Section 8 Company Vs Trust Vs Society
| Parameter | Trust | Society | Section 8 Company |
|---|---|---|---|
| Meaning | It is considered to be the oldest form of charitable organisations. It is, in essence, an arrangement between parties whereby one party holds ownership over property on behalf of another person | It is formed when a collection of people come together for a common charitable purpose. But it is not limited to charitable purposes but may extend to multiple other fields. | A company established with objects of promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object and apply any profits into furthering the objective. |
| Regulated By | Private Trusts are governed by the Indian Trust Act, 1882. Public Trusts are governed by respective Trusts Acts of the state where these are established | The State Acts are applicable for state level Societies, whereas, for the societies operating all over India, the Societies Registration Act, 1860 is applicable | Governed by the Indian Companies Act, 2013 |
| Registering Authority | Deputy Registrar of the state | Registrar or Deputy Registrar of the particular state in which it is to be registered | Registrar of Companies (ROC) or Regional Director |
| Registered as | NGO/NPO | NGO/NPO | NGO/NPO. They also enjoy all the privileges of a limited company Without add Pvt. Ltd. to the name. Section 8 Company Name must end with the words like foundation, forum, association, federation, chambers, confederation, council, electoral trust, etc. |
| Constitution Documents | Trust Deed | MOA and rules and regulations | MOA and AOA |
| Minimum members required | 2 trustees minimum | 7 members minimum (5 for Jammu and Kashmir and Telangana) | 2 directors and 2 shareholders (The directors may also be the shareholders) |
| Management | Managed by Trustees | Managing Committee or Governing Council | Board of Directors |
| Change in Management | As per Provisions of the Trust Deed | As per Society Rules and MOA | As per AOA |
| Change in Reg Address | Difficult | Difficult | Easy |
| Process/Documentation | Physical | Physical | Online |
| Annual compliances | No Specified mandatory yearly compliance. General Compliance which required by An Assessee in Income tax. | The society must file the list of names, occupations and address of the managing committee members of the society to the Registrar annually | The company must file the annual returns and accounts with the ROC. |
| Audit | Mandatory for Only Public Trust | As per Society Regulations | Mandatory As per Companies act |
| Remuneration | Not Allowed - Trustees | Allowed - Member | Allow only in case of profit - In Good Faith No Limit for Remuneration to Employees |
| Audit under IT Act | Mandatory If Obtained 80G/12A | Mandatory If Obtained 80G/12A | Mandatory If Obtained 80G/12A / Turnover exceeding tax audit limit |
| Grants and subsidies from the government | Preferred less | Preferred less | High Preferable |
| Preference for Foreign Contribution | Low preference | Low preference | Most Preferred |
| Reg. Under IT Act for 80G/12A | Allowed | Allowed | Allowed |
| Transparency | Low | Low | Very High |
| Property Ownership | Trust | Society | Company |
| Cost Factor | Low | Low | Little High in Compare to Other |
| Reg./Formation Time | 10-20 Days | 20-30 Days | 7-15 Days |
| Stamp Duty on constitution | Non-Judicial Stamp duty Based on Total worth of Property/trust | Non-Judicial Stamp duty - as per the Stamp Act of the concerned state | According to Authorised Capital |
| Dissolution | Except a Public Charitable Trust, all trusts can be dissolved on grounds mentioned in the Trusts Act | May be dissolved with the approval of 3/5th members of the society | Companies can be wound up following the conditions and procedure prescribed under the Companies Act |
Tax laws and thresholds change frequently. This article reflects the rules in force when it was written - please confirm current provisions before relying on it, or get in touch for up-to-date advice.