Registration
Private Trust / Society
Features
- • Limited liability
- • Formed by natural or legal persons
- • 12A exemption
- • Limited scope
Eligibility
- • Three members
- • Trust deed
- • Resident of India
A Private Trust, as the name suggests, functions for the benefit of individuals rather than the welfare of the general public or a charitable purpose — created for the financial benefit of one or more designated beneficiaries. Under the Indian Trusts Act, an author can create a trust with their own personal property and designate one or more trustees. Besides an individual, a company, firm, society, or association of persons can also create a Private Trust.
A person of majority age and sound mind, not disqualified by law, can create a Private Trust; a trust can also be created on behalf of a minor with a civil court's permission. The Indian Majority Act 1875 sets majority at 18 years, or 21 if a court-appointed guardian is involved.
A Private Trust offers a constructive, systematic way to manage and pass on family assets, helping negate family disputes and protecting group or family assets against claims and creditors — the assets are owned by trustees for the benefit of members.
Types of Private Trust
Specific Trust — the individual shares of beneficiaries are known and ascertainable.
Discretionary Trust — no individual shares are mentioned in the deed; income is distributed at the trustee's discretion.
The Main Parties in a Trust
Author (Settlor/Trustor/Donor) — transfers property and places confidence in another to create the trust.
Trustee — accepts the confidence for the formation of the trust.
Beneficiary — the person who benefits from the trust.
Taxation
A trust should register under Section 12A with the Commissioner of Income Tax; a Private Trust is not exempt from Income Tax the way a Public Trust is.
Registration Process
- 1
Name Approval
A private trust with only movable property need not be registered, but one with immovable property must register under the Registration Act, 1908. Choose a name free of government-patronage implications and not prohibited under the Emblems and Names Act, 1950.
- 2
Submitting Trust Deed
Prepare the Trust Deed stating names/addresses of the trust and trustees, registered office, objectives, rules, and beneficiaries, then submit it to the local Registrar.
- 3
Obtain Registration Certificate
Once submission formalities are complete and documents verified, the registration certificate is granted.
Documents Required
- ID proof — Passport, Driving License, or Voter ID
- Address proof — mobile/telephone bill, recent utility bill, or bank statement
- Trust deed on stamp paper of requisite value
- Proof of registered office — rental agreement
- No Objection Letter and owner's utility bill, for consented premises
Frequently Asked Questions
How does a Private Trust differ from a Public Trust?
A Private Trust benefits individuals, while a Public Trust aims for general public welfare or a charitable cause.
What is the difference between a Specific Trust and a Discretionary Trust?
In a Discretionary Trust, the trust manager chooses who benefits and how much; in a Specific Trust, beneficiary entitlements are fixed by the settlor at the outset.
Can a minor create a Private Trust?
Yes, by or on behalf of a minor, with the permission of a principal civil court of original jurisdiction.
Register Private Trust / Society
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