An NGO in India can be set up either as a Trust or Section 8 Company or Society in India. But the purposes of all these three are different. In this article, we are going to compare Trust, Section 8 Company, and Society in detail, so you can know which one to choose?
So, without further ado. Let’s get started.
Happy reading 🙂
We will first discuss a trust, a section 8 company, and society separately.
A Trust
A Trust is formed to have a legal agreement as per which ownership of property is held by one party or more parties (trustees) for the benefit of other parties (beneficiaries) to the trust. for the time being, It is governed by one of the oldest acts in India “The Indian Trust Act, 1882”. It is observed to be the oldest form of Charitable Organization.
A Section 8 Company
A Section 8 Company is a non-profit organization established under the “Companies Act, 2013” for charitable, social, or welfare purposes. Therefore, section 8 company needs to apply its profit only for such objectives.
A Society
A Society is formed by a bunch of people who have come together for a common charitable cause. The formation of societies is governed under one of the ancient acts “The Society Registration Act, 1860” in India.
Comparison between Trust, Section 8 Company and Societies
We have given a comparison between all these three as below:-
Particulars | Trust | Section 8 Company | Societies |
Governing Act | The Indian Trust Act, 1882 | Companies Act, 2013 | The Society Registration Act, 1860 |
Registered As | It is registered as an NGO or NPO | It is registered as an NGO or NPO as well although it enjoys limited company benefits but it can’t add “Ltd” or “Pvt Ltd” to its registered name. | Also, can be registered as an NGO or NPO. |
Authority to register | Deputy Registrar of Trusts of the respective jurisdictional area. | Registrar of companies or Regional Director of respective areas. | Registrar or Deputy Registrar of Societies of the respective jurisdictional area. |
Cost factor | High | Low | High |
Registration Period | Upto 10 days | Upto 7 days | Upto 10 days |
Number of members required | Minimum two trustees | Minimum two (director and shareholders, although they can be same) | Minimum seven members |
Transparency | Low | High | Low |
Compliances | A very few annual compliances need to be done. | As governed by the Companies Act, there are many compliances which a section 8 company needs to adhere to like filing of annual returns with ROC. | Also, have to fulfill mandatory annual compliances like filing the name of members with the Registrar of Societies. |
Registration under Income Tax Act | Yes, Need to be done | Yes, need to be done | Yes, need to be done |
Reference under FCRA | Not likely | Yes | Not likely |
Legal title | In the name of trustees | In the name of company | In the name of society |
Required documents for registration | Trust Deed | Like any other company, Memorandum of Association and Articles of association. | Memorandum of Association and Rules & Regulations of Society. |
To get “CSR Fund” need 3 year records for trust or societies but not for Section 8 Company
We hope, this comparison helps you decide which one to choose as per your objective and preference. If you need any assistance then kindly do reach out to us.
