Quick answerA trust in India is created by a trust deed in which the settlor transfers property to trustees to hold for beneficiaries or for a charitable purpose. Private trusts are governed by the Indian Trusts Act, 1882; public charitable and religious trusts are governed by general law and, in some states, by a public trusts Act. The deed is stamped as per state law and registered with the Sub-Registrar under the Registration Act, 1908, and a charitable trust then applies for income tax registration.
- Law
- Indian Trusts Act 1882 (private trusts)
- Registration
- Sub-Registrar, Registration Act 1908
- Parties
- Settlor and at least 2 trustees in practice
- Stamp duty
- Varies by state and property
Public charitable trust or private trust
The first decision is who the trust is for, because it changes the law, the tax treatment and the way the deed is written.
| Point | Public charitable trust | Private trust |
|---|
| Beneficiaries | The public or a section of it: the poor, students, patients, a religious community | Specific, identifiable persons, usually family members |
| Governing law | General trust law, the Registration Act, and the state public trusts Act where one exists | Indian Trusts Act, 1882 |
| Purpose | Relief of poverty, education, medical relief, environment, preservation of heritage and other objects of general public utility | Succession planning, holding family property, protecting assets for minors or dependants |
| Income tax | Can claim exemption after registration as a charitable institution | Taxed as per the trust and beneficiary rules; no charitable exemption |
Section 1 of the Indian Trusts Act expressly excludes public or private religious or charitable endowments, which is why a charitable trust's rules come largely from its deed, the courts and state legislation.
What goes into a trust deed
The trust deed is the constitution of the trust. Once registered, changing it is difficult, so we draft it with care. A well-drafted deed covers:
- The name of the trust, its registered office and the settlor's initial contribution.
- Clear objects, specific enough to satisfy the income tax department that they are charitable, or for a private trust, the beneficiaries and their shares.
- The number of trustees, how they are appointed, removed and replaced, and whether any are life trustees.
- Powers of trustees: to open bank accounts, invest, borrow, buy and sell property, and delegate.
- Meetings, quorum, accounts and audit.
- Amendment: what can be amended and by whom. A deed with no amendment power can usually be changed only through the court.
- Dissolution: for a charitable trust, the remaining assets must pass to another charity with similar objects, never back to the settlor or trustees.
Why and where the deed is registered
Under Section 5 of the Indian Trusts Act, a private trust of immovable property is valid only if declared by a registered non-testamentary instrument. Under Section 17 of the Registration Act, 1908, documents that create an interest in immovable property must be registered. Even where only money is settled, banks, donors and the income tax department expect a registered deed, so we register every deed.
The deed is presented to the Sub-Registrar having jurisdiction over the trust's registered office or the property, signed by the settlor and the trustees, with two witnesses. Stamp duty is payable under the state's stamp law: some states charge a fixed amount for a trust deed, others charge with reference to the value of the property settled. Many states now require online appointment booking and e-stamping.
In states with a public trusts Act, such as Maharashtra, Gujarat, Rajasthan and Madhya Pradesh, a public trust must also be registered with the Charity Commissioner or the Registrar of Public Trusts and files annual accounts there.
Income tax registration for charitable trusts
A charitable trust's income is not exempt simply because it is registered with the Sub-Registrar. It must obtain registration as a charitable institution from the income tax department and, if it wants donors to claim a deduction, a separate approval. Under the Income-tax Act, 1961 these were sections 12AB and 80G; the Income-tax Act, 2025, effective from 1 April 2026, continues the scheme under new section numbers.
A new trust first receives provisional registration and later applies for regular registration once it has begun its activities. Conditions apply throughout: income must be applied to the objects, accounts must be audited, returns filed on time, and donations recorded with donor details. Business income, payments to trustees and their relatives, and investments outside permitted modes can cost the exemption. If the trust will receive foreign donations, FCRA registration is also required.
Private family trusts for succession planning
Families use private trusts to keep property together across generations, provide for a dependent or differently-abled family member, or protect assets for minor children. A private trust can be revocable or irrevocable, and the tax result depends on whether the beneficiaries and their shares are fixed (a specific trust) or left to the trustees' discretion (a discretionary trust).
A trust is an alternative to, or a supplement to, a will. Unlike a will, it takes effect during the settlor's lifetime and avoids probate of the trust assets. It does not override the rights of creditors, and transferring property to defeat creditors can be set aside. We usually advise on the family's full position, including existing wills and joint property, before drafting a private trust deed.
Mistakes we see in trust deeds
- Objects copied from another trust that do not match the work actually done, which leads to tax registration being refused.
- All trustees from one family with no succession clause, so the trust stalls when a trustee dies.
- A clause allowing assets to return to the settlor, which is fatal to charitable status.
- No power to amend, forcing a court application for simple changes.
- Running a trust without bank and tax registrations, so donations received in the meantime may be taxed.
If your group wants members and elections rather than a fixed board of trustees, consider society registration instead.
Duties of trustees after registration
Trustees hold the trust property for others, so the law expects a high standard of care. Under the Indian Trusts Act, a trustee of a private trust must carry out the trust, act as carefully as a prudent person would with his own property, keep accounts and give beneficiaries information on request, and must not profit from the trust or mix its funds with his own. Courts apply similar principles to trustees of public trusts.
In practice this means a separate bank account in the trust's name, written resolutions for major decisions, proper books of account, an annual audit where the income tax law requires it, and timely income tax returns. A trustee who wants to step down should do so in the manner the deed provides, and the change should be recorded so that bank signatories and the tax record stay current.
Trust registration costs and timeline
The cost of setting up a trust has three parts: stamp duty under the state stamp law, the Sub-Registrar's registration fee, and professional fees for drafting and filing. Where property other than cash is settled, stamp duty can be the largest item, so we calculate it before the deed is finalised. Once the draft is agreed, registration usually takes one to three weeks depending on appointment availability. We quote the full cost in writing before we start.
Documents you need
For the settlor, trustees and the trust office:
- Proposed name and objects of the trust
- Identity and address proof of the settlor and each trustee (Aadhaar, PAN, passport or voter ID)
- Passport-size photographs of the settlor and trustees
- Proof of the registered office: electricity bill or property tax receipt
- No-objection letter from the owner of the premises
- Details and documents of any property being settled
- Identity proof of two witnesses
- PAN of the trust after registration, for the bank account and tax filings
How we handle it for you
Purpose and structure
We confirm whether a public trust, a private trust, a society or a Section 8 company fits your aims.
Deed drafting
Objects, trustee clauses, powers and dissolution drafted for your purpose and the tax rules.
Stamping and registration
Stamp duty calculated, appointment booked and the deed registered with the Sub-Registrar.
PAN and bank
We apply for the trust's PAN and help open its bank account.
Tax registration
For charitable trusts, applications for income tax registration and donor deduction approval are filed and followed up.
Why clients choose ProudLegal
Advocates who appear in courtYour matter is drafted and argued by enrolled advocates, not call-centre staff.
Company and tax filings in-houseCompany secretaries and tax professionals handle registrations and returns.
Fees agreed in writingYou receive a written fee quote before any work begins.
Updates on WhatsApp and emailEvery hearing date, filing and document is shared as it happens.
Please note: this page explains the law and procedure in general terms as on 30 October 2026. Fees, limits and timelines change, and the facts of each case matter, so take advice on your own papers before acting.
Frequently asked questions
What is the minimum number of trustees for a trust?
The Indian Trusts Act does not fix a minimum, but two or more trustees are standard practice and some state laws and funders expect it. One person can be both settlor and trustee.
Is registration of a trust deed compulsory?
A private trust of immovable property must be declared by a registered instrument. For other trusts registration is strongly advisable, as banks and the income tax department require a registered deed.
How much is the stamp duty on a trust deed?
It depends on the state and, in some states, on the value of the property settled. We calculate it for your state before drafting.
Can a trust deed be changed after registration?
Only if the deed contains a power to amend, and only within its limits. Otherwise a court order may be needed.
Does a registered trust get income tax exemption automatically?
No. A charitable trust must apply separately to the income tax department for registration and meet the conditions every year.
Who can be a trustee?
Any person competent to contract can be a trustee. A company can also act as trustee.
How long does trust registration take?
The deed is usually registered within one to three weeks of finalising it. Income tax registration takes longer and follows separately.
What is the difference between a trust and a Section 8 company?
A trust is created by a deed and run by trustees; a Section 8 company is incorporated under the Companies Act with members, directors and ROC filings. The company form has more compliance but is often preferred by large donors.
