How trust is different from Section 8 Company

What is a Trust?
It is considered to be the oldest form of charitable organizations. It is, in essence, an arrangement between parties whereby one party holds ownership over property on behalf of another person
What is a Section 8 Company?
It is a company established with the purpose has in its objects the promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object and whereby they apply any profits into furthering the objective.
Difference between Trust and Section 8 Company
Sr. No	Particulars	Trust*	Section 8 Company
1	Governing Legislation	A trust is established under and governed by the Indian Trust Act, 1882 for private trusts. General law is applied for public trusts except in a few states such as Gujarat and Maharashtra, which have their own state laws.	Companies Act, 2013
2	Registered as	NGO/NPO	NGO/NPO. But they enjoy all the privileges of a limited company without the need for them needing to add Pvt. Ltd. to the name.
3	Document of constitution	Trust Deed	MOA and AOA (articles of association)
4	Registration Authority	Deputy Registrar of the state	Registrar of Companies (ROC) or Regional Director
5	Minimum members required	2 trustees minimum	2 directors and 2 shareholders. It should be noted that the directors may also be the shareholders.
6	Annual compliances	There are no mandatory yearly compliances to be met by a trust	The company must file the annual returns and accounts with the ROC.
7	Cost factor	Low	High
8	Grants and subsidies from the government	Not much	Considerable (possible)
9	Preference in registration under FCRA	Low preference	Preferred
10	Registration under The Income Tax Act, 1961	Allowed	Allowed
11	Transparency	Low	High
12	Legal right over the property	Held by the trustee	Held in the name of the company
13	Registration period (approximately)	15-20 days	30-45 days
14	Stamp duty	Dependent upon the state stamp duty Act a well as the total worth of the property involved in the matter.	None
*Note: As per Notification issued by Ministry of Corporate Affairs dated 22nd January 2021, it is mandatory for all NGO’s which wants to raise CSR Funding to enrol with MCA w.e.f 01/04/2021 to get CSR Funding. As per this notification from 01 April 2021 onwards, every entity, who intends to undertake any CSR activity, shall register itself with the Central Government by filing the Form CSR-1 electronically with the Registrar. On successful submission of Form CSR-1, a unique CSR Registration Number shall be generated by system automatically.
Following type of NGO’s are eligible to file Form CSR-1 on MCA Portal for getting CSR Funding
a)	A company established under section 8 of the Act, or a registered public trust or a registered society, registered under section 12A and 80 G of the Income Tax Act, 1961 (43 of 1961), established by the company, either singly or along with any other company, or
b)	a company established under section 8 of the Act or a registered trust or a registered society, established by the Central Government or State Government; or
c)	any entity established under an Act of Parliament or a State legislature; or
d)	a company established under section 8 of the Act, or a registered public trust or a registered society, registered under section 12A and 80G of the Income Tax Act, 1961, and having an established track record of at least three years in undertaking similar activities
Following documents are required for filing Form CSR-1
1.	Copy of PAN Card of the NGO
2.	Mail ID and Mobile Number
3.	Details of Governing Body Members
4.	Copy of Registration Certificate
5.	Digital Signature of the Authorized Person with his PAN Number

 

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