Trust registration and section-8 company registration
Hemlata Khandelwal / 2021-03-18 08:22:28If an organization donates its money for welfare, it is not counted in the benefit of the organization. This includes schools, colleges, religious organizations, hospitals (NGOs). Here we have to know about NGO registration in India and Section 8 is different from company trust and society.
Trust registration
Charitable organizations are known as trust in the oldest form. Private and public trusts are primarily designed for known individuals and or for the benefit of family members. It comes under the Indian Trust Act, 1882. The Indian Justice Act is not valid for public justice. which have separate Public Trust Acts.
It is easy to create and operate a trust if there is no dispute. But, if a dispute arises, the parties will have to go to court. A trust can be amended by the managing trustee or with prior approval from the Income Tax authorities as per the recall in the deed.
Document Required for trust registration
-
A bill of electricity or water is required to register the address.
-
At least two members of the company should have proof of identity. This can be proved from the list below:
-
Voter ID
-
Aadhar card
-
driving license
-
Passport
-
Society Registration
Societies are considered comparatively modern. Seven persons come together for a common resolution in a common body. They can be Indian or foreign. More members can be added. Each general body member has a vote.
In many states, societies in their original or modified form are governed by the Societies Registration Act, 1860. Governance and public filings differ from state to state. In general, every society has to file a list of members of the governing body every year. Some states also ask for the audited accounts to be filed.
Documents required for Society Registration
-
Name of the society.
-
Address proof of office.
-
Identity proof of all nine members:
-
Voter ID
-
Aadhar card
-
Driving license
-
Passport
Section 8 Company Registration
These companies are established under the Companies Act and it is a limited companies. The government gives these companies a special license under the Section 8 company. In a company that is limited by guarantee, there are no shares and therefore no shareholders. Members of a company who are limited by a guarantee are bound by a guarantee in the articles of association of the company, which requires them to pay the company a loan of up to a certain amount. There are three main conditions for this.
-
The company should form a charitable trust.
-
Profits and income should be used towards these items
-
The company should not pay any dividends to its members.
Requirements for Registration
-
Name of the company for approval.
-
Address proof of office. It can also be an electricity or water bill or house tax receipt.
-
Identity proof of all directors:
-
driving license
-
Copy of passport
-
Voter id
-
Aadhar card
-
Memorandum(M) of(o) Association(A) and Articles(A) of(o) Association(A) of the Company.
Is a trust or society or a Section 8 company a better NGO Registration?
In India, A charitable purpose is generally defined under section 2 (15) of the Income Tax Act. The charitable purpose mainly includes relief to the poor, education, yoga, medical aid, protection of environment and monuments or historical or artistic objects or places.
When choosing the form to be registered to make a non-governmental organization a non-profit, the entity must evaluate its areas of operation and objects, the individuals included in its constitution, and the income source to achieve its resolution. In order to facilitate decision making, a comparative analysis of all forms of registration available to non-profit entities viz. it should be done for Trust, Society, and Section 8 Company.
It is(section-8) a non-payment organization, that will makes several deductions on taxes and other benefits. The benefit is received under Section 80G of the Income Tax Act, 1961. The stamp duty is also lower for section-8 companies comparable for other companies.
Companies that are registered under section 8 do not require more share capital. They can simply funded by donations and membership made by them.
Unlike limited liability companies, which are not generally allowed to transfer ownership or title, but as per Section 8 of the Income Tax Act, 1961, Allows the transfer of ownership or title to movable and immovable interest with any type of restriction.
So, Company registration in India for a section 8 company is a better option than trust or society through this analysis.
