Governing Law, Taxation and Compliances
S. No. |
Particulars |
Trust |
Society |
Section 8 Company |
1. |
Meaning |
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. |
2. |
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. |
3. |
Registration |
As Public Trust |
As NGO/ NPO |
As NGO/ NPO, enjoying the privileges of a limited company but without using the words “Limited” or “Private Limited” in its name. |
4. |
No. of minimum members required at the time of registration |
Minimum 2 |
Minimum 7 members. |
Minimum 2 directors and shareholders |
5. |
Registering authority |
Deputy Registrar of the relevant area. |
Registrar or Deputy Registrar of Societies of the State. |
Registrar of Companies (ROC) or Regional Director. |
6. |
Board of Management |
Trustees or board of trustees. |
The Governing council or Managing Committee. |
The board of directors. |
7. |
Trust Deed. |
Trust Deed. |
Memorandum and Rules & Regulations. |
MOA and AOA. |
8. |
Amendments |
Vide supplementary/ addendum to Trust deed. |
Amendments shall be made in the MoA and the Rules and Regulations. |
Procedure Prescribed under Companies act 2013. |
9. |
Cost factor |
Low |
Medium |
High |
10. |
Time Period involved in registration |
15-20 days |
20-25 days |
25-45 days |
11. |
Preference in case of Grant of subsidy by the Government |
Not much preferred. |
Not much preferred. |
Mostly preferred |
12. |
Legal title of property |
Vests in the hands of trustees. |
Held in the name of the society. |
Held in the name of the company. |
13. |
Preference in case of Foreign Contribution Regulation Act (FCRA) registration |
Not much preferred. |
Not much preferred. |
Mostly preferred |
14. |
Annual compliance requirement |
There are some annual compliance requirement:
Audit i s mandatory above specified limits |
Societies must file annually, with the Registrar of Societies, A list of the names, addresses and occupations of their managing committee members. |
There is requirement of Annual compliance of
|
15. |
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. |
16. |
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 |
17. |
Online filing facility |
Online filing facility is available for:
|
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. |
18. |
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) |
19. |
In case of Inactiveness |
Normally there is no issue if there are no material assets and liabilities. 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. |
20. |
Advantages |
A Charitable trust is flexible in its management and no democratic selection of Governing Board of Trustee needed. |
Various Financial and other assistance shall be available for education, birth of baby, Unemployment, sickness and medical expenses etc. |
Tax Exemption
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21. |
Disadvantages |
|
|
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23. |
Tax implications |
|
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. |