Understanding the right legal structure is crucial when setting up a non-profit organization. The three most common structures in India are Trusts, NGOs, and Section 8 Companies. Each has distinct legal, operational, and financial characteristics. This guide explains the key differences between these entities to help you choose the best option for your organization.
Overview of Trusts, NGOs, and Section 8 Companies
- Trust: A legal arrangement where a settlor transfers property to trustees for public or private benefit.
- NGO (Non-Governmental Organization): A broad term encompassing various non-profit entities, including Trusts and Section 8 Companies.
- Section 8 Company: A non-profit organization registered under the Companies Act, 2013, with stricter regulations but better credibility.
Legal Structure and Governing Laws
- Trusts: Governed by the Indian Trusts Act, 1882 (for private trusts) or state laws (for public trusts).
- NGOs: Not a legal term; it includes Trusts, Societies, and Section 8 Companies.
- Section 8 Companies: Governed by the Companies Act, 2013 under the Ministry of Corporate Affairs (MCA).
Key Differences
| Criteria | Trust | NGO | Section 8 Company |
|---|---|---|---|
| Legal Status | Separate legal entity for public trusts | Not a legal term | Separate legal entity |
| Governing Body | Trustees | Varies | Board of Directors |
| Registration Authority | Sub-Registrar of Trusts | Varies | MCA |
| Compliances | Minimal | Depends on structure | High compliance |
| Profit Distribution | No profit distribution | No profit distribution | No profit distribution |
| Tax Exemption | 12A, 80G applicable | 12A, 80G applicable | 12A, 80G applicable |
| Foreign Funding (FCRA) | Limited | Depends on structure | Easier to get FCRA approval |
| Credibility | Moderate | Moderate | High credibility |
Which One Should You Choose?
- Trust: Ideal for small-scale charitable work such as schools, hospitals, and religious institutions.
- NGO (Society): Best for grassroots community work, membership-based organizations, and advocacy groups.
- Section 8 Company: The best choice for large-scale non-profits, social enterprises, and organizations requiring international funding.
Why Choose My Jama Kharch for NGO, Trust, and Section 8 Company Registration?
✔️ End-to-End Support: We handle documentation, registration, and compliance.
✔️ Tax & Legal Assistance: Expert guidance on 12A, 80G, and FCRA approvals.
✔️ Faster Registration: Hassle-free process with professional assistance.
📞 Get in touch with My Jama Kharch today!
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