Formation of trust WITH DOCUMENTS

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Megha Choudhary

Megha Choudhary (Querist)
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14 June 2022 Kindly if anyone has documents for trust formation pls share alongwith process

Asha Kanta Sharma

Asha Kanta Sharma

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07 July 2024 Forming a trust involves several steps and requires specific documents to be prepared and filed. Here’s a general outline of the process along with the documents typically required for forming a trust in India:

### Process for Trust Formation:

**Settle the Trust Deed:**
- Draft a Trust Deed outlining the objectives, rules, and operations of the trust. The Trust Deed must include details such as the name of the trust, the settlor (person creating the trust), trustees, beneficiaries, and the initial assets of the trust.

**Stamp Duty Payment:**
- Calculate and pay stamp duty on the Trust Deed as per the Stamp Act applicable in your state. Stamp duty rates vary across states in India.

**Execution of Trust Deed:**
- The Trust Deed must be signed by the settlor and witnessed by at least two witnesses. Trustees should also sign the Trust Deed to signify their acceptance of their roles and responsibilities.

**Registration (Optional):**
- Registration of the Trust Deed with the local Sub-Registrar is optional but advisable. Registration provides legal validity and evidentiary value to the Trust Deed.

**PAN Application:**
- Obtain a PAN (Permanent Account Number) for the trust from the Income Tax Department. PAN is necessary for opening a bank account and for tax purposes.

**Bank Account Opening:**
- Open a bank account in the name of the trust using the Trust Deed, PAN, and identity/address proof of trustees.

**Apply for 12A and 80G Registration (if applicable):**
- If the trust intends to avail tax exemptions, apply for registration under Section 12A (tax exemption on income) and Section 80G (tax deduction for donations to donors).

### Documents Required for Trust Formation:

**Trust Deed:**
- Drafted and signed document specifying the objectives, rules, and operations of the trust.

**Identity and Address Proof:**
- Identity proof (PAN, Aadhaar, Passport, etc.) and address proof (Aadhaar, Passport, Utility bill, etc.) of settlor and trustees.

**Passport Size Photographs:**
- Passport size photographs of settlor and trustees.

**Stamp Paper for Trust Deed:**
- Stamp paper of requisite value as per the Stamp Act (varies by state).

**Bank Account Opening Documents:**
- Trust Deed, PAN card of the trust, identity/address proof of trustees, and resolution authorizing opening of bank account.

**Optional: Registration Documents:**
- Application for registration of Trust Deed with the Sub-Registrar (if opting for registration).

**PAN Application Form (Form 49A/49AA):**
- Application for PAN card for the trust.

**Application for 12A and 80G Registration:**
- Detailed application forms along with supporting documents for registration under Section 12A and 80G, if seeking tax exemptions.

### Additional Steps:

- **Compliance:** Ensure ongoing compliance with trust rules, filing of annual returns, and maintaining proper accounts.

- **Legal Advice:** It's advisable to seek legal advice to ensure all legal requirements are met and to tailor the Trust Deed to specific needs.

Each state in India may have specific requirements or variations in the process, so consulting with a legal professional or a chartered accountant experienced in trust formations is recommended to navigate the process smoothly.