Private Trust Income Tax Private Trust : Few Issues

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The Tax Publishers Income Tax--Private Trust Income Tax Private Trust : Few Issues R. Muralidharan Private Trust is one of the major Areas of tax planning in Income tax. The Author discusses the method of Formation and taxability of this in this Article. 1. Main instrument of declaring a Trust The instrument by which the Trust is declared is called instrument of Trust and is generally known as Trust Deed. The main instrument of declaring a Trust is the Trust Deed, which should be made on non-judicial stamp papers of, prescribed fee and signed by the Trustee or Trustees for submission to the Registrar concerned of the State. The Trust Deed should contain name(s) of the author(s), settler(s) of the Trust; the name(s) of the Trustee(s); the name(s) if any, of the beneficiary/ies or whether it shall be public at large; name of the trust; address of the trust; objects of the trust; procedure of appointment, removal or replacement of a trustee, their rights, duties and powers, etc; the mode and method of determination of the trust etc. 2. How to register a Private Trust ? A registered document called Trust deed is necessary to set up Trust and should be registered with the Registrar. The deed should be executed on a stamp paper. The Trust deed should have the following : (i) Details in relation to trust property. (ii) Purpose of trust. (iii) Beneficiaries of trust. (i) If trust property happens to be immovable property A registered document (trust deed) is necessary to set up a trust if immovable property is being transferred to it. The deed should be made out on stamp paper and registered with the Registrar of Assurances under the Registration Act. (ii) If trust property happens to be movable property If only movable property is settled upon the trust, no formal document or written agreement is necessary. All the same, it's advisable to prepare a trust deed on a stamp paper and have it signed by the settlor and the trustees in the presence of a witness to avoid any subsequent disputes. 3. Types of assets can be part of the trust There are many types of assets that can be held in trust. These may include : SUBSCRIBE FOR FULL CONTENT

The Tax Publishers

Income Tax--Private Trust

Income Tax Private Trust : Few Issues

R. Muralidharan

Private Trust is one of the major Areas of tax planning in Income tax. The Author discusses the method of Formation and taxability of this in this Article.

1. Main instrument of declaring a Trust

The instrument by which the Trust is declared is called instrument of Trust and is generally known as Trust Deed. The main instrument of declaring a Trust is the Trust Deed, which should be made on non-judicial stamp papers of, prescribed fee and signed by the Trustee or Trustees for submission to the Registrar concerned of the State.

The Trust Deed should contain name(s) of the author(s), settler(s) of the Trust; the name(s) of the Trustee(s); the name(s) if any, of the beneficiary/ies or whether it shall be public at large; name of the trust; address of the trust; objects of the trust; procedure of appointment, removal or replacement of a trustee, their rights, duties and powers, etc; the mode and method of determination of the trust etc.

2. How to register a Private Trust ?

A registered document called Trust deed is necessary to set up Trust and should be registered with the Registrar. The deed should be executed on a stamp paper. The Trust deed should have the following :

(i) Details in relation to trust property.

(ii) Purpose of trust.

(iii) Beneficiaries of trust.

(i) If trust property happens to be immovable property

A registered document (trust deed) is necessary to set up a trust if immovable property is being transferred to it. The deed should be made out on stamp paper and registered with the Registrar of Assurances under the Registration Act.

(ii) If trust property happens to be movable property

If only movable property is settled upon the trust, no formal document or written agreement is necessary. All the same, it's advisable to prepare a trust deed on a stamp paper and have it signed by the settlor and the trustees in the presence of a witness to avoid any subsequent disputes.

3. Types of assets can be part of the trust

There are many types of assets that can be held in trust. These may include :