Income tax category for scheme business

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This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

13 February 2014 If 4 person make a scheme for a business. The scheme of business:-
They Collect 1300 rs. per person for 13 month. They give this plan to 4300 person.
After then they will do draw every month.
On Every draw they will give motorcycle, Cars and Led etc. Which person number will be announced in draw he collect his gift and after then he will not pay any premium.
Remaining people will get 21000/- on the end of this plan(Last Month/13th Month).
There is also some profit after complete of this plan.

So now in which category they have to registered them. In partnership or AOP, or Club & Association.

Nikhil Kaushik

Nikhil Kaushik (Expert)

14 February 2014 just to confirm. each person will pay Rs 1300 per month for 13 months ie Rs 16900. And for all those who don't win anything, you give back 21000 per month? even assuming that you would give maximum gift for Rs 21000 per month, that too only one person each month, you would have 4287 people to be paid at the end. you would need to invest the surplus cash at 40% annualized to even break-even. thats not an easy thing to achieve for even the best in the markets.

At best these things are ponzi schemes used to fleece innocent investors...

regardless, you should register as a partnership/company.

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Querist : Anonymous

Querist : Anonymous (Querist)

14 February 2014 But if their 1st draw held in 15th march. They will collect 5590000/- but they distribute gifts only 7 ro 8 Lakhs. Then What is their gross receipt.
The Amount they collect has some liabilities then which part of collection is shown in gross receipt and liabilities.

Nikhil Kaushik

Nikhil Kaushik (Expert)

14 February 2014 well what you receive is the gross receipts. having liabilities against the same is not relevant.

Querist : Anonymous

Querist : Anonymous (Querist)

03 March 2014 Their first draw is on 15th march they collected 50(5000*1000) Lakhs and give prizes of 12 Lakhs and their expenses are 5 Lakhs. They have remained a some of 33 Lakhs. How profit of that firm will be calculated. They have to pay sum of money after end of this scheme feb of next year.