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TRUST V/S SOCIETY V/S SECTION 8 CO.
| Aspect | Trust | Society | Section 8 Company |
|---|---|---|---|
| Definition | A Trust is a legal arrangement where assets are held by trustees for the benefit of beneficiaries, typically for charitable purposes. | A Society is a group of individuals coming together to achieve a common charitable, cultural, educational, or scientific goal, governed under the Societies Registration Act, 1860. | A Section 8 Company is a non-profit company formed under the Companies Act, 2013, with the primary goal of promoting social welfare, arts, education, or similar objectives, without profit distribution. |
| Governing Act | Indian Trusts Act, 1882 (for private trusts) or state-specific laws (for public trusts). | Societies Registration Act, 1860 (governed at the state level). | Companies Act, 2013 (Section 8 under the Companies Act). |
| Minimum Members | At least 2 trustees (for private trusts), or a minimum of 2 trustees for a public trust. | At least 7 members for state-level registration, and 8 members from different states for national-level societies. | At least 2 directors and 2 shareholders. |
| Governance Structure | Managed by trustees who handle all the decisions and operations. The trustees are responsible for fulfilling the charitable objectives. | Governed by an elected committee (such as a president, secretary, and treasurer) that handles all operations. | Managed by a Board of Directors, which operates according to formalized governance structures and professional management standards. |
| Credibility | Trusts offer less formal recognition and may not inspire as much public trust, especially for large-scale operations. | Societies are generally viewed as more credible than trusts and can easily attract grants and donations, though they are not as professional as Section 8 companies. | Section 8 Companies have the highest credibility among non-profits because they are regulated by the Registrar of Companies (ROC) and must meet formal compliance requirements. |
| Tax Benefits | Trusts can avail tax exemptions under Section 11 and Section 12 of the Income Tax Act, provided they meet the criteria for charitable activities. | Societies are also eligible for tax exemptions under Section 12A of the Income Tax Act, similar to trusts. | Section 8 Companies are eligible for tax exemptions under Section 8 of the Companies Act and Section 12A of the Income Tax Act. |
| Fundraising | Trusts have limited options for raising funds, especially for foreign donations. | Societies can access funds through donations, government grants, and membership fees. | Section 8 Companies have broader opportunities to raise funds from both domestic and foreign sources and are more trusted by international donors. |
| Transparency | Trusts are less transparent due to minimal filing requirements. However, public trusts must maintain some degree of transparency. | Societies must file annual returns and maintain records, but they are often less rigorous than Section 8 Companies. | Section 8 Companies are required to adhere to strict reporting and transparency norms, including annual filings and audits with the Registrar of Companies. |
| Registration Process | Registration of a trust is relatively simple and quick, requiring the trust deed to be filed with the appropriate authorities. | Societies are registered with the Registrar of Societies, requiring a more formal process involving members' approval. | The process is more formal and involves submitting an application to the Registrar of Companies (ROC), along with the company's objectives and draft Memorandum of Association (MOA). |
| Annual Compliance | Trusts have minimal compliance requirements. However, public trusts must file annual returns and maintain books of accounts. | Societies are required to file annual returns and submit audits, making them more compliant than trusts but less so than Section 8 companies. | Section 8 Companies must submit annual reports, maintain detailed financial records, and undergo audits regularly, ensuring high accountability. |
| Foreign Funding | Trusts face restrictions on foreign funding and often need FCRA registration for accepting foreign donations. | Societies have some access to foreign funding but may need FCRA registration to receive international donations. | Section 8 Companies are best suited for receiving foreign donations and can easily access funding from international sources, subject to FCRA registration. |
| Flexibility | Trusts offer greater flexibility in management, as the trustees can decide on various matters independently. | Societies require more democratic processes, with decisions made by an elected committee and often needing approval from a larger body of members. | Section 8 Companies have a formal structure, which makes them less flexible compared to trusts and societies, but more suitable for large-scale operations and compliance-driven work. |
| Ideal For | Small-scale charitable projects with limited scope, especially where flexibility and privacy are important. | Larger community-focused projects, such as educational and social welfare organizations that need a more formal governance structure. | Large-scale, professional non-profits with transparent operations, requiring formal governance and access to significant funding opportunities. |