REGISTRATION OF MINOR TRUST: REVISED
BY CA NITESH KUMAR MORE
Trust can be formed for a minor by executing a deed for a specific period, say 21 years.
This trust can be registered under the Indian trust Act.
1 Tax implication every year during the period of trust: This private trust will be taxed at a slab rate applicable for individual provided it does not have business income.
Any business income may be taxed @ 30% or at slab rate.
2 Tax implications at the end of specified periods: At the end of the specific period, the trust property will be transferred to the beneficiary minor (who become major till that period) and will be a capital receipts in the hand of beneficiary and hence not taxable.
1 Enjoy tax exemption limit and lower tax rate applicable for individual every year.
2 Transfer of the assets of trust to beneficiary at no cost/ negligible cost.
3 Transfer of the assets of trust to beneficiary will be tax neutral provided he attains majority.
LIMITATIONS: Any business income of trust may be taxed @ 30% or at slab rate.
INFORMATION AND DOCUMENTS NEEDED: Details about trustee, beneficiary and settlor.