Trust Compliance

As per the Indian Trusts Act, 1882, every trust established in India is required to fulfill certain compliance requirements on an annual basis. These compliance requirements are important to ensure that the trust is operating in accordance with the law and is fulfilling its legal obligations.

Some of the key annual compliance requirements for trusts in India are:

1. Maintenance of Trust Accounts: The trustees of a trust must maintain accurate accounts of the trust’s financial transactions. The accounts must be audited annually by a qualified chartered accountant, and the audit report must be submitted along with the annual return.
2. Conduct of Annual General Meeting: The trustees must hold an annual general meeting of the trust’s beneficiaries to discuss the trust’s activities, review the financial statements, and approve the annual return.
3. Filing of Income Tax Returns: All of the finances must be audited by a chartered accountant and annual income tax return (ITR-5/ ITR-7) must be filled.
4. Compliance with Income Tax Dept: Form 10B and Form 10BD must be submitted by trusts that have been registered under Section 12A and 80G of the Income Tax Act of 1961 respectively. This forms includes information about the trust’s operations, adherence to Act requirements, donation list and financial resource use.
5. Report on Foreign Contributions: Numerous trusts accept donations from other nations. The trust must create a Foreign Trust Report if part of its contributions come from abroad. Additionally, the trust has to file the Report for Foreign Contributions even if it doesn’t get the foreign donation.

Non-compliance with the annual compliance requirements can lead to penalties and legal action against the trust and its trustees. Therefore, it is important for trustees to ensure that the trust is fulfilling its annual compliance requirements in a timely and accurate manner.