Concept of SOCIETY in India
Societies are governed by the Societies Registration Act 1860, which is an all-India Act.
According to section 20 of the Act, the types of societies that may be registered under the Act include, but are not limited to, the following: Charitable Societies established for the promotion of science, literature, or the fine arts, education and Public art museums and galleries, and certain other types of museums.
The societies managed by a governing council or managing committee, Individuals or institutions or both may be members of a society. The general body of members delegates the management of day-to-day affairs to the managing committee, which is usually elected by the membership. Members of the general body of the society have voting rights and can demand the submission of accounts and the annual report of the society for inspection. Members of the managing committee may hold office for such period of time as may be specified under the bylaws of the society.
Societies must file annually with the Register of Societies, a list of the names, addresses and occupations of their managing committee members. Dissolution of the society must be approved by at least three- fifths of the society’s members. Upon dissolution, and after settlement of all debts and liabilities, the funds and property of the society may not be distributed among the members of the society. Rather, the remaining funds and property must be given or transferred to some other society, preferably one with similar objects as the dissolved entity.
- GENERAL SCHEME
The Income Tax Act, 1961, which is a national all-India Act, governs tax exemption of not-for-profit entities. Organizations may qualify for tax- exempt status if the following conditions are met:
The organization must be organized for religious or charitable purposes;
The organization must spend 85% of its income in any financial year (April 1st to March 31st) on the objects of the organization. The organization has until 12 months following the end of the financial year to comply with this requirement. Surplus income may be accumulated for specific projects for a period ranging from 1 to 5 years;
The funds of the organization must be deposited as specified in section 11(5) of the Income Tax Act
- Corpus Donations
Corpus donations or donations to endowment are capital contributions and should not be included to compute the total income of the organization.
- Business Income
Under amendments to Section 11(4A) of the Income Tax Act 1961, a not- for-profit organization is not taxed on income from a business that it operates that is incidental to the attainment of the objects of the not-for- profit organization, provided the entity maintains separate books and accounts with respect to the business. Furthermore, certain activities resulting in profit, such as renting out auditoriums, are not treated as income from a business.
- Disqualification from Exemption
The following groups are ineligible for tax exemption: all private religious trusts; and charitable trusts or organizations created after April 1, 1962, and established for the benefit of any particular religious community or caste. But note that a trust or organization established for the benefit of “Scheduled Castes, backward classes, Scheduled Tribes or women and children” is an exception; such a trust or organization is not disqualified, and its income is exempt from taxation.
- TAX EXEMPTION FOR DONOR
The person who will give donation, he/she will get the deduction to under section 80G of the Income tax Act, 1961
Provided that such society must be registered under the Section 80G and 12AA of the Income Tax Act, 1961
MANDATORY REQUIREMENT FOR SOCIETY REGISTRATION
- Seven Members required (Blood relation should not exist
- Memorandum of Association
- Rules and Regulations
- Consent Letter of all the members
- Authority Letter duly singed by all the members •An Affidavit sworn by the president or secretary
- Declaration for using of funds only for society benefits