Body of individuals - help needed
Puneetkumar Pattar
(Querist) 03 February 2012
This query is : Resolved
Hi all
I need to get some information about forming an entity to run a small self help kind of fund. We are about 70-80 people (friends from school, college, etc). 2 years back, one of us was in an urgent need of Rs 1 lac and we all contributed some money and gave it to him. He returned it to us and instead of distributing it, we opened an account and deposited it there so that it can be used by anyone else in need.
Later, we also decided to contribute some money (say Rs 5000 per annum) to this account. Now, the corpus has gone up to around Rs 2 lacs. We now understand that, very soon, the interest will be subject to TDS and the account holder will face an issue as to declaration of the source of fund. So, we are planning to register an entity to handle this.
Now, what entity do we register? Society, Trust, Association? Or something else.
Pl note that we don't have any business. We do not even have anything to do with anyone except the members. All we are doing is accepting money, saving it and giving to the ones in need for a short tenure. We do not charge interest as well. The only transaction that can be treated as income is the interest received from bank.
I request you to please guide us on how to go about forming an entity and also not lose too much money on formalities/taxes, etc
Thanking in anticipation
Raj Kumar Makkad
(Expert) 03 February 2012
Your entity is nothing but An Association of Persons. You should get it registered with your bye-laws. The taxation liability is very limited in this entity.
Puneetkumar Pattar
(Querist) 03 February 2012
Hi, could you please guide me with the legal / procedural aspects in this regard? Who do we register with? Considering that the only activity we will be doing is collection of funds for use by members, will it be called a finance business? Considering that we do NOT have a profit motive and will NOT be lending money on interest but to meet temporary needs, what kind of entity do we register? Kindly help
Raj Kumar Makkad
(Expert) 04 February 2012
You should collectively pass a resolution accepting bye-laws in writing. Each one should sign it and thereafter you should elect your office bearers to look after the affairs of your association. Then such elected persons should go to the office of registrar of firms and societies and follow its guidelines.
