When we think of financial administration of a registered society, we don’t mean just administering finance; rather it is much wider than the finance; it includes the organizational structure, officials and their roles, Governing Body, financial policy, monitoring, audit, reporting, record keeping, etc. Here is an attempt to understand the role of each of these in financial administration.
- Organizational set-up: We run all our institutions and activities under the umbrella of a registered society. This is to say that all our institutions and activities are run as units of the registered society. Thus, the registered society is the owner of all these institutions and activities and that one income tax return is filed consolidating the accounts of all units. The return is filed in the name of the registered society, using the society’s PAN. If so, the income and expenditure of all units is the income and expenditure of the society and the society may use the income of all its units for any of its units, but in line with its objectives. Till last year, we were free to give donations to any registered society with similar objectives and with 12A within the Province or Diocese and the entire amount donated could be taken as application of income for the income tax purpose and treated tax exempt. But no more. From April 2023, only 85% of the donated amount could be taken as application of income, making the balance 15% as accumulation under section 11(2) or as taxable income. As a way out of this problem, we can re-organize our organizational set-up of each society. We can regroup our institutions and activities under each society in such a way that each society has financially well to-do and dependent institutions too, so that we can claim 100% utilization (application of income) for the entire amount spent on any unit within the society’s structure. Besides, where possible, we can take the purchase bills of the revenue expenditure directly in the name of the society which wants to support its sister organizations under another registered society.
Fr Alex G SJ
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