Need for Registration of A “Public Charitable or Religious Trust”
For a public trust, whether in relation to a movable property or an immovable property the registration is optional but always desirable. From the practical point of view, it is always advisable for charitable trusts to have a proper registered trust deed.
Registration has the following advantages:
a) A registered Trust Deed becomes an official document which carries support and force of law.
b) a registered deed effectuates transmutation of possession. The registration of a trust-deed, in the absence of an intention to the contrary, is enough to convey the title to trust-property to the trustee, even if the trust deed is not delivered to him;
c) A conveyance of trust property to the trustee under a registered deed is generally not open to challenge.
d) In case of a charitable or religious trust, in relation to an immovable property, for claiming exemption u/s. 11 of the Income Tax Act, it is essential that the instrument of trust is duly registered [CIT v. Trustees of Dr Divekar Charity Trust { 1977 } 110 ITR 227 (Born.)]
e) When the trust deed is reduced into writing with the Registrar, it facilitates exemptions under section 80G of the Income-Tax Act for the donors. It may be noted that this is an essential requirement for the purposes of section 80G of the Income-tax Act, 1961.
(f) Under the provisions of sections 11,12,1 2A and 13 read with sections 60 to 63 of the Income-Tax Act, the income of charitable! religious trust is exempt from income tax subject to the fulfillment of certain conditions. Such trust institutions are entitled to exemption under the Income-tax Act when they are created or established for charitable purposes as defined under section 2(15) of the Income tax Act, 1961.