All the 3 types of organizations registered in India such as- Society, Trust, and Section 8 Company are NGOs, that is, non-governmental organizations and also commonly known as NPOs (non-profit organizations). All these can be formed for social welfare and development. But they are not the same. There are some differences among them.
Comparison between Trust, Society, and Section 8 Company
Details | Trust | Society | Section 8 company |
Meaning | It is an agreement between the parties, under which one party owns the property for the benefit of the other party. | It is a collection of individuals, who come together for the beginning of any literary, scientific or charitable purpose. | It is an enterprise formed with a commercial, social, charitable or any other purpose and intends to apply its profits to promote such objectives. |
Registration | As an NGO/NPO | As an NGO/NPO | As an NGO / NPO, enjoying the privileges of a limited company, but without using the words “limited” or “private limited” in its name |
Government law | The Indian Trust Act for private trusts, 1882 and general law for public trusts, except in states like Gujarat, Maharashtra, where they have separate Public Trust Acts. | Society registration act 1860. | Company registration act 2013. |
Right to register | Deputy Registrar of the respective field. | Registrar or Deputy Registrar of State Committees. | Registrar of Companies (ROC) or Regional Director. |
Time of registration | The minimum number of members required is 2 trustees. | Minimum 2 members. | Minimum 2 directors and shareholders required. The same person can be a shareholder and a director too. |
Geographical area of operation | All India | State-wise, but can operate/work in all over India after taking all India registration and becoming a national level society. | All India |
Main documents supporting formation | Trust deed | Rules and regulation and Memorandum of Association. | Memorandum of Association and Articles of Association. |
The legal title to the property | Lies in the hand of the trustee. | Named after society. | Named after the company |
Cost factor | Low | Medium | Low |
Preference in case of Government grant | Not much liked | Not much liked | Preferred mostly. |
Registration under the Income Tax Act, 1961 | Yes, allowed | Yes, allowed | Yes, allowed |
Preference in case of FCRA registration | Not liked much | Not liked much | Mostly preferred. |
Many Annual compliance requirements | Depends on whether the trust is a private trust or a public trust. | Annual filing of the list of names, occupations, and addresses of the members of the society’s managing committee with the registrar of the society. | With the Registrar of Companies (ROC), the annual compliance of the filing and filing of the annual returns of the Se 8 company. |
From the above comparison, we get an overview of the important points that need to be discussed before choosing from the appropriate type of organization.
For more details related to the legal advice NGO registration process contact Chartered Munshi as an NGO registration consultant and get the best advice.