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Comparison Between Trust, Society and Section 8 Company

Jul 10, 2020

Governing Law, Taxation and Compliances

S. No.




Section 8 Company



A trust is an agreement between parties, whereby trustee holds assets of settlor for the benefit of beneficiary.

Society is a collection of persons, who come together for the public, welfare of common being and charitable purpose.

Company formed for social, charitable, art, commerce, science, or any other such objective.


Statute/Governing Law

The Indian Trusts Act, 1882 for Private Trusts and general law for Public Trusts except states like Gujarat, Maharashtra where they have separate public trust acts.

The Indian Societies Act, 1860.

Companies Act 2013.



As Public Trust


As NGO/ NPO, enjoying the privileges of a limited company but without using the words “Limited” or “Private Limited” in its name.


No. of minimum members required at the time of registration

Minimum 2

Minimum 7 members.

Minimum 2 directors and shareholders


Registering authority

Deputy Registrar of the relevant area.

Registrar or Deputy Registrar of Societies of the State.

Registrar of Companies (ROC) or Regional Director.


Board of Management

Trustees or board of trustees.

The Governing council or Managing Committee.

The board of directors.


Trust Deed.

Trust Deed.

Memorandum and Rules & Regulations.

MOA and AOA.



Vide supplementary/ addendum to Trust deed.

Amendments shall be made in the MoA and the Rules and Regulations.

Procedure Prescribed under Companies act 2013.


Cost factor





Time Period involved in registration

15-20 days

20-25 days

25-45 days


Preference in case of Grant of subsidy by the Government

Not much preferred.

Not much preferred.

Mostly preferred


Legal title of property

Vests in the hands of trustees.

Held in the name of the society.

Held in the name of the company.


Preference in case of Foreign Contribution Regulation Act (FCRA) registration

Not much preferred.

Not much preferred.

Mostly preferred


Annual compliance requirement

There are some annual compliance requirement:

  • Regular Trustee meetings
  • Minutes of meetings
  • Proper accounting of trust property and trust Income
  • Tax return to be filed regularly

Audit i s mandatory above specified limits

Societies must file annually, with the Registrar of Societies,

Ÿ A list of the names, addresses and occupations of their managing committee members.

There is requirement of Annual compliance of

  • filing of accounts and Ÿ filing of annual return Ÿ Board report
  • Management Changes
  • KYC reports
  • DIN of Directors
with the Registrar of Companies (ROC).


Geographical area of operation

Whole of India.

State wise, but can operate in whole of India aGer taking All India Registration and becoming National Level Society.

Whole of India.


Stamp Duty

Trust deed to be executed on non- judicial stamp paper, vary from state to state.

No stamp duty required for memorandum of association and rules and regulations.

No stamp duty required for memorandum and articles of association


Online filing facility

Online filing facility is available for:

  • tax returns and /or
  • audit Report
  • Annual accumulation declaration Compliances are not complicated & very little time consuming.

Online filing facility is not available. Everything has to be submitted in the office of Registrar of Societies in hard copy.

Compliances are more complicated & time consuming.

Online facility is available. The Compliances, like annual filing, appointment & removal of directors, shiGing of registered office, increase in capital, change in object clause & others can be done online at MCA portal. It is very easy, time saving and transparent process.


Revocable/ Irrevocable

Indian public charitable trusts are generally irrevocable. These can be dissolved as per process in the trust deed.

Societies may be dissolved. Dissolution must be approved by at least three-fiGhs of the society's members

A section 8 Company may be dissolved (winding up process)


In case of Inactiveness

Normally there is no issue if there are no material assets and liabilities.
If a trust becomes inactive due to the negligence of its trustees, the Charity Commissioner may take steps to revive the trust.

Furthermore, if it becomes too difficult to carry out the objects of a trust, the doctrine of cy pres, meaning "as near as possible," may be applied to change the objects of the trust.

Upon dissolution , and a Gersettlement of all debts and liabilities, the funds and property of the society may not be distributed among the members of the society. Rather, the remaining funds and property must be given or transferred to some other society, preferably one with similar objects as the dissolved entity.

Upon dissolution and aGer settlement of all debts and liabilities, the funds and property of the company may not be distributed among the members of the company. Rather, the remaining funds and property must be given or transferred to some other section 8 Company, preferably one having similar objects as the dissolved entity.



A Charitable trust is flexible in its management and no democratic selection of Governing Board of Trustee needed.
No mandatory filing except in relation to income tax.
Activities can be confidential as no mandatory publication of details of trustees, assets, liabilities, and other detail. No minimum amount for corpus. Credibility based on quality of work carried out

Various Financial and other assistance shall be available for education, birth of baby, Unemployment, sickness and medical expenses etc.

Tax Exemption

  • No minimum capital requirement
  • No stamp duty payable
  • Credibility as its clause of MOA and AOA are so strict that it cannot be amended without the permission of govt. Due to this feature it enjoys more public confidence.
  • No Stamp Duty required



  • Power of trustees are restricted by trust deed
  • Trust properties cannot be enjoyed by settlors, large donors, and trustees.
  • The charitable trust being a public property the trustees are answerable to public for any misuse.
  • Democratic elections are mandatory
  • The Rules and regulations laid by law are mandatory
  • Registrar of society can inspect the records and books.
  • Society members may have a tendency to seek answers to questions and seeking transparency
  • Profit can be applied for the promotion of main objects only. It cannot be used for the promotion of any other ancillary object.
  • Dividend are not allowed to be members.
  • No Remuneration shall be paid to a member whether it is a servant or employee.


Tax implications

  • Exempt from tax, however certain compliances are required to be followed to enjoy the privileges.
  • Income not applied for charitable purposes may be taxed if not planned properly

Exempt from tax, however certain compliances are required to be followed.

Section 8 company is completely exempt from tax, however certain compliances are required to be followed to enjoy the privileges.