In India, there are several types of organisations that work with the aim of promoting charitable purposes, social welfare, social development etc. rather than horseheadedly focusing towards making a profit. Two such organisations are trusts and societies. While both offer their own set of advantages and disadvantages, irrespective of what’s chosen, the first step in the journey of establishing a trust/society is its registration.
Trusts in India are governed by the Indian Trust Act, of 1881, while societies are governed by the Societies Registration Act of 1860. Both trusts, as well as societies in India, are registered as a Non-Governmental Organisation (NGO) or Non-Profit Organisation. Despite both trusts as well as societies being charitable organisations, their basic characteristics are distinct. Trusts are formed by an agreement whereby a party holds the ownership of a property/asset on behalf of another party, for the benefit of a third party that is called the beneficiary. On the other hand, a society is a collection/assemblage of individuals that come together for a common charitable/welfare purpose. However, to establish a trust/society is essential to duly register the same as per the procedures laid down in the statutes governing the trust/society. While the process of trust/society registration might sound simple, in reality, the same is dependent on a plethora of documentation and procedures that need to be followed. This is why it makes complete sense to hire a professional service provider for trust/society registration.
The first step towards trust/society registration is to ensure all eligibility criteria are fulfilled. The same are enumerated below:
Trusts
Society
The document required for the registration of a trust/society is as follows:
Trusts
The procedure for registration of a trust/society is as follows:
Finalise Name/Trust Requirements: The first step towards registering a trust/society is to decide upon a suitable name. A good name aligns with the values of the society/trust and also complies with the provisions of intellectual property laws. In the case of trust, in addition to the name, it is also important to finalise the trustee, trustor, settler etc.
Prepare Memorandum of Association/ Trust Deed: The second step is to prepare a memorandum of association (in the case of a society) along with the rules and regulations of the society. While the MoA describes the main objective of the society, the rules define the management of the internal affairs of the society such as the powers and responsibilities of the official positions, quorum of meetings etc. In the case of a trust, the preparation of a Trust Deed is a crucial step towards trust registration. The trust deed must be concise, well-drafted and duly stamped. It is advisable to hire professional legal services to draft the trust deed.
Application to the Registrar: In the case of a society, after the drafting of the MoA and Rules and Regulations, an application is submitted to the Registrar of Society with signed MoA and Rules and all required affidavits and KYC documents of all the members and officials of the society. In the case of a trust, once the trust deed is created, it must be submitted to the Registrar along with all necessary documents. The trustor, trustee and beneficiaries will also be involved in this process.
Issuance of Certificate of Society Registration/Trust Registration: Once all documents are submitted to the registrar, the registrar who after going through all submitted documents will issue a certificate of registration which will be the last and final step of society/trust registration. Usually, it takes nearly a month to complete the process of Society Registration in India.
The advantages of trust/society registration are as follows:
Charitable Involvement: Setting up a registered trust/society enables individuals to push forward their beneficial, charitable purpose in an organised, legal and efficient manner.
Tax Exemptions: Registering a society trust in India comes with various tax exemption benefits as provided by the income tax statutes.
Legal Identity and Protection: Registration of societies/trusts gives legal identity to the trust/society enabling them to initiate independent legal action and also subjects them to various legal protection.
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