Filing a Trust Annual Compliance

As per Section 3 of the Trust Act, of 1882, a trust is a legally established organization where the owner is the Trustor & the Beneficiary is the Trustee. The main purpose of the creation of a Trust is to ensure an easy transfer of the property owner of the Trust in the Trustees' name according to the provisions mentioned under the Trust Deed.

In India, all the registered Trusts are supposed to be governed & managed by the Indian Trust Act, of 1882. The registered Trusts in India have to adhere to all the legal provisions of the said Act and complete annual compliance for trust within the allowed time every year. Apart from the provisions and Trust Registration, also meeting some of the Trust's Annual Compliances is mandatory to abide by the different government laws in India applicable to trusts.

Different Types of Trust in India

Trusts in India are divided into two major types subject to certain terms and conditions. The two different trust types have their specific eligibility, advantages, and disadvantages. It can be chosen based on the need for registering a trust or other conditions. 

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Below are the two kinds of Trusts:

  1. Public Trust: This kind of trust is established for a large group (the public at large). For instance, Non-Profit NGO's Charitable Institutions are examples of public trusts. 
  2. Private Trusts: A Private Trust is established for a closed group and here the beneficiaries can be identified. For example, a few friends created Trust for a particular reason.

Annual Compliance for Trust in India

Post a Private Trust is formed, it needs to comply with the provisions of multiple laws and trust annual compliances without fail. It will help the registered trust to avail grants or other aid from the government in the country. Also, it will help conduct varied activities without restriction from the local administration. 

Below are the annual compliances for trust in India :

Indian Trust Act 1882

The Income Tax Act, 1961

Bombay Public Trust Act, 1950

Apart from this, a Private Trust must comply with the different provisions laid down by the State Legislation as well.

Trust in India: Who Can Establish

Trust can be created by:

Any individual who is competent to contract, the person can be an individual, AOP, HUF (Hindu Undivided Family), Company, etc.

In case a Trust is been set up on behalf of a minor, then it is mandatory to get the permission of a Principal Civil Court (PCC) of the original jurisdiction.

Moreover, it also depends on the existing law and the desire of the Trust author to dispose of his property. The important thing to note is the trust annual compliance mandatory for all.

Vital Documents Required for Filing Trust Annual Compliance

Unlike other entities in the country, trust also has to meet the predefined eligibility and abide by the required law. One of the vital necessities is the submission of necessary documents.

Some of the documents needed while filing Annual Compliance for trust in India include:

Name and Address of the Trust;

Name & Address and Aadhar Card of the Trustees;

PAN Card of the Trust;

Audit Report prepared by CA 

Membership Certificate of the CA issued by ICAI;

Affidavit of the Trustees;

Other documents, if required.

Trust Annual Compliance
Annual Compliance for Trust: Requirements

The Trust is like any other governing act for Public Trust and so it is mandatory to meet all the compliances while establishing a trust.

Auditing of accounts is mandatory in case the income of the trust is more than the threshold limits given under the Income Tax Act, of 1961.

The trust has to file Income Tax Return, the annual return of income in form ITR-7 is required to be filed every year.

The Trust receiving some kind of foreign contributions has to submit a report, duly certified by a Chartered Accountant and accompanied by an Income and Expenditure Statement, Receipts and Payments Account, Balance Sheet and other financial records.

Filing of TDS returns and issuance of TDS certificates are mandatory. In case any Private Trust is deducting tax at source for payment of salaries to the staff or employees (kept for managing the Trust Property), it is supposed to furnish certificates of TDS to the persons on whose behalf the company has deducted the TDS.

In case the annual income or receipts of the Trust (generated from the Trust Property) is more than Rs.1, 00, 00,000 (INR One Crore), they are supposed to publish their accounts in a newspaper.

In case the trust has GSTIN, then they have to furnish GST returns monthly or quarterly (as may be applicable).

Why Valcus to File Compliance for a Trust?

The team of experts at Valcus consists of highly qualified CS, CA, and Lawyers who work dedicatedly to helping clients get the best services. Our experts help you through the process of trust annual compliance to avoid legal penalties. Compliance is also mandatory for the effective operation of a trust registered at any location in India. 

For more details regarding annual compliance for trust, contact our experienced and trained professionals right away.