Society

The formation and registration process is very simple.

The requirement of Record-keeping is minimum and compliance with regulations is easy.

Compliance cost is low.

Least possibility of interference by the regulator.

Exemption from tax due to charitable essence of operations.

Tax exemption extended to societies may apply to the public trusts only to the extent the Income Tax department is accepts their activities as being charitable.

Since such institutions are of charitable nature, it is an unsuitable form of a commercial venture.

The notion of an equity investment or ownership is virtually absent; Hence, it is not attractive for commercial investors and interested in microfinance.

Commercial investors regard the investments in such entities as risky mostly on account of their lack of professionalism and managerial practices and political leanings( in some cases) and are, therefore, unwilling to provide large-scale funding to such bodies.

The Societies Registration Act, 1860 lays down the procedure for the registration of societies for various authentic purposes. The registration gives the society a legal status and is essential for:

Under Income Tax Act, obtaining registration and approval

lawful vesting of property in the societies;

provides authenticity and identification to the society before all authorities and the world at large; and

for opening bank accounts and transactions of a business.

When the society is registered, it and its members become bound to the same scale, as if each member had signed the memorandum of association. If any person Once registered under the Societies Registration Act, then society must bound its activities to the objects contained in its Memorandum. A society registered under the society Act enjoys the status of a legal entity apart from the members constituting it. A society so registered is a legal entity/person similar to an individual but with no physical existence. As such entity/person can buy and hold property and can sue and be sued in its own name. Society should be registered under the Act to obtain the status of a juridical person. In the nonappearance of registration, all the trustees in charge of the fund have alone a legal status and the society has no legal status, and, therefore, it cannot sue and be sued. If a society is not registered in society Act, it may exist in fact and theory, but not in the eyes of law. If benefits are to be taken, the registration of a society under the Act is required. An unregistered society cannot take benefits under the Income-tax act.