chit fund

The amount disbursed by a chit fund company to the members from their contribution cannot be treated as `interest'; as the payments made/disbursed to the subscribers/ members are not `interest', therefore, the question of deducting any tax at source therefrom would not arise; in the case of a chit fund, there is no borrowing of moneys nor any debt is incurred and as such the provisions of section 2(28A) are not attracted. Full Article

Earlier, the entities that fell under the ambit of the law included only chit fund companies, banking companies, financial institutions and housing finance companies. The amendment now says any company registered under section 25 of the Indian Companies Act, 1956, and/or as a trust or society under the Societies Act, 1860, or any similar state legislation, will be brought under the purview of PMLA. Full Article