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April 30, 2022
Trust, Section-8 Company & Society
In India, a non-benefit association for a beneficent reason can be enlisted as a Trust, Society and Section 8 Company. A magnanimous reason for existing is characterized under Section 2(15) of Income Tax Act “altruistic reason” incorporates alleviation of poor people, training, yoga, clinical help, Preservation of climate (counting watersheds, backwoods, and untamed life) and conservation of landmarks or places or objects of creative or notable premium, and the progression of some other object of overall population utility”.
Trusts, Societies and Section 8 organizations are set up to offer support to the local area and not with a benefit rationale. Every one of them are framed for social government assistance and improvement, however they are not the same.
Table of Content
What is Trust ?
Trust is known to be an agreement between parties in which one party owns the ownership of the property for the benefit of the other party. Trust is governed by the Indian Trust Act 1882. It is observed to be the oldest form of Charitable Organisation. It is either private or public. Its major role is to provide benefit to a section of people.
What is Society?
Society is a formation of people who meet for starting any literary, scientific or charitable purpose. Societies are governed under the Society Registration Act 1860. It is commonly a group of 7 people who come together for a similar charitable purpose. Memorandum of Association is an important tool in the Registration of a Society.
What is Section 8 Company ?
Section 8 Company is an non- profit organization which is formed with a commercial, social and charitable or any other likely objective and tends to apply its profit for encouraging such objectives.
Section 8 Companies are governed by Companies Act 2013. These companies are formed for the purpose of promoting charitable object concerning to art,commerce,science,health and many more. All the benefits and subject to all the obligations of Limited Companies are enjoyed by such companies.
Comparison between Trust, Societies and Section 8 Company
Particulars |
Trusts |
Societies |
Section 8 Company |
Governing Act |
Trusts is governed by the Indian trust in Act, 1882 |
Societies are governed by the societies registration Act, 1860 |
Section 8 companies are governed by the Indian Companies Act, 2013 |
Registration Authority |
The trusts are under the jurisdiction of deputy registrar / charity commissioner of the relevant area |
The power to register a society lies in the hand of the Registrar of societies. |
The power to register a Section 8 Company lies in the hand of Regional Director & Registrar of companies of concerned state. |
Registration Document |
For Registration of Trust focal instrument are Trust deeds. |
For registration of society, the main instrument is message of Association & regulations. |
for registration of section 8 companies main instrument is Memorandum and Articles of Association. |
Stamp duty |
Trust deeds to be executed on non-judicial stamp paper, vary from national to state. |
No stamp sense of duty is essential for memorandum of memory and regulations. |
No stamp duty is required for memorandum and articles of association. |
Members required |
At least two trustees are required to register in the public domain charitable trust. In general, Indian citizens role out as trustees, even though there is no prohibition against non-natural legal people in this capacity. |
Minimum seven members are required for the formation of state demolish society. Eight members are required from different states for the formation of inhabitant press flat society. |
Minimum two members for a private company and seven for a municipal limited company. |
Governed By |
Trusts are governed by their trustees or by the board of trustees. |
Societies are governed by a governing council or managing committee. |
Section 8 company is governed by a slate of directors. |
Differences between Trust, Societies and Section 8 Company
Particular |
Trust |
Societies |
Section 8 company |
Definition |
Trust is NPO and was set up for charity purposes. It is governed by the Indian Trust Act 1882. |
Societies are the charitable organisations of seven or more people. |
It is also an NPO and is incorporated to promote charitable purposes, it is governed by Indian Companies Act 2013. |
Time taken to register. |
It is formed in the span of one week. |
It takes one month to be formed. |
It takes 2-3 months to be formed. |
Annual cost |
Annual cost is around Rs. 5000+ |
Annual cost is around Rs. 10000+ |
Annual cost is around Rs. 30000+ |
Payment to members |
Trust allows payment to its members and directors. |
Societies allow payment to its members and directors in most of the states for actual service. |
Section 8 allows payment to its members and director for actual services. |
Control |
Control is quite easy. |
Control is difficult. |
Control is easy. |
Area of operation |
Covers most of India. |
Usually restricted to state boundaries. |
Covers all of India. |
Paperwork |
Paperwork is less. |
Paperwork is moderate. |
Paperwork is high. |
Hence, Trust, Society and Section 8 Company are unprotected entities. However, there is a clear difference between creation and working in all three of them.
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