Hey.. Kala Raksha is a not for profit organization in Kutch and is registered as a trust and a society. https://www.kala-raksha.org/. It is running various activities like health and education activities which are recieving donations from many donors. Apart from this, they are also running an income generating program for rural artisans where they provide them raw material and get the final products made on a fair wage basis and the final marketing is done by kalaraksha itself. they dont receive any fund/ donation for this income generation program. The profits so earned are utilised in benefit of society itself by either investing in raw material etc or for its health and education programs. They have registered themselves under 80G for tax exemption. Recently they got an income tax notice for their income generated. Now, there is some confusion that can an organization registered as a society do such business activity or not? According to some people, there is a new law which forbids any society to do selling kind of business. Is it true? isnt there a provision in which 15% of the profit can be carried to next yr activity and remaining be utilised for benefit of the society itself? cant they just pay taxes and still work as a society? should it register itself as a new society to separate its income generating activities for artisans? or should they register as a pvt ltd company (but they want the benefits to go to artisans and not shareholder!)? or under section 25 of company act law (but that may need formalization and expertise which kalaraksha lacks to some extent and since located in rural village, it is difficult to arrange them).. Also read that remuneration cannot be paid to the members/employees, so again bit dicey!. the most favourable option that the kalaraksha has is to start a new society with fresh MOA, but still a confusion is existing about will it be allowed to do selling under society or not. Also some confusion around what is Body of individuals/ body of persons and under what conditions a society reduces to it? harms and benefits.
PLEASE SUGGEST URGENTLY WHAT KALARAKSHA SHOULD DO? SHOULD IT FORM A NEW COMPANY/SOCIETY/ FIRM OR WHAT..
