Section 13 of the Chit Funds Act, 1982 - Aggregate Amount of Chits
Section 13 of the Chit Funds Act, 1982 places statutory ceilings on the aggregate gross chit amount that a foreman may commence or conduct at any time. The ceiling depends on whether the foreman is an individual, a firm or other association of individuals, a company, or a co-operative society.
Meaning of "gross chit amount"
Section 2(ja), inserted by the Chit Funds (Amendment) Act, 2019, defines "gross chit amount" as the sum-total of the subscriptions payable by all subscribers for any instalment of a chit, without deduction of discount or otherwise. This expression is important because the ceilings under Section 13 are calculated with reference to the aggregate gross chit amount.
Section 13 - Statutory limits
Section 13(1): Individual or other foreman. A foreman other than a firm or other association of individuals, a company, or a co-operative society cannot commence or conduct chits whose aggregate gross chit amount at any time exceeds Rs. 3 lakh.
Section 13(2)(a): Firm or association with at least four partners or individuals. Where the number of partners of the firm, or individuals constituting the association, is not less than four, the aggregate gross chit amount cannot at any time exceed Rs. 18 lakh.
Section 13(2)(b): Other firm or association. In any other case, the ceiling is calculated at Rs. 3 lakh for each partner or individual constituting the firm or association.
Section 13(3): Company or co-operative society. The aggregate gross chit amount of chits conducted by a company or co-operative society cannot at any time exceed ten times its net owned funds.
Section 13 limits at a glance
| Category of foreman | Maximum aggregate gross chit amount |
|---|---|
| Foreman other than a firm, association of individuals, company or co-operative society | Rs. 3 lakh |
| Firm or association having at least four partners or individuals | Rs. 18 lakh |
| Firm or association having fewer than four partners or individuals | Rs. 3 lakh for each partner or individual |
| Company or co-operative society | Ten times its net owned funds |
Meaning of "net owned funds" under Section 13(3)
For Section 13(3), "net owned funds" means the aggregate of the paid-up capital and free reserves disclosed in the last audited balance sheet of the company or co-operative society, reduced by the accumulated balance of loss, deferred revenue expenditure and other intangible assets, if any, disclosed in that balance sheet.
Accordingly, a company or co-operative society must determine its net owned funds from its latest audited balance sheet before applying the ten-times ceiling prescribed by Section 13(3).
Effect of the 2019 amendment
The Chit Funds (Amendment) Act, 2019 amended Section 13 by increasing the earlier monetary ceilings. In Section 13(1), Rs. 1 lakh was replaced by Rs. 3 lakh. In Section 13(2)(a), Rs. 6 lakh was replaced by Rs. 18 lakh, and in Section 13(2)(b), the per-partner or per-individual amount was increased from Rs. 1 lakh to Rs. 3 lakh. The same amending Act also introduced the statutory definition of "gross chit amount" and substituted that expression throughout the principal Act.
Practical significance of Section 13
Section 13 is a capacity restriction on the foreman. It does not merely regulate the value of one chit; it limits the aggregate gross chit amount of the chits being conducted at any time. A foreman should therefore consider all running chits covered by the provision when checking compliance with the applicable ceiling.
Section 13 should also be read with the other provisions governing registration, commencement and conduct of chit business, including the requirements relating to previous sanction and registration under the Chit Funds Act, 1982 and the applicable State rules.
Official legal sources
Updated: 15 September 2026. This page is intended as a general legal reference. For a specific chit transaction, the Central Act should be read with the rules and notifications applicable in the relevant State or Union Territory.