Dissolution of Trust

Dissolution of Trust

Dissolving a Trust involves distributing its assets as per the Trust Deed provisions or transferring them to another charitable organization. The process is governed by the Indian Trusts Act, 1882 or the relevant state public trust Act (e.g., Maharashtra Public Trusts Act, 1950).

Grounds for Dissolution

• The purpose of the trust has been fulfilled completely.
• The purpose of the trust has become illegal, impossible, or impracticable.
• All trustees and beneficiaries consent to dissolve the trust.
• The trust period has expired as defined in the Trust Deed.
• Court order directing dissolution of the trust.

Steps Involved

1. Pass a formal resolution by all trustees to dissolve the trust.
2. Distribute remaining assets and funds as per the Trust Deed provisions.
3. If remaining assets cannot be distributed, transfer to a similar charitable organization with Charity Commissioner approval.
4. File final income tax return (ITR) for the trust.
5. Apply for cancellation of PAN in the trust's name.
6. Cancel 12A and 80G registrations with the Income Tax Department (Form 10BD).
7. File dissolution notice with the Registrar of Trusts/Charity Commissioner of the concerned state.
8. Close the trust's bank account.

Documents Required

• Trustee resolution for dissolution of the trust.
• Trust Deed (original registration copy).
• Latest audited financial statements of the trust.
• Proof of distribution/transfer of assets.
• Bank account closure certificate.
• 12A/80G cancellation application to the Income Tax Department.

Timeline

30–60 working days for complete dissolution and deregistration.

Why Choose Tax Precision?

• Expert guidance on asset distribution per Trust Deed provisions.
• 12A and 80G cancellation application management.
• Charity Commissioner filing and state Registrar notification support.
• Final ITR filing for the trust.
• FCRA registration cancellation support if applicable.