Trust Annual Compliance
A Trust is a type of settlement derived from an arrangement between the Author/settler( property owner) and the Trustee for the profitable interest of the beneficiary. This settlement is regarding control, and regulation property considered Trust property for the advantages and perks of the Trust beneficiaries. The settlement provides endorsement to the idea of separate ownership where the Trustee is an authentic owner and the beneficiary is a favorable title-holder.
Trusts have mainly two categories:
- Private Trusts
- Public Trusts
When the Trust is established for the welfare of a particular family or person, it is called Private Trust. On the other hand, when trust property is regulated for the welfare and advantages of common public and society or volatile community of individuals but not restricted to sole section, it is called Public Trust.
A private trust is not obligatory to involve in any charitable and religious activity.
On the contrary, the Public Trust is entitled to have charitable, religious and responsible for the welfare of the entire society.
The Indian Trusts Act, 1882 regulates the Private Trusts, but when it is prepared through a bill, it needs to follow the rules of the India Succession Act, 1925.
Here are the Annual compliance requirements of the Trust
Mandatory audit of accounts
If the total earning of a Private Trust surpasses the cap provided under the Income Tax Act, 1961 for tax exemption( (Rs. 1,50,000 for FY 2021-22), it is mandatory to audit the income by a Chartered Accountant.
Yearly Return of income
Post the Trust’s account audit performed by the Chartered Accountant; the audit report must be submitted enclosed with yearly Return of income under FORM ITR-7 on or prior to the due date.
Submission of TDS Certificate
When any Private Trust is subtracting tax due to payment of salaries to the employees( for governing the Trust Property), it requires to issue TDS certificate the staffs from that TDS was deducted. It must be done within 30 days before the closing date of the financial year.
Details of foreign funding and grants
Every Trust that accepts foreign funding and grants requires a detailed statement authorized by a Chartered Accountant. Along with it, an income and expense statement, balance sheet, payment and receipt account within 9 months before the closing date of the financial year to the Secretary, Ministry of Home Affairs, Government of India. If there are no donations acquired from the foreign entities from a previous financial year, a ‘Nil’ statement must be presented to the department.
Publish the account statement in the newspaper
When yearly income or Trust receipts ( produced from the Trust Property) surpasses Rs. 1,00,00,000 (INR One Crore).
Filing Service Tax Return and VAT
In case the gross turnover of a Private Trust surpasses INR 15,00,000 (INR 15 Lakhs), it is responsible for filing Service Tax Return and VAT in the applicable pattern. Trust must file VAT every 3 months.
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