Section 34 of the Co-operative Societies Act, 1912 - Contribution to Charitable Purpose

Section 34 regulates when a registered co-operative society may use part of its annual net profits for a charitable purpose. The provision requires prior sanction of the Registrar, allocation of the prescribed portion of net profits to the reserve fund, and compliance with a statutory ceiling on the charitable contribution.

Text of Section 34

Any registered society may, with the sanction of the Registrar, after one-fourth of the net profits in any year has been carried to a reserve fund, contribute an amount not exceeding ten per cent. of the remaining net profits to any charitable purpose, as defined in section 2 of the Charitable Endowments Act, 1890 (1 of 1890).

Official text: Co-operative Societies Act, 1912 - India Code

Meaning and Requirements of Section 34

The section permits a contribution to charity, but only after its statutory conditions are satisfied. In practical terms, the provision contains the following requirements:

What Is a "Charitable Purpose"?

Section 34 expressly adopts the meaning given in Section 2 of the Charitable Endowments Act, 1890. Under that provision, charitable purpose includes relief of the poor, education, medical relief and advancement of another object of general public utility. A purpose relating exclusively to religious teaching or worship is excluded from that statutory definition.

Official text: Charitable Endowments Act, 1890 - India Code

How the 10 Percent Limit Works

The 10 percent ceiling applies to the remaining net profits, not to the society's total annual net profits. The sequence in Section 34 is therefore important: first determine the net profits for the year, then carry one-fourth of those net profits to the reserve fund, and only thereafter calculate the maximum charitable contribution from the balance.

Illustration: If annual net profits are Rs. 1,00,000, one-fourth, or Rs. 25,000, must first be carried to the reserve fund. The remaining net profits are Rs. 75,000. Subject to the Registrar's sanction and the other applicable requirements, Section 34 permits a contribution of up to 10 percent of that balance, i.e. up to Rs. 7,500, to a qualifying charitable purpose.

Relationship with Section 33

Section 33 deals with restrictions on division of a registered society's funds by way of bonus, dividend or otherwise among members. Section 34 separately authorises a limited charitable contribution from profits when its specific conditions are met. Reading the provisions together helps distinguish distributions connected with members from a contribution made for a qualifying charitable purpose.

Read Section 33 - Funds not to be divided by way of profit

Important Legal Note

The Co-operative Societies Act, 1912 is an older Central enactment and the law governing a particular co-operative society can also depend on the applicable State or Union Territory co-operative legislation, amendments, rules, by-laws and the society's legal status. The applicable local enactment should therefore be checked before relying on Section 34 for a specific transaction or proceeding.

Page reviewed against official India Code materials on 21 September 2026.