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Trust Annual Compliance in India

Q: Does every trust need to be audited?

Not every trust needs to be audited. Generally, trusts with an income exceeding a certain threshold (as prescribed by income tax laws) or those registered under specific sections for tax exemptions (like Section 12A) are required to get their accounts audited by a qualified Chartered Accountant.

Q: What is the difference between Form 10B and Form 10BB?

Form 10B is the audit report for trusts claiming tax exemption under Section 11/12. As of recent changes, Form 10BB is used by trusts or institutions whose total income is below a certain threshold (e.g., up to ₹5 crore) and who have not received foreign contributions, among other conditions. The choice depends on specific financial criteria, and your CA can determine the correct form.

Q: Can a trust accept donations in cash?

Yes, a trust can accept donations in cash, but there are limits. As per current Indian income tax laws, cash donations exceeding ₹2,000 from a single person are not eligible for deduction under Section 80G. For the trust's accounting and compliance, it's generally advisable to encourage non-cash donations for larger amounts. While the donor loses the 80G benefit for cash donations over ₹2,000, the trust must still account for this income properly in its books.

Q: What records should a trust maintain throughout the year?

A trust should maintain comprehensive records, including the trust deed, minute books of meetings, donation receipts, expenditure vouchers, bank statements, ledgers, balance sheets, income and expenditure statements, details of assets and liabilities, and any other relevant financial or legal documents. Proper record-keeping is essential for audits and compliance with regulatory bodies.

Q: What is Section 12AB, and why is it important?

Section 12AB provides an income tax exemption to trusts on income applied to charitable or religious purposes. Without a valid 12AB registration, the trust's income becomes taxable.

Q: Is GST applicable to trusts?

Yes, if a trust provides taxable services (like paid training programs) and crosses the threshold (₹20 lakhs for services), it must register under GST and file returns.

Q: What are Form 10BD and Form 10BE?

Form 10BD is a statement of donations received, filed by May 31st each year. Form 10BE is the certificate issued to donors to help them claim tax deductions under Section 80G.

Q: What happens if a trust doesn’t comply with annual requirements?

Non-compliance can lead to penalties, loss of tax exemptions, difficulty in raising funds, and reputational damage with donors and authorities.

Q: Can a private trust claim a tax exemption under Section 80G?

No. Only public charitable trusts can register under Section 80G and offer tax benefits to donors. Private trusts are not eligible for this exemption.

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Frequently Asked Questions (FAQs)

What is a trust deed, and why is it important for compliance?

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A trust deed is a legal document that outlines the rules and regulations for the operation of a trust. It's crucial for compliance as it defines the trust's objectives, powers of the trustees, beneficiary details, and how the trust's assets will be managed, serving as the foundational document for all legal and financial activities.

Does every trust need to be audited?

What is the difference between Form 10B and Form 10BB?

Can a trust accept donations in cash?

What records should a trust maintain throughout the year?

What is Section 12AB, and why is it important?

Is GST applicable to trusts?

What are Form 10BD and Form 10BE?

What happens if a trust doesn’t comply with annual requirements?

Can a private trust claim a tax exemption under Section 80G?

Why Choose RegisterKaro for the Trust Annual Compliance Service?

Choosing the right partner for your trust's compliance can save you a lot of hassle.

Expert Help to Avoid Penalties and Legal Issues: Our team of experts ensures your trust adheres to all regulations, helping you steer clear of hefty penalties and complex legal problems that can arise from non-compliance. We provide accurate and up-to-date advice to keep your trust on the right side of the law.
We Save Your Time and Handle All the Paperwork: Dealing with compliance paperwork can be time-consuming and confusing. We take care of all the necessary documentation and filings, freeing up your valuable time so you can focus on your trust's core activities.
Clear and Transparent Pricing with No Hidden Charges: We believe in complete transparency. Our pricing structure is straightforward and clearly outlined upfront, so you'll never encounter any unexpected fees or hidden charges throughout the process.
A Dedicated Expert to Guide You at Every Step: You'll have a dedicated compliance expert assigned to your trust, providing personalized guidance and support from start to finish. This ensures you always have a go-to person for all your questions and concerns.
Get Reminders So You Never Miss a Due Date: Missing compliance deadlines can lead to significant issues. We provide timely reminders for all your crucial due dates, ensuring your trust remains compliant and avoiding any late penalties.

Why Choose RegisterKaro for the Trust Annual Compliance Service?

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