Setting Up of Religious Trusts

1. What is a trust?

Trusts are typically established for a specific purpose, such as managing and distributing assets after the death of the grantor, preserving assets for future generations, or supporting charitable causes.

Religious Trust: Religious trusts are organizations founded in India to promote and preserve religious institutions. They are often formed as non-profit organizations that are tax-exempt and tax-deductible for donations.

It takes hardly 15-20 days for the registration of Trust from the date of filing of the application. A minimum of 3 members are required

for the formation of Trust.

2. How to form a trust?

a) A trust can be formed as per Section 4 of the Indian Trust Act 1982 for a lawful purpose;

b) A trust should have a document written and signed by trustees or a sole trustee;

c) A trust can be formed through a will also; There is no definite form to create trust. The objectives of the trustee should be clear and unambiguous;

3. Who can form a trust?

The following can form a trust under Sec.7 of the Indian Trusts Act 1882:

a) A person capable of making a contract can form a trust;

b) Trust can be formed on behalf of a minor with permission of the Civil Court.

4. What is the stamp duty to be paid for a trust deed?

· Rs.500/- if only money is contributed by the author of the trust or if immovable property is conveyed where the author remains as the sole trustee.

· Same duty as conveyance if the immovable property is conveyed and the author is not a trustee or a sole trustee.

5. What is the fee for the registration of a trust deed?

As per Article III of the table of fees under Karnataka Registration Rules 1965, the fee shall be paid at 1 per cent on the total of value shown by the trustee or the value of movable or immovable property shown in the trust deed.

6. Steps for the registration process

Step 1: Select an Apt Name for the Trust - The first and foremost step in the process of Trust registration is the name selection for the proposed Trust.

Step 2: Determining the settler/ author and trustees of the intended trust

Step 3: Drafting of Trust Deed - Drafting of Trust Deed is an important undertaking because it is the only thing that makes the Trust legally enforceable. And Bylaws of the trust.

Step 4: Preparation of all the documents required to be submitted

Step 5: Submit the trust deed along with the property-attested photocopies to the local registrar.

Step 6: The registrar will retain the photocopy and return the original

Step 7: Registration certificate will be received in 7 working days

7. Documents for registration of trust

· Request letter to register a society.

· Two copies of MoA including a List of Proposed governing body and list of founder members of the society:All pages to be signed by all members.

· Two sets of Rules & Regulations framed for the functioning of the society.

· Affidavits (on Rs.10/- stamp paper from President/Secretary Society regarding the name/title of the society.)

· Copy of Residence proof of all members.

· Proof of ownership of the registered office of the society & no objection certificate.(on ten rupees stamp paper.)

· Copy of proof of identification of all society

· 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 (Electricity Bill/Water bill etc)

· NOC from the land owner with his identity proof

· Proof of property registered in the trust name

8. Cancellation of trust

A trust can be cancelled on the following grounds as per Sec. 78 of The Indian Trust Act 1882:

a) Trust can be cancelled at the will of the trustees;

b) Trust can be cancelled if there is a provision for cancellation in the deed.

c) If the author of a trust creates trust for the purpose of repayment of his debt and if this is not informed to the creditor author can cancel the trust.