance in India?

Trust annual compliance is required for:

• Individuals competent to contract, such as individuals, Associations of Persons (AOP), Hindu Undivided Families (HUF), companies, and other legal entities eligible to establish a Trust.
• On behalf of minors (with permission from the Principal Civil Court of original jurisdiction).
• Subject to prevailing laws: The creation of a Trust depends on the laws in force at the time and the extent to which the Trustor intends to dispose of their property.

Documents Required for Trust Deed Registration

• Trust deed on stamp paper
• Two passport-size photographs
• Self-attested copy of PAN and ID proof
• Signature of settler on all pages of trust deed
• Proof of registered office address
• NOC from the landowner (if applicable)

Checklist for Trust Annual Compliance

The following essential documents are 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 a Chartered Accountant (CA), including Audit Report, Income and Expenditure Statement, Contribution Calculation, Balance Sheet
• Membership Certificate of the CA issued by ICAI
• Affidavit of the Trustees
• Other Documents, as required

Procedure for Registration of Trust in India

Trust Annual Compliance Process:

1. Name of The Trust: Choose an appropriate name that complies with relevant acts like Trademarks, Copyrights Act, Intellectual Property Rights Act, etc.
2. Settlers of the Trust: Determine the individuals who will act as settlers (minimum of two trustees).
3. Preparation of MoA for the Trust: Prepare a Memorandum of Association (MoA) outlining the objectives and purposes for which the Trust is established.
4. Drafting of a Trust Deed: Create a legally binding trust deed to present to the registrar.
5. Submission of Deed to the Registrar: Submit the trust deed with necessary documents to the registrar.
6. Grant Trust Registration Certificate: Once documents are reviewed and verified, the registrar will grant the Trust registration certificate. A bank account in the Trust’s name can then be opened.

Types of Trust that Require Trust Annual Compliance

1. Public Trust: Created for a large group, typically the general public, such as non-profit NGOs and charitable institutions.
2. Private Trust: Established for a specific, closed group of individuals, e.g., for the friends and family of the Trustor.
3. Public Cum-Private Trust: A combination of public and private purposes, with income used to benefit the public as well as specific individuals or families.

List of Annual Compliance for Private Trust

Private Trusts must meet the following annual compliance requirements:

• Trust registration (Trust Deed, PAN, TAN, FCRA, RBI Approval, GST, etc.)
• Filing ITR for trusts with gross income exceeding the basic exemption limit
• Submit reports certified by a CA to the Ministry of Home Affairs, GOI
• Filing TDS returns and issuing TDS certificates
• Publication of accounts in the newspaper if annual income exceeds Rs. 1 crore
• Furnish GST returns monthly or quarterly for trusts with GSTIN
• Audit of accounts for trusts exceeding the threshold limits under the Income Tax Act, 1961

Trust Annual Compliances

• Auditing of Accounts: Mandatory if the income exceeds the threshold for non-taxable income under the Income Tax Act.
• Filing Annual Returns: Submit Audit Report (Form 10B) and Annual Return (ITR-7).
• Foreign Contributions Report: Trusts receiving foreign contributions must submit a report to the Ministry of Home Affairs (MHA), Government of India.
• Publication of Accounts: Required if annual income exceeds Rs. 1 crore.
• Filing GST Returns: Required for trusts with GSTIN.
• Filing TDS Return and Issuance of TDS Certificates: For trusts deducting tax at source on employee salaries.

Due Date for Filing ITR for Trusts

• Typically due on: 30th September of the assessment year.
• Other Forms: Forms like FORM No. 10B, 10, 3CD follow the same due date.

Checklist of Annual Compliance for Private Trust

• Accounting and Bookkeeping
• Minutes Book Preparation
• Statutory Audit (as applicable)
• Income Tax Audit (if applicable)
• ITR Filing
• AGM Conduct

Why Trust Fastzeal for Annual Compliance for Trust?

• Expert Consultation: Over 10 years of experience helping clients with Trust annual compliance.
• Time Efficiency: 99% success rate in meeting Trust compliance needs.
• Paperwork & Documentation: Expert team ensures minimal errors in document preparation.
• Compliance Management: Comprehensive management to ensure compliance with all statutory requirements.
• 24/7 Support: Our consultants are available round-the-clock to address your compliance concerns.
• End-to-End Assistance: From consultation to submission, we provide complete support for Trust Annual Compliance.