Home > Free Legal Advice > Question Details

90,000+ Legal Questions Answered

Trust and Society (NGO)

Legal Status

Dear Sir/Madam, For a trust which was not registered under Indian Trust Act but was registered in 12A (Income Tax Act) as well as has 80G certificate, is it necessary to get it registered under Indian trusts Act? The trust is already functioning from past 17 years and filing IT returns regularly and has even now GST certificate. Kindly clarify as sometimes some banks/people question this. If you say, yes, it is still mandatory, then: 1) Why? What happens if we continue without it? 1) What if Founder Settlor is already dead. How to go about it now, if we have to register it under Indian Trusts Act? 2) The trust was started using cash, not using some immovable property. And we were told as per one Income tax lawyer that as per Indian Trusts Act, 1882, Section 5, if trust is made using cash in the beginning, it need not to compulsorily get registered under Indian Trusts Act. Is it correct? - because now and then some people keep asking us this question. If you can kindly clarify us with proper references and law, we will be very grateful. Regards,

( Kolkata, West Bengal )

4 years ago

Reply

Please consult Chartered Accountant.

Kishan Dutt Kalaskar

View All Answers

Helpful

I have gone through your query in detail.
1) Yes registration of the trust in India is compulsory.,. If you continue without registration the activities of the trust will continue but may not have the legal validity in long run and anybody can challenge the activities of the trust in near future..
2) If the founder settler is dead then there must be some legal heir who is currently operating the trust like his wife/ son /daughter /etc. so you can go ahead with the registration of the trust under the Indian trust act 1882.....
3) Whether the trust is started by using the Cash or by Cheque the trust registration is compulsory there is no way out.,. Eg. It is as good as you are having the first floor and the second floor of the building But, ground floor of the building itself is missing... and you don’t have the steps also to reach 1st & 2nd Floor.
4) If somebody challenges such kind of trust which is NOT registered there will be lots of legal discrepancies and the trust members name can be defamed and the reputation of the Trust & Members can be tarnished & that all the members may be compelled to dissolve the trust though it is unregistered and activities of such trust can be deemed as illegal .. So get the Registration of the Trust from a Lawyer as the Draft to be made should be including all the activities of the trust & even the future anticipated activities, which will be beneficial in long run. Also make sure you can make a website for your trust along with Payment Gateway in order to get Online donations & income for your trust which is Tax free.

If you realize my professional skills, the time & efforts put in by me needs to be truly appreciated, and then Please “CLICK MY LIKES/ THUMBS UP/GIFT” button shown below this reply format & also CLICK/ WRITE a “REVIEW” in 5 star as I have answered your query in detail. Hope this information is useful
ADV. ANISH PALKAR (High Court)