A soiciety is registered under Tamil Nadu Societies Registration Act 1977 as a parents association on an annual subscripttion basis and Life time member basis for the mutual benefit of the parents. A major portion of the annual subscripttion and interst income on corpusfund deposits are spent within the same year. A small surplus of few thousands is left at the year end .The assn does not engage in any commercial or profit making activities Is the Association liable to file IT Return and pay tax on the small surplus or is it entitled to basic exemption like individual assessees.Would be thankful for a clarification. Sundaram
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Taxation ofsocieties
Replies (1)
In Income Tax law, concept of mutuality is in force. As per this contributors and beneficiaries are identical and one can not make profit by dealing with himself. There is no taxable profit involved wherever such concepts applies.So surplus derived by a mutual concern is not chargeable to tax.
Where entire activity of the mutual concern is carried out for the mutuality principle and only for its members, it doesn't matter in what form the entity is constituted.
But, let us see other views also.
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