Registration of Associations under Society & Public Trust Acts.

Registration Of Associations. M.V.Ruparelia.

Although it is not statutorily compulsory for Associations to get registered, as per extant law (Section 41c of The Bombay Public Trusts Act, 1950), prior permission of Charity Commissioner is required to be obtained for collecting any money, subscription, donation etc for charitable or religious purposes. Provision of facilities for recreation or other leisure time occupation provided in the interest of social welfare and public benefit and advancement of any object of general public utility is considered as Charitable Purpose under that Act. This Act stipulates that every Trust may apply for registration within 3 months of its formation. In view of such a position, it may be better for Associations to get registered under The Societies Registration Act, 1860 and The Bombay Public Trusts Act, 1950 for proper Administration of Associations. Similar Acts & Rules exist for each State and there is not much change in requirements.

The Societies Registration Act, 1860.
The main aim of this Act is to improve the legal position of registered Societies/Associations. The procedure for registration is very simple and fees is only Rs.50. Any 7 or more persons may by subscribing their names to a Memorandum of Associations and filing the same along with Memorandum of Associations with the Registrar with fee of Rs.50 can form the Association. The Memorandum of Association shall contain the name and objects of Association. Copy of Rules & Regulations of the Association, certified by not less than 3 office bearers is also to be filed with names, addresses & occupations of all members of governing body/working committee. There is no prescribed form for registration. There is a Registration Office in every area & sub area notified. With effect from 1-7-1956, Registrar & Asst Registrars for State Of Maharashtra are Charity Commissioner, DY/Asst Charity Commissioners and all Societies/Associations are liable to be registered under The Bombay Public Trusts Act, 1950 also.
No Association shall be registered by a name, which in the opinion of Charity Commissioner is undesirable, being a name identical with existing Association. After necessary inquiries, Certificate of Registration shall be issued. After registration also, Association can alter its name, purpose, scope etc by following a laid down procedure with approval of Charity Commissioner. All Associations will continue to work according to their Rules & Regulations and there shall not be any interference in normal working after registration.
Every Association shall keep proper accounts of all receipts & payments, movable & immovable properties, all encumbrances, loans, advances etc in such details that Balance Sheet and Income & Expenditure Account can be prepared in prescribed Schedules III & IV of The Societies Registration (Maharashtra) Rules, 1971. The Accounts should be balanced every year as on 31st March or any other date laid down in Rules & Regulations of Association, as approved by Charity Commissioner. The Accounts are required to be audited by Auditor- by CA, if annual gross income is more than Rs. 5000 and by any other person authorized by State Government for such Audit, if income is Rs.5000 or less. Accounts should be got audited within 6 months of closing. It will be the duty of Auditor to prepare Balance Sheet and Income & Expenditure Account in the prescribed Schedule III & IV
with a Report on irregularities etc and send directly to Charity Commissioner within a fortnight of completion of audit. On receipt of audited accounts, these should be sent by Association also to Charity Commissioner and also put up before General Body for acceptance, as required under their Rules & Regulations. Associations, which are also registered under The Bombay Public Trusts Act, 1950 may follow the instructions under that Act for Accounts and need not send Schedule III & IV mentioned above.

Every year, a list of names, addresses & occupations of all members of Working Committee for the current year should be sent to Charity Commissioner in the prescribed Schedule I of Rules, 1971 within 14 days of holding General Body Meeting. If G.B. Meeting is not laid down in Rules & Regulations of the Association, such statement must be sent in January every year.
Every Association is required to maintain a List of all members indicating name, address, date of admission, signature of the member in prescribed Schedule VI.
List of employees of the Association, if any, is required to be sent in prescribed Schedule II as on 31st December every year.
Any person can inspect or get a certified copy of any document filed with Registrar by payment of prescribed fee.
For various matters, Schedules are laid down with definite instructions and target dates. Auditor & Charity Commissioner & his staff are required to be supplied with all information/record etc. All office bearers & all members are required to be honest in dealing with affairs of their Associations and are liable to be sued for any offence committed for breach of any Rules & Regulations of the Association.

The Bombay Public Trusts Act, 1950.

The aim of this Act is to regulate and make better provision for the administration of Trusts/Associations in the State. For registration, a form is prescribed in Schedule II, IIA & IIB of The Bombay Public Trusts Rules,1951. This form is available in office of Charity Commissioner at a nominal price and contains instructions for filling also. All forms prescribed in Rules, 1971 are available in office of Charity Commissioner and with some reputed stationers also. Court Fee stamp of Rs.2 is to be affixed on this Application. Fees for registration is Rs.100.All Trusts/Associations are required to apply for registration within 3 months of formation. After inquires, as necessary, Charity Commissioner will issue Certificate Of Registration before expiry of 6 months from the end of the month in which Application is received. Registration of Association under this Act does not make the Association a Trust, though all provisions of the Act apply to the Association. For creating a Trust, you need an owner of a property (called Author), who nominates Trustees and declares confidence in them for utilization of the said property for the benefit of beneficiaries.
Associations are at liberty to function as per their Rules & Regulations but all members have to be vigilant & honest in their dealings of Associations. They can change their Rules & Regulations, Office Bearers etc, as necessary by following the laid down procedure. All changes in any information including movable & immovable property already supplied to Charity Commissioner are required to be notified to Charity Commissioner within 90 days of occurrence of the change in the prescribed Schedule III of the Rules, 1951 with fee of Rs.100.
All Associations have to keep proper Accounts of all receipts & payments, movable & immovable properties, all encumbrances, loans, advances etc in proper details and in such form, as may be approved by Charity Commissioner. Accounts should be balanced as on 31st March or other date, as approved by Charity Commissioner. All accounts are required to be got audited within 6 months of closing by Chartered Accountant or the person authorized by State Government for such audit. The Auditor, after checking thoroughly, shall prepare Balance Sheet and Income & Expenditure Account in prescribed Schedules VIII & IX of the Rules, 1951. All Associations having annual income or collection or receipt of more than Rs.25000 have to pay a contribution at notified rate on worked out income of Association for which it is liable to pay contribution to the Public Trust Administration Fund. This will be as per details worked out by Auditor in prescribed Schedule IX C of Rules, 1951. Auditor shall send these 3 Schedules and his report to Charity Commissioner within a fortnight of completion of audit and give copies to Association also. Association will also send these to Charity Commissioner with payment of contribution and also get it passed by General Body Meeting.

Here, one thing is to be noted carefully. If there is a provision in Rules & Regulations of the Association to treat the membership fees, whether Life or Annual, as Corpus then only such receipts shall not be treated as income. Similarly, unless the donations received do not have written directives from donors to treat them as Corpus, all donations shall be treated as income. Money received by Associations and not required to be spent shortly should be deposited in Scheduled Bank, Postal S.B. or a Cooperative Bank approved by State Government and/or in approved Securities. Immovable property of the Association can not be sold, exchanged or gifted without prior permission of Charity Commissioner. Borrowing money also requires prior permission. For erring office bearers, Charity Commissioner has powers to remove, dismiss and suspend them and to appoint adhoc committee for administration of Association. Fines are laid down in Section 66 of the Act for various omissions, late submission/willfully giving wrong information etc.
All Associations having annual income exceeding Rs 10000 shall prepare and send to Charity Commissioner a Budget in prescribed Schedule VIIA of Rule,1951 one month before the commencement of each Accounting Year showing probable receipts and disbursement during the following year and making adequate provision for carrying out the objects of the Association.
A Register of all movable & immovable properties is required to be maintained in prescribed Schedule XAA of Rules, 1951.
Details of all Associations/Trusts are available with Charity Commissioner in the Register of Public Trusts in prescribed Schedule I of Rules, 1951. Any person can peruse and/or have details of any Association/Trust on payment of nominal fee.

Registration of Associations for 80 G.
According to recent Press Notification, all Institutes/Trusts/Associations requiring exemptions for their incomes received for charitable/religious purposes must get themselves registered with Income Tax Department under Section 12 A of the Income Tax Act, 1961 before 31st May, 2007 to get such exemptions for previous periods, failing which they will get exemptions only from the assessment year following the financial year in which they apply.

Associations/ Institutes/Trusts are required to pay Income Tax as Association of Persons, exemption limit for the current financial year 2007-08 being Rs. 110000. Associations registered under The Bombay Public Trusts Act,1950 and Section 12 A of Income Tax Act are entitled for exemption under Section 11 & 12 of Income Tax Act for income received for charitable/religious purposes to the extant, they utilize their income on objects specified in Trust Deed/Memorandum of Association. However, any part of such total income, if not spent during the year but accumulated for next year/s (not more than 5 years from 1-4-01) for future application to charitable purposes by obtaining permission of Assessing Officer in Form No 10 is also exempted. Those having income, before such exemptions, exceeding Rs 110000 are required to get accounts audited by C.A., obtain PAN Card and file Income Tax Return regularly with Audit Report in Form 10 B.

Objects of the Associations of Senior Citizens registered under The Societies Registration Act, 1860 and The Bombay Public Trusts Act, 1950 are treated as charitable. As per Section 12(1) of Income Tax Act, 1961, voluntary (Life and Annual) contributions/subscriptions and donations received are treated as income for charitable purpose. Subscriptions credited to Corpus as per bye-laws of the Associations of Senior Citizens and donations received with specific directions from donors for being credited to Corpus are not treated as Income but form part of Corpus, which is not taxable. For being eligible for getting exemptions, Associations of Senior Citizens have to get registered with Income Tax Department under Section 12 A of the Act by filling in Form No.10 A. The procedure is simple. This form is available with Income Tax Department and Chartered Accountants. It should be accompanied with Original or certified copy of Trust Deed/ Memorandum of Association, copies of Accounts of previous years (not more than 3 years), if existing since earlier years. Those having taxable income shall send Auditor’s Report as well as copy of PAN Card.

Associations of Senior Citizens do not have any sources of income except annual or Life Membership fees and voluntary contributions/donations from members and others. Donors generally expect Certificate under Section 80 G of the Act to get some relief in payment of their Income Tax for their donations. The procedure to get an authority from Income Tax Department for issuing such certificates to Donors is very simple and can be applied immediately on formation of Association. There is general impression that Association should wait for 3 years etc but this is not true. Registration is to be made under Sec 80 G (5) (vi) of the Act. Application is to be made in Form 10 G available with the Department/ Chartered Accountants. This form is to be sent in triplicate to Commissioner of Income Tax having jurisdiction over the Association with the following documents:
Copy of registration received under Section 12 A.
Notes on activities of Association since its inception or during last 3 years, whichever is less.
Copies of Accounts since inception or 3 years, whichever is less.

Registration shall generally be issued within 6 months of applying, excluding periods, if any of delay in-compliance of queries.

(Note: This is for guidance in brief and relevant Acts & Rules should be referred for detailed position).
(E/Mail: mvrup@yahoo.co.in ).