Society - Annual Membership Fees

Hi Sridhar,

Here’s how you can treat the Admission Fee / Annual Membership Fees for your new society and related compliance:

1. Accounting Treatment: Can the entire ₹9,000 be added to Corpus Fund Account?

• Admission Fee (Membership Fee) is generally treated as income of the society, not directly added to Corpus Fund.

• Corpus Fund usually consists of donations, grants, or amounts specifically contributed for the long-term capital fund.

• So, ₹9,000 collected as admission fees should be credited to an “Income from Membership Fees” or “Subscripttion Income” account.

• When this amount is deposited into the bank, the entry will be:

   

  Dr. Bank A/c ₹9,000 Cr. Membership Fees Income A/c ₹9,000

• Only when you receive a specific donation meant for Corpus Fund (e.g., “Donation to Corpus Fund”) can it be credited to Corpus Fund account.

2. Applicability of 85% Spending on Charitable Purpose

• Section 11 and 12 of the Income Tax Act require a charitable trust/society to spend at least 85% of its income on charitable activities to claim exemption.

• This applies regardless of the amount — there is no minimum threshold exemption.

• So, even this small amount of ₹9,000 is subject to the 85% spending rule for claiming exemption under section 11.

• If not spent in the year, it can be carried forward and spent in the next year but should be tracked properly.

3. Should it be deposited in a specific account?

• The amount can be deposited in the general bank account.

• For clarity and audit purposes, maintain separate ledger accounts for:

  • Membership fees

  • Corpus fund

  • Expenses on charitable activities

• Track the receipt and utilization of funds separately for compliance and reporting.

Summary

Additional Tip: Since your 12A approval is pending, keep all records and receipts properly, as 12A approval is important for tax exemption.