Comparing Trust, Section 8 Company & Society   Which one to choose?

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.  

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