Difference Between Trust, Society and Section 8 Company

Difference Between Trust, Society and Section 8 Company. Non-Governmental Organisations (NGOs), also known as Non-Profit Organisations (NPOs), are established to support social, charitable, educational, religious, or scientific causes. In India, NGOs can be registered under three different legal structures: Trusts, Societies, and Section 8 Companies. Though all three serve similar charitable purposes, but they differ in their formation process, governance, compliance, and operational flexibility. This article explains the difference between Trust, Society and Section 8 Company in detail, helping you choose the most appropriate legal framework for your organisation.
What is a Trust?
A Trust is the oldest and most traditional form of non-profit organisation in India. It is created when a person (called the author or settlor) entrusts property to trustees for the benefit of a beneficiary. Trusts are generally formed to carry out charitable activities such as running schools, hospitals, shelters, or promoting art and culture. The document that governs the Trust is called the Trust Deed, and it contains all the details regarding objectives, roles of trustees, and use of assets. Trusts in India are governed by the Indian Trust Act, 1882, in the case of private trusts. Public charitable trusts are regulated by general law except in states like Maharashtra and Gujarat, where state-specific laws apply. Trusts are not regulated by any single central authority, which often results in fewer compliance obligations but less oversight and transparency. Key Characteristics of Trust:

Minimum two trustees required.

Registered with the Deputy Registrar of the state.

Governance is through trustees as per the Trust Deed.

No annual compliance mandatory.

Registration takes approximately 15-20 days.

Stamp duty depends on state laws and the value of the property involved.

What is a Society?
A Society is a collective body of individuals associated for promoting charitable, literary, scientific or social objectives. It requires at least seven people to come together with a shared mission. Societies are more democratic in nature as they involve elections and have a structured governing body. A Society is registered under the Societies Registration Act, 1860, and the governing document is the Memorandum of Association (MOA), which outlines its objectives and rules. The society is managed by a governing council or committee, which oversees the operations. Key Characteristics of Society:

Minimum of seven members required (five in Jammu & Kashmir and Telangana).

Registered with the Registrar of Societies.

Annual filing of list of members with the Registrar is mandatory.

MOA and rules and regulations serve as governing documents.

No stamp duty is required for registration.

Registration takes approximately 20-25 days.

Easy to wind up and has member exit flexibility.

What is a Section 8 Company?
A Section 8 Company is a legal entity registered under the Companies Act, 2013 for promoting commerce, arts, science, education, research, environment, social welfare and similar objectives. The key difference is that it enjoys the structure and recognition of a company without being profit-oriented. Section 8 Companies are governed by the Registrar of Companies (ROC) and require MOA and Articles of Association (AOA) for Section 8 Company registration. They are suitable for organisations aiming for national or international credibility, professional governance and eligibility for receiving government grants and FCRA registration. Key Characteristics of Section 8 Company:

Minimum of two directors and two shareholders (can be the same person).

Managed by a board of directors.

Mandatory annual filings with ROC.

Requires higher compliance but offers higher transparency.

Registration may take 30-45 days.

No stamp duty applicable.

High preference for FCRA registration and government grants.

Difference Between Trust, Society and Section 8 Company: Comparision Table

Particulars

Trust

Society

Section 8 Company

Governing Law

Indian Trust Act, 1882 (private trust)

Societies Registration Act, 1860

Companies Act, 2013

Legal Entity Status

Not a separate legal entity

Separate legal entity

Governing Document

Trust Deed

MOA + Rules and Regulations

MOA + AOA

Registration Authority

Deputy Registrar of the State

Registrar of Societies

Registrar of Companies

Minimum Members Required

Two trustees

Seven members

Two Directors and two Shareholders

Governance

Board of Trustees

Managing Committee

Board of Directors

Annual Compliance

Not mandatory

Annual member list to Registrar

Annual filing of returns and audit

Transparency

Low

High

Cost of Formation

Low

Medium

High

Government Grants

Rare

Considerable

FCRA Eligibility

Low

High

Income Tax Benefits

Available

Stamp Duty

Applicable based on property value

Not applicable

Property Ownership

In the name of trustee

In the name of society

In the name of company

Which One Should You Choose?
Choosing between a Trust, Society, or Section 8 Company depends on your long-term goals, number of people involved, compliance capabilities, and operational needs.
Trust
If you're starting an NGO with close family members or a small group of known individuals, a Trust may be the ideal structure. Trusts are known for their simplicity and long-term stability, especially when you want trustees to serve for life. They are governed by a Trust Deed and registered under the Indian Trusts Act, 1882 or state-specific legislation. This form requires minimal compliance, provides greater privacy, and suits those who prefer to avoid frequent elections or detailed reporting. It is best suited for private philanthropic activities, religious organizations, or legacy-based charitable work.
Society
If your NGO aims to be a community-driven organization with a democratic setup, forming a Society is a practical choice. Registered under the Societies Registration Act, 1860, societies offer the flexibility of periodic leadership elections, allowing fresh ideas and rotating governance. This structure is best for collaborative projects such as cultural groups, educational initiatives, and advocacy work. Societies also allow easy entry and exit of members, which is ideal for organizations that expect growth or change in their core team. The compliance is moderate, requiring regular meetings and annual filings, but not as stringent as Section 8 Companies.
Section 8 Company
If you plan to engage in large-scale charitable activities, especially those involving foreign donations, government grants, or corporate partnerships, a Section 8 Company is the most suitable option. Registered under the Companies Act, 2013, this form enjoys the highest credibility among NGOs due to its transparent structure and stringent compliance norms. It is perfect for those who want to undertake a wide range of social initiatives such as education, health, environment, or poverty alleviation. Section 8 Companies are also eligible for FCRA Registration, CSR-1 Registration, NITI Aayog Registration, and 12A & 80G registration, which enhance funding opportunities and tax exemptions.
Conclusion
Each structure of NGOs in India offers its own advantages and limitations. If you’re looking for minimal compliance and privacy, a Trust might suit you. If democratic participation and flexibility matter, go for a Society. However, if transparency, professionalism, and long-term scaling are your goals, a Section 8 Company is the best choice.
For expert assistance in NGO registration, compliance, and legal advisory, you may reach out to Compliance Calendar’s experts through mail info@ccoffice.in or Call/Whatsapp at +91 9988424211.
FAQs
Q1. What is the main difference between a Trust, a Society, and a Section 8 Company?
Ans. A Trust is created by a settlor transferring property to trustees for charitable purposes, governed by the Indian Trusts Act. A Society is an association of people working towards a common goal and is governed by the Societies Registration Act, 1860. A Section 8 Company is a not-for-profit company formed under the Companies Act, 2013, with stricter compliance but greater credibility.
Q2. Which registration structure is best for getting foreign donations (FCRA)?
Ans. A Section 8 Company is preferred for FCRA registration as it offers higher transparency, better governance structure, and regulatory compliance, making it more reliable in the eyes of government authorities.
Q3. Can I convert a Trust into a Section 8 Company or Society?
Ans. Yes, conversion is possible but involves legal procedures, amendments in governing documents, and approvals from regulatory authorities such as the Registrar of Companies or Societies, depending on the target structure.
Q4. How many members are required to start a Trust, Society, and Section 8 Company?
Ans. A Trust requires at least 2 trustees, a Society needs at least 7 members (5 in Telangana and J&K), and a Section 8 Company needs a minimum of 2 directors and 2 shareholders (who can be the same individuals).
Q5. Which structure is easiest to wind up or dissolve?
Ans. Societies are generally easier to dissolve due to simpler legal procedures. Trusts and Section 8 Companies require more formal processes involving courts or government authorities.
Q6. Is annual compliance mandatory for all three structures?
Ans. No. Trusts have no mandatory annual compliance. Societies must file an annual list of governing body members, while Section 8 Companies have strict annual filing and audit requirements under the Companies Act, 2013.
Q7. Can a Section 8 Company receive government grants?
Ans. Yes, Section 8 Companies are eligible and often prioritized for government grants and subsidies due to their robust legal structure and transparency.
Q8. Which structure is best suited for a long-term, large-scale NGO project?
Ans. A Section 8 Company is ideal for large-scale projects due to its professional governance, credibility, funding eligibility, and structured legal framework.

Non-Governmental Organisations (NGOs), also known as Non-Profit Organisations (NPOs), are established to support social, charitable, educational, religious, or scientific causes. In India, NGOs can be registered under three different legal structures: Trusts, Societies, and Section 8 Companies. Though all three serve similar charitable purposes, but they differ in their formation process, governance, compliance, and operational flexibility. This article explains the difference between Trust, Society and Section 8 Company in detail, helping you choose the most appropriate legal framework for your organisation.

What is a Trust?

A Trust is the oldest and most traditional form of non-profit organisation in India. It is created when a person (called the author or settlor) entrusts property to trustees for the benefit of a beneficiary. Trusts are generally formed to carry out charitable activities such as running schools, hospitals, shelters, or promoting art and culture. The document that governs the Trust is called the Trust Deed, and it contains all the details regarding objectives, roles of trustees, and use of assets. Trusts in India are governed by the Indian Trust Act, 1882, in the case of private trusts. Public charitable trusts are regulated by general law except in states like Maharashtra and Gujarat, where state-specific laws apply. Trusts are not regulated by any single central authority, which often results in fewer compliance obligations but less oversight and transparency. Key Characteristics of Trust:

Minimum two trustees required.
Registered with the Deputy Registrar of the state.
Governance is through trustees as per the Trust Deed.
No annual compliance mandatory.
Registration takes approximately 15-20 days.
Stamp duty depends on state laws and the value of the property involved.

What is a Society?

A Society is a collective body of individuals associated for promoting charitable, literary, scientific or social objectives. It requires at least seven people to come together with a shared mission. Societies are more democratic in nature as they involve elections and have a structured governing body. A Society is registered under the Societies Registration Act, 1860, and the governing document is the Memorandum of Association (MOA), which outlines its objectives and rules. The society is managed by a governing council or committee, which oversees the operations. Key Characteristics of Society:

Minimum of seven members required (five in Jammu & Kashmir and Telangana).
Registered with the Registrar of Societies.
Annual filing of list of members with the Registrar is mandatory.
MOA and rules and regulations serve as governing documents.
No stamp duty is required for registration.
Registration takes approximately 20-25 days.
Easy to wind up and has member exit flexibility.

What is a Section 8 Company?

A Section 8 Company is a legal entity registered under the Companies Act, 2013 for promoting commerce, arts, science, education, research, environment, social welfare and similar objectives. The key difference is that it enjoys the structure and recognition of a company without being profit-oriented. Section 8 Companies are governed by the Registrar of Companies (ROC) and require MOA and Articles of Association (AOA) for Section 8 Company registration. They are suitable for organisations aiming for national or international credibility, professional governance and eligibility for receiving government grants and FCRA registration. Key Characteristics of Section 8 Company:

Minimum of two directors and two shareholders (can be the same person).
Managed by a board of directors.
Mandatory annual filings with ROC.
Requires higher compliance but offers higher transparency.
Registration may take 30-45 days.
No stamp duty applicable.
High preference for FCRA registration and government grants.

Difference Between Trust, Society and Section 8 Company: Comparision Table

Particulars	Trust	Society	Section 8 Company
Governing Law	Indian Trust Act, 1882 (private trust)	Societies Registration Act, 1860	Companies Act, 2013
Legal Entity Status	Not a separate legal entity	Separate legal entity	Separate legal entity
Governing Document	Trust Deed	MOA + Rules and Regulations	MOA + AOA
Registration Authority	Deputy Registrar of the State	Registrar of Societies	Registrar of Companies
Minimum Members Required	Two trustees	Seven members	Two Directors and two Shareholders
Governance	Board of Trustees	Managing Committee	Board of Directors
Annual Compliance	Not mandatory	Annual member list to Registrar	Annual filing of returns and audit
Transparency	Low	Low	High
Cost of Formation	Low	Medium	High
Government Grants	Rare	Rare	Considerable
FCRA Eligibility	Low	Low	High
Income Tax Benefits	Available	Available	Available
Stamp Duty	Applicable based on property value	Not applicable	Not applicable
Property Ownership	In the name of trustee	In the name of society	In the name of company

Which One Should You Choose?

Choosing between a Trust, Society, or Section 8 Company depends on your long-term goals, number of people involved, compliance capabilities, and operational needs.

Trust

If you're starting an NGO with close family members or a small group of known individuals, a Trust may be the ideal structure. Trusts are known for their simplicity and long-term stability, especially when you want trustees to serve for life. They are governed by a Trust Deed and registered under the Indian Trusts Act, 1882 or state-specific legislation. This form requires minimal compliance, provides greater privacy, and suits those who prefer to avoid frequent elections or detailed reporting. It is best suited for private philanthropic activities, religious organizations, or legacy-based charitable work.

Society

If your NGO aims to be a community-driven organization with a democratic setup, forming a Society is a practical choice. Registered under the Societies Registration Act, 1860, societies offer the flexibility of periodic leadership elections, allowing fresh ideas and rotating governance. This structure is best for collaborative projects such as cultural groups, educational initiatives, and advocacy work. Societies also allow easy entry and exit of members, which is ideal for organizations that expect growth or change in their core team. The compliance is moderate, requiring regular meetings and annual filings, but not as stringent as Section 8 Companies.

Section 8 Company

If you plan to engage in large-scale charitable activities, especially those involving foreign donations, government grants, or corporate partnerships, a Section 8 Company is the most suitable option. Registered under the Companies Act, 2013, this form enjoys the highest credibility among NGOs due to its transparent structure and stringent compliance norms. It is perfect for those who want to undertake a wide range of social initiatives such as education, health, environment, or poverty alleviation. Section 8 Companies are also eligible for FCRA Registration, CSR-1 Registration, NITI Aayog Registration, and 12A & 80G registration, which enhance funding opportunities and tax exemptions.

Conclusion

Each structure of NGOs in India offers its own advantages and limitations. If you’re looking for minimal compliance and privacy, a Trust might suit you. If democratic participation and flexibility matter, go for a Society. However, if transparency, professionalism, and long-term scaling are your goals, a Section 8 Company is the best choice.

For expert assistance in NGO registration, compliance, and legal advisory, you may reach out to Compliance Calendar’s experts through mail info@ccoffice.in or Call/Whatsapp at +91 9988424211.

FAQs

Q1. What is the main difference between a Trust, a Society, and a Section 8 Company?

Ans. A Trust is created by a settlor transferring property to trustees for charitable purposes, governed by the Indian Trusts Act. A Society is an association of people working towards a common goal and is governed by the Societies Registration Act, 1860. A Section 8 Company is a not-for-profit company formed under the Companies Act, 2013, with stricter compliance but greater credibility.

Q2. Which registration structure is best for getting foreign donations (FCRA)?

Ans. A Section 8 Company is preferred for FCRA registration as it offers higher transparency, better governance structure, and regulatory compliance, making it more reliable in the eyes of government authorities.

Q3. Can I convert a Trust into a Section 8 Company or Society?

Ans. Yes, conversion is possible but involves legal procedures, amendments in governing documents, and approvals from regulatory authorities such as the Registrar of Companies or Societies, depending on the target structure.

Q4. How many members are required to start a Trust, Society, and Section 8 Company?

Ans. A Trust requires at least 2 trustees, a Society needs at least 7 members (5 in Telangana and J&K), and a Section 8 Company needs a minimum of 2 directors and 2 shareholders (who can be the same individuals).

Q5. Which structure is easiest to wind up or dissolve?

Ans. Societies are generally easier to dissolve due to simpler legal procedures. Trusts and Section 8 Companies require more formal processes involving courts or government authorities.

Q6. Is annual compliance mandatory for all three structures?

Ans. No. Trusts have no mandatory annual compliance. Societies must file an annual list of governing body members, while Section 8 Companies have strict annual filing and audit requirements under the Companies Act, 2013.

Q7. Can a Section 8 Company receive government grants?

Ans. Yes, Section 8 Companies are eligible and often prioritized for government grants and subsidies due to their robust legal structure and transparency.

Q8. Which structure is best suited for a long-term, large-scale NGO project?

Ans. A Section 8 Company is ideal for large-scale projects due to its professional governance, credibility, funding eligibility, and structured legal framework.