Closing of Trust

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This discussion addresses the closure of a private unregistered trust by its trustees due to personal reasons. The trustees plan to transfer the trust's remaining balance to another registered trust, KMECT, as a donation. They are seeking advice on the legality of this process, whether they need to inform any authorities, and if the trust's PAN card needs to be surrendered after filing final IT returns.

Virender Malla

Virender Malla (Querist)
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29 May 2021 I am one of the trustee of a private unregistered trust, which was created by my father and has two trustees at present. Due to personal issues we are unable to carry out the functioning of the trust and would like to close it. The trust has only one account and we propose to transfer the entire balance in the savings account of the trust to another trust and close the trust account.

Can we do it and are we supposed to advise or report to any authority about such closure. The trust has its own PAN No. & since we are regularly filing the trust IT Returns are we required to report the closure to IT authorities and also surrender the Pan Card.

Please advise

Thanks

Virender Malla

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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29 May 2021 Who is the beneficiary of the new trust. Is there any change in beneficiary.

Virender Malla

Virender Malla (Querist)
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30 May 2021 The beneficiary is KMECT which is a registered trust. The funds will be transferred in small amounts as donation to KMECT

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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30 May 2021 Not replied for change in beneficiary or not.
In case of change in beneficiary tax applicable on transfer in excess of 50,000.

Virender Malla

Virender Malla (Querist)
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31 May 2021 I could not understand what you mean by change in beneficiary.
I believe beneficiary is the person who gets donation from the trust. Our trust is donating money to KMECT who becomes the beneficiary. So how does change in beneficiary come in here.

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