Registered Society

A society registered under the Societies Registration Act 1860 is governed by a managing committee elected by members, whereas a trust (registered under the Indian Trusts Act 1882 or state trust acts) is governed by a board of trustees with no elected membership structure, and a Section 8 company under the Companies Act 2013 is regulated by the Ministry of Corporate Affairs with mandatory annual ROC filings. Societies are generally preferred for membership-based organisations (professional bodies, sports clubs, alumni associations) because the democratic governance structure is embedded in Section 9 of the SRA 1860, which allows members to vote on dissolution, amendments, and committee elections. For income tax purposes, all three structures can qualify for exemption under Section 12AB of the Income Tax Act 1961, but Section 8 companies face higher compliance burdens including compulsory statutory audit under Section 138 of the Companies Act 2013 regardless of turnover.

A society must obtain FCRA registration under Section 11 of the Foreign Contribution (Regulation) Act 2010 before accepting any foreign contribution; prior permission under Section 11(2) is available for one-time grants if registration is not yet obtained. The society must have been in existence for at least three years with a minimum domestic expenditure of ₹15 lakh on charitable activities before applying for FCRA registration (Rule 9(1)(a) of the FCRA Rules 2011). All foreign contributions must be received exclusively into the FCRA-designated account at SBI New Delhi Main Branch or a permitted utilisation account, and any mixing with domestic funds violates Section 17 of the FCRA 2010, which carries penalties including cancellation of registration. Annual reporting is mandatory via Form FC-4 on the FCRA Online portal, and the auditor's report must accompany the filing.

Under Section 12AB of the Income Tax Act 1961 as amended by the Finance Act 2020, societies holding provisional registration must apply for final registration in Form 10AB at least six months before the five-year provisional period expires, or within six months of completion of the first year of activities, whichever is earlier. The Commissioner of Income Tax (Exemptions) examines audited accounts, activity reports, and compliance with prior orders before granting final registration. If 12AB registration lapses without timely renewal, all income of the society becomes fully taxable at the maximum marginal rate under Section 164 of the Income Tax Act 1961, retroactive to the lapse date, eliminating the Section 11 exemption on accumulated and applied income. Donors who received 80G deductions based on a lapsed registration may also face reassessment of their deduction claims.

A registered society can hold immovable property in the name of the society under Section 6 of the Societies Registration Act 1860, unlike an unregistered association. The property must be recorded as a fixed asset in the society's balance sheet at cost (or revalued amount under the ICAI Guidance Note on Accounting by Not-for-Profit Organisations) and disclosed in the notes with details of title, location, and any encumbrances. For income tax purposes, any capital gain arising from sale of property by a 12AB-registered society is eligible for exemption under Section 11(1A) of the Income Tax Act 1961, provided the net consideration is reinvested in charitable activities within the prescribed period. Societies receiving FCRA funds and using foreign contributions to acquire immovable property must report the asset in Form FC-4 under Rule 13 of the FCRA Rules 2011.

Dissolution of a society requires a special resolution passed by at least three-fifths of the members present at a general meeting called specifically for this purpose, as prescribed under Section 13 of the Societies Registration Act 1860. Upon dissolution, the remaining assets after settling all liabilities cannot be distributed among members—Section 14 of the SRA 1860 mandates that surplus assets be transferred to another society with similar objects or to the government, as specified in the society's rules. For a 12AB-registered society, any dissolution that results in assets being diverted for non-charitable purposes triggers deemed income under Section 115TD of the Income Tax Act 1961 (accreted income tax), taxable at the maximum marginal rate on the fair market value of net assets. The dissolution must be intimated to the Registrar of Societies with a dissolution certificate and final accounts.