society is membership organizations registered to government authorities
minimum of seven individuals are required to form a society
applicants must register the society with the state registrar of societies having jurisdiction in order to be eligible to apply for tax-exempt status.
usually managed by managing committee.
governed by the societies registration act 1860, which has been adapted by various states.
unlike trusts, societies may be dissolved.
india provides for exemption from corporate income taxes of the income of certain ngos carrying out specific types of activities, with unrelated business income being subject to tax under certain circumstances
not-for-profit organizations involved in relief work and in the distribution of relief supplies to the needy are 100% exempt from indian customs duty on the import of items such as food, medicine, clothing and blankets. other exemptions may also be available.
applicable laws
constitution of india articles 19(1)(c) and 30;
income tax act, 1961;
societies registration act, 1860;
foreign contribution (regulation) act, 1976;
the right of all citizens to form associations or unions is guaranteed by the constitution of india, article 19(1)(c).
not-for-profit society are required to file annual tax returns and audited account statements with the registrar of societies (referred to in some states by different titles, including the registrar of joint stock companies), and the registrar of companies (for section 25 companies). at the national or federal level, the regulatory bodies include the income tax department and ministry of home affairs (only for not-for-profit organizations receiving foreign contributions).
registration application includes the society's memorandum of association and rules and regulations. in general, indian citizens serve as members of the managing committee or governing council of societies, although there is no prohibition in the societies registration act against non-natural legal persons or foreigners serving in this capacity.
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;
societies established for the promotion of science, literature, or the fine arts,
for education; and
public art museums and galleries, and certain other types of museums.
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, unlike trusts, must file annually, with the registrar of societies, a list of the names, addresses and occupations of their managing committee members. furthermore, in a society, all property is held in the name of the society
societies may be dissolved. dissolution 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. instead, the remaining funds and property must be given or transferred to some other society, preferably one with similar objects.
there are no restrictions on business/commercial/economic activities. however, the profits must be applied fully towards charitable objects. if this is not done, then society will lose its income tax exemption and its income will be liable to tax at the maximum marginal rate. further the society must maintain separate books of account for the business/commercial/economic activities.
state and national laws limit the types of investments indian not-for-profit organizations may make. for example, indian not-for-profit organizations may not invest in shares of public or private limited companies. furthermore, not-for-profit organizations registered in india may not invest abroad.
not-for-profit organizations in india may not engage in political campaign activities or legislative activities. indian not-for-profit entities may "lobby" for non-political causes, however, provided that such activity promotes the "general public utility" and is incidental to the attainment of the charity's objects.
article 30 of the constitution of india gives all "minorities," whether based on religion or language, the right to establish and administer educational institutions of their choice. "minority" is defined as those groups that wish to preserve stable ethnic, religious or linguistic traditions or characteristics markedly different from those of the rest of the population. accordingly, special inquiry should be made when donors are considering providing grants to educational institutions.
all members of the society are expected to be independent.
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;
no part of the income or property of the organization may be used or applied directly or indirectly for the benefit of the founder, trustee, relative of the founder or trustee or a person who has contributed in excess of rs. 50,000 to the organization in a financial year;
the organization must timely file its annual income return; and
the income must be applied or accumulated in india.
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.
the income tax act, section 80g, sets forth the types of donations that are tax-deductible. the act permits donors to deduct contributions to trusts, societies and section 25 companies. many institutions listed under 80g are government-related; donors are entitled to a 100% deduction for donations to some of these government funds. donors are generally entitled to a 50% deduction for donations to non-governmental charities. total deductions taken may not exceed 10% of the donor's total gross income.
the following are examples of governmental charities listed in section 80g, contributions to which entitle the donor to a 100% deduction: the prime minister's national relief fund; the prime minister's armenia earthquake relief fund; the africa (public contributions india) fund; and the national foundation for communal harmony.
under the foreign contribution (regulation) act, 1976 (fcra), all not-for-profit organizations in india (e.g., public charitable trusts, societies and section 25 companies) wishing to accept foreign contributions must a) register with the central government; and b) agree to accept contributions through designated banks. furthermore, not-for-profit entities must report to the central government regarding foreign contributions received, within 30 days of their receipt, and must file annual reports with the home ministry. the entity must report the amount of the foreign contribution, its source, the manner in which it was received, the purpose for which it was intended, and the manner in which it was used. foreign contributions include currency, securities, and articles, except personal gifts under rs. 1,000 (approximately $20). funds collected by an indian citizen in a foreign country on behalf of a not-for-profit entity registered in india are considered foreign contributions. moreover, funds received in india, in indian currency, if from a foreign source, are considered foreign contributions.
according to fc(r)a guidelines if 50% or more of the office bearers (not members of the board of management) of a trust/society or section 25 company change, the organization must apply to the home ministry for approving the change. this approval could take as long as three to four months. however, in the interim period, the fc(r)a registration granted to the organization would stand suspended.
fc(r)a guidelines require that an organization allowed to receive funds from a foreign source, may provide funds from its fc(r)a account to another organization, only if the other organization also has clearance from the home ministry to receive funds from a foreign source. if the foreign donor agency specifies in writing that the whole or part of the grant may be taken to corpus”, the recipient organization may do so. such corpus fund may be invested in an approved security.
the interest or dividend generated should be accounted for as amount received by way of interest on deposit drawn out of funds received from a foreign source.
in other words, even the interest/dividend received in india in indian rupees must be disclosed in the return form fc-3.
not-for-profit organizations involved in relief work and in the distribution of relief supplies to the needy are 100% exempt from customs duty on the import of items such as food, medicine, clothing and blankets. moreover, other exemptions may be available, such as an exemption from customs duty for scientific/technical equipment and components intended for research institutes. donors should investigate whether an exemption from customs duty is available before shipping articles to not-for-profit entities in india.
taken from reference
1-name same as per memorandum.
2-address same as per memorandum.
3-area of operation same as per memorandum
4-objects: same as per memorandum
5-membership this should contain different type of members such as life, ordinary,patron.exofficio etc.
6-ceasation of membership this should contain provision regarding ceasation of member ship such as death,insolvancy,insanity,default in paying fee etc.
7-body of society
(a) general body
(b) executive or governing body
8- general body
(a) formation: all types of members will constitute the general body.
(b) meetings :provision regarding convening ordinary and special general meeting.
(c) notice period:what will be the notice period of general body meeting and how it will be served.
(d) quarum: provision regarding minimum number required to hold a meeting .
(e) rights and duties of general body: this should contain clearly spelled out provision regarding rights and duties of general bodies such as election of executive bodies,passing of annual budget changes in bye laws etc.
9- executive body:
(a) formation: all types of members will constitute the general body.
(b) meetings :provision regarding convening ordinary and special general meeting.
(c) notice period:what will be the notice period of general body meeting and how it will be served.
(d) quarum: provision regarding minimum number required to hold a meeting .
(e)rights and duties of general body: this should contain clearly spelled out provision regarding rights and duties of
(f) tenure: the tenure of executive body must be mentioned. it can vary from one to five years and is fixed but can not be varied.
10-rights and duties of office bearers rights and duties of each office beares as mentioned in of executive body memoranudm must be given in this column.
11-amendments in memorandum procedure regarding amendments in memorandum and bye and bye laws. laws must be mentioned clearly.
12-funds of society how a society will raise the fund to fulfill its objective and how they will be maintained,given clearly.a society must maintain a bank account in any bank or post office and name of the person who will operate the account.
13-audit of account this column must contain provision of audit of accounts by a recognised chartered accountant.
14-liabilities in legal matters this must contain name of the office bearers who will will be liable of taking legal action in case society is sued by others or vice versa.
15-records of societies this must contain the list of books to be maintained by the societies such as members register,minute book,cash book,ledger etc.
16-dissolution of societies a society can be dissolved as per section 13 and 14 of society registration act 1860 after dissolution property of society will go to another society and not to its members or any individual.
17- other provision this may contain any other provision which is relevant to achieve its main object.
note:
1 - bye laws must type written on thick durable paper one sided only in the order given above.
2 - each page of bye laws must be signed by at least three member of executive body.
3 - objects must not be repeated in bye laws if it is repeated then they must be identical to those of memorandum.
4 - if there is any contradiction between provision of bye laws with the provision of act,the provision of act will prevail.
uttarakhand society document templates .. are here