Taxability of chit fund proceeds: organisers' commissions treated as business income and subscribers' excess taxed as interest. Organisers who convene and administer chit funds and earn commission have business income, with any unrecovered amounts treated as bad debts subject to usual business tests. Subscribers receiving amounts in excess of subscriptions are treated as receiving interest, taxable as such; subscribers who take money earlier incur interest-like loss, whose allowance depends on how the funds were utilised and the statutory conditions for deduction.
Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
Provisions expressly mentioned in the judgment/order text.
Taxability of chit fund proceeds: organisers' commissions treated as business income and subscribers' excess taxed as interest.
Organisers who convene and administer chit funds and earn commission have business income, with any unrecovered amounts treated as bad debts subject to usual business tests. Subscribers receiving amounts in excess of subscriptions are treated as receiving interest, taxable as such; subscribers who take money earlier incur interest-like loss, whose allowance depends on how the funds were utilised and the statutory conditions for deduction.
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