An alumni association is an association of graduates or, more broadly, of former students (alumni).
The purpose of an association is to foster a spirit of loyalty and to promote the general welfare of the organization.Alumni associations exist to support the parent organization's goals, and to strengthen the ties between alumni, the community, and the parent organization.
Today, alumni relations is an important part of an institution's advancement activities for many reasons:
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Alumni are an institution's most loyal supporters.
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Alumni are fundraising prospects.
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Alumni generate invaluable word-of-mouth marketing among their social and professional networks.
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By engaging alumni, an institution can continue to benefit from their skills and experience.
It is imperative for all alumni communities to be self-sustaining and to establish some mechanism to obtain revenues for its overall maintenance. The primary source of income for alumni communities is membership dues and patronage support. Following are other sources of income of an alumni association:
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Profits from events
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Event sponsorship (from internal or external sources)
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Income from alumni community funds kept in savings accounts or money market funds
Alumni Association comes under “Association of Persons” classification according to Income Tax laws of India. Generally, it gets registered as a society under the Society Registration Act of the respective state where the registered office of the alumni association will be situated. The society will have it's own PAN number, bank account and office bearers. Mandatory positions held are Secretary, Treasurer, Vice-President and President. The members of the association keeps on varying as there are many students who pass-out every year and they join the alumni association. Thus, we can say that the share of every member in the association is not known and therefore is indeterminate. Thus, the Income tax on surplus i.e. Excess of income over expenditure will be taxed at the maximum marginal rate.
Where the individual shares of the members of an association of persons or body of individuals are indeterminate or unknown, tax shall be charged on the total income of the association or body at the maximum marginal rate.