The Indian Trust Act is a law relating to private trustees and trustees of India. The deed explains what the Trust will actually be called, and who exactly can be a trustee and give an explanation to them. The Indian Trust Amendment Bill of 2015 empowered the government to consider investments of trust at its own discretion, but at the same time removed certain restrictions on investment in assets, etc. Assets to be managed by the trust, and how to appoint trustees and beneficiaries. 

In addition, the Act states that a trust must have a clear definition of the following:

• What the author’s purpose is to create trust.
• A future beneficiary who is a later asset manager.
• The purpose of the trust.
• Financial assets donated to the fund.
• Grants control financial assets – whether entrusted to a trustee, partially or in full, and which administrator has left.

As provided for in Section 3 of the Indian Trust Act 1882: ‘A trust is a responsibility attached to the possession of the property and arising out of a trust reserved and accepted by the owner or declared and accepted by the owner for the benefit of another, or of another, and of the owner.’

For the purposes of NGO registration, a decision on the following issues must be taken:

• The Trust Name and Address
• The subject-matter of the Trust, whether for a charitable or religious purpose
• Settler of confidence
• Two fiduciaries
• If it is movable or immovable, trust land.

Under Section 7 of the Indian Trusts Act, a trust can, with the permission of the principal court of original jurisdiction, be formed by any person competent to contract and by or on behalf of a minor. The following are eligible for the creation of a Trust.

1. Trust of an Undivided Hindu Family
2. Trust from a Minor
3. Trust by a woman
4. The Persons’ Association
5. Company

Types of Trust

Private Trust:

A fund is called a Private Trust if it is for the benefit of one or more persons, or within a specified period, which may be available. Financially Trusted Trustees are governed by the Indian Tr trust Act 1882. Private Trust may be established between Vivos or will. 

Prerequisites for building a Private Trust:

• The person who creates the trust (residence) must make an undoubted declaration that binds him or her.
• Trust items must be defined and clarified.
• Beneficiaries specified.
• They must transfer the identifiable asset under an immovable order and separate themselves entirely from the ownership and enjoyment of the revenue from that asset.
• Unless all the requirements listed above are met, the trust cannot be assumed to exist.

 Public Trust

The fund is called the Public Trust when it is created entirely or primarily for the benefit of the general public, in other words, the beneficiaries of the Public trust form a non-profit organization. Public funds are actually charitable or religious resources and are governed by the general Law. The provisions of the Indian Trustees Act do not apply to Public Trustees. Like secret trusts, public trusts can be built by inter vivos or by will. Indian Tr trust Act does not apply to public trusts that may be established by common law.

Prerequisites for creating a Public Trust:

• Declaration of trust binding on the occupant,
• Setting aside certain property and living space that Deprives it of ownership
• A statement of the items on which the property will be Held afterward, i.e. the beneficiaries.

It is important that the transferor ie the occupier or the trustee must be able to enter into an agreement. Similarly, trustees should also be able to negotiate a contract. It is also very important that trustees must show their willingness to act as trustworthy to make the fund operational. When a trust is established and the property is transferred to the fund, it cannot be withdrawn. If the title deed contains any provision for the removal of the trust, the provisions of sections 60 to 63 of the Taxation Act will come into effect and the income of the fund will be taxed at the hands of the occupier.

Public-cum-Private Trusts

Some trusts may be classified as Public cum Private Trusts, whose portion of the profits may be used for public purposes and a portion may go to a private person or individuals. Such trusts shall be eligible for exemption in respect of the portion of income earned by private individuals or persons as private trusts and shall be eligible for exemption in respect of the portion of income received for public purposes in compliance with section 11, given that such trusts have been created before the Income Tax Act of 1961, i.e. before 1-4-1962. Public-cum-private produced on or after 1-4-1963 is not eligible for U/S exemption 11.

The procedure of trust registration is as mentioned below:  

Step: 1 Choosing a Name

First of all, choose a specific name for the trust. That name should be new and should not lead to a violation of any type.

Step: 2 Define the trustees’ number

Determine the trust’s number of trustees. A minimum of 

Step: 3 Draft deed for a trust

Afterward, the trust deed is drafted.

Step: 4 Sub-registrar registration

Trustees and the author of the trust must be present at the sub-registrar office with 2 witnesses for the registration of the trust deed. A properly attested copy of the trust deed must be given and registration fees must also be charged.

Step: 5 For PAN and TAN, apply

Upon the filing of a trust deed, apply for the trust’s PAN and TAN and then apply for a bank account.