Trust Annual Compliance
Ensuring Your Trust Meets Legal Obligations in India
Struggling with Trust Annual Compliance? Tax Pal Solutions helps your trust stay fully compliant with annual statutory requirements through timely filings, audit support, FCRA guidance, and complete penalty prevention.
Key Features:
- Tailored Compliance Calendar for Your Trust
- Timely Notifications & Filing Alerts
- Expert Review of Annual Reports
- Assistance with FCRA Renewal & Amendments
- End-to-End Compliance Management
Overview of a Trust
A trust is a legal arrangement where the settlor transfers assets to a trustee to manage for the benefit of one or more beneficiaries.
Key Parties in a Trust:
| Party | Role |
|---|---|
| Settlor/Grantor | Creates the trust and contributes assets |
| Trustee | Manages trust assets as per trust deed, fiduciary duty applies |
| Beneficiary | Receives benefits from the trust assets |
Governing Laws in India:
- Private Trusts: Indian Trusts Act, 1882
- Public Charitable Trusts: Charitable and Religious Trusts Act, 1920 & state-specific acts (e.g., Bombay Public Trusts Act, 1950)
Why Annual Compliance Matters
Annual compliance ensures legal validity, transparency, and credibility, while protecting tax exemptions and safeguarding assets.
Benefits of Compliance
- Maintain Legal Standing – Avoid penalties and retain exemptions.
- Boost Transparency – Build trust with beneficiaries and donors.
- Fulfill Tax Responsibilities – Submit accurate ITRs and audit reports.
- Safeguard Trust Assets – Ensure proper utilization per trust deed.
- Enhance Credibility – Promote confidence among stakeholders.
Documents Required for Annual Compliance
| Category | Key Documents |
|---|---|
| Core Trust Documents | Trust Deed, PAN, TAN, Registration Certificate, 12A & 80G certificates |
| Financial Records | Bank statements, vouchers, books of accounts, investment records, loan & advance details |
| Donation & Donor Records | Donor register, donation receipts, grant agreements, corpus donation details |
| Foreign Contributions (if applicable) | FCRA certificate, FCRA bank statements, donor details, utilization reports, Form FC-4 |
| Previous Year’s Filings | Past ITRs, audit reports (Form 10B/10BB), FCRA returns, trustee meeting minutes |
Key Annual Compliances
| Compliance | Form | Due Date | Remarks |
|---|---|---|---|
| Income Tax Return (Audited Trusts) | ITR-7 | Oct 31 | Mandatory for audited trusts |
| Income Tax Return (Unaudited Trusts) | ITR-5/7 | Jul 31 | For non-audited trusts above threshold |
| Audit Report | 10B/10BB | Sep 30 | Required if income exceeds ₹2.5 lakh |
| TDS Returns | 24Q/26Q/27Q | Quarterly | For salaries or payments requiring TDS |
| Statement of Donations | 10BD | May 31 | Required for 80G-registered trusts |
| Certificate of Donation | 10BE | May 31 | Issued based on 10BD |
| FCRA Annual Return | FC-4 | Dec 31 | Mandatory for FCRA-registered trusts |
| GST Returns | GSTR-1/3B/9 | Monthly/Quarterly | Only if applicable |
Compliance for Private vs Public Trusts
Private Trusts:
- Specific beneficiaries; no charitable purpose
- Taxed on beneficiary basis (determinate) or at Maximum Marginal Rate (discretionary)
- File ITR-5; no 12A/80G exemptions
Public Charitable Trusts:
- Income tax exemptions under 12A/12AB; donations eligible for 80G benefits
- Must file ITR-7, Form 10BD, 10BE, 10B/10BB
- FCRA compliance if foreign donations received
Step-by-Step Compliance Process
Step 1: Gather Documents – Core trust, financial, donor, and FCRA records.
Step 2: Prepare Financial Statements – Cash book, ledger, trial balance, income & expenditure account, balance sheet.
Step 3: Audit by Chartered Accountant – Mandatory if income exceeds ₹2.5 lakh; report filed as Form 10B/10BB.
Step 4: File Returns & Forms – ITR, TDS, FCRA, GST, donation statements, and certificates.
Step 5: Maintain Records – Acknowledgment receipts, filed forms, audit reports, correspondence for 7–10 years.
Cost of Annual Compliance
Factors affecting cost:
- Type of trust (public charitable vs private)
- Annual income and transaction volume
- Complexity of operations (foreign contributions, business income, investments)
- Quality of internal accounting
- Professional fees (CA or consultant)
- Number of statutory filings
Risks of Non-Compliance
| Risk Area | Details |
|---|---|
| Legal Obligations | Non-compliance affects trust registration and tax exemptions |
| Financial Implications | Penalties, fines, loss of tax benefits |
| Legal Risks | Exposure to lawsuits or trustee liabilities |
| Operational Disruptions | Restricted access to banking or government grants |
| Reputation Damage | Loss of credibility with donors and beneficiaries |
| Funding Risks | Difficulty in securing future donations or grants |
Penalties for Late Filings:
| Filing | Section | Penalty |
|---|---|---|
| ITR | 234F | ₹5,000 if income > ₹5L; ₹1,000 if ≤ ₹5L |
| TDS Return | 234E | ₹200 per day delay |
| Audit Report (10B) | 272A(2) | ₹100/day, up to ₹10,000 |
| FCRA/Other Forms | 271I | Up to ₹1,00,000 |
Why Choose Tax Pal Solutions
- 500+ MCA Certified Experts
- 10,000+ Trusted Reviews
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- Serving Businesses Across India
Ensure your trust remains fully compliant, transparent, and legally protected with Tax Pal Solutions.
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