Choosing a Vehicle: Trust, Society or Section 8 Company

A person who wants to set up a charity in India has three main legal forms to choose from: a public charitable trust, a society registered under the Societies Registration Act, 1860 (or a State equivalent), or a Section 8 company under the Companies Act, 2013. All three can obtain tax exemption and receive donations, but they differ in legal personality, governance, regulation, flexibility and permanence. This note compares them so that the choice can be made deliberately.

1. The Three Forms

Public charitable trust: created by a trust deed (or will) dedicating property to a charitable or religious purpose, managed by trustees. Governed by the general law of public trusts, Section 92 CPC and, where applicable, a State public trusts Act (Topics 40 to 42). It is not a legal person; the trustees hold the property.
Society: an association of at least seven persons who subscribe to a memorandum of association for a literary, scientific or charitable purpose and register it under the Societies Registration Act, 1860 or a State Act. Managed by a governing body elected by members.
Section 8 company: a company licensed under Section 8 of the Companies Act, 2013 to promote commerce, art, science, sports, education, research, social welfare, religion, charity, protection of the environment or similar objects, which applies its profits to those objects and prohibits dividends to members.

2. Comparison

Feature	Public trust	Society	Section 8 company
Legal personality	None; trustees hold property	Limited; in many States property vests in the governing body or trustees, and suits are by or against office bearers	Full separate legal personality and perpetual succession
Minimum founders	One author and trustees (often two or more)	Seven or more members	Two (private) or seven (public) members
Governing document	Trust deed	Memorandum and rules or bye-laws	Memorandum and articles of association
Control	Trustees, often self-perpetuating as the deed provides	Members elect the governing body; democratic	Members and board of directors
Changing objects	Difficult; usually needs court or Charity Commissioner sanction	By special resolution of members, subject to the Act	By special resolution and approval of the central government
Regulator	Charity Commissioner or similar (where a State Act applies); otherwise courts	Registrar of Societies	Registrar of Companies and the Ministry of Corporate Affairs
Compliance burden	Generally lowest, unless a State Act applies	Moderate; annual filings with the Registrar in many States	Highest; Companies Act filings, board meetings, audit
Winding up	Property must stay in charity; cy-près applies	Surplus to another society with similar objects, not members	Assets to another Section 8 company with similar objects

3. Factors in the Choice

Priority	Usual choice	Why
Simplicity and control by a founder or family	Trust	Few formalities; the founder can define a stable board of trustees in the deed
Membership-based organisation with democratic governance	Society	Members elect office bearers; suited to associations, clubs and community bodies
Credibility with institutional donors, corporate partners and foreign funders	Section 8 company	Corporate governance, transparency and separate legal personality
Large operations, many employees and contracts	Section 8 company	Clear legal personality and limited liability
Holding religious property for a fixed purpose	Trust	Permanence and fidelity to the founder's purpose

4. Common Features

Tax exemption: all three can register as non-profit organisations under income tax law, apply income to their objects, and obtain approval for donors to claim deductions (Topic 48).
Foreign contributions: all three need registration or prior permission under the FCRA, 2010 to receive foreign funds (Topic 49).
CSR: all three may implement corporate social responsibility projects for companies, subject to registration with the Ministry of Corporate Affairs as implementing agencies.
Non-distribution: none may distribute profits or assets to its founders or members.

⚠ Note

Private family purposes cannot be pursued through any of these charitable forms. A family that wishes to hold and manage assets for its members uses a private trust under the Indian Trusts Act (Topic 54).

⚠ Key point

Charities in India commonly use a public trust (simplest, founder controlled, no legal personality, hard to change, governed by trust law, Section 92 CPC and State Acts), a society (membership based and democratic, at least seven members, registered with the Registrar of Societies), or a Section 8 company (full legal personality, no dividends, highest compliance, regulated by the Ministry of Corporate Affairs, favoured by institutional donors). All can obtain tax exemption, FCRA registration and CSR eligibility, and none may distribute surplus to members. The choice turns on control, governance, credibility, scale and permanence.

5. Related Topics and Provisions

Private and public trusts (Topic 40)
Statutory regulation of public trusts (Topic 42)
Taxation of charitable and religious trusts (Topic 48)
FCRA, PMLA and beneficial ownership (Topic 49)