Tax India ›› Truts In India ›› What Is Trust?
What Is Trust?
India follows the English concept of a trust as a vehicle under which property is alienated from the original owners and held by a trustee for the benefit of others. The law governing trusts is codified and contained in the Indian Trust Act.
Types Of Trust.
Common types of trusts are noted below.
- Public charitable or religious trusts
Income from these trusts is applied to charitable or religious purposes.
Income from private trusts is available to specified beneficiaries and not the public at large. In some cases, the shares of the individual beneficiaries are fixed or ascertainable, according to the provisions of the trust deed. In others (discretionary trusts), the trustee has the power to apply the income among a class or group of beneficiaries in proportions determined entirely at the trustee's discretion.
Trusts are often used as vehicles to hold property for present or future needs of dependents and family members, and sometimes they are used to reduce the burden of tax. A common example is a trust that provides for the accumulation of income and capital for specified infant children. Subject to their maintenance during this period, the accumulation must be handed over to them upon their attaining a specified age or, in the case of a female beneficiary, upon marriage. Retirement trusts are commonly set up be employers to provide retirement benefits to employees.
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