Chit - Definition - Law Dictionary Home Dictionary Definition chit

Definition :

Chit, means a transaction whether called chit, chit fund, Chitty, kuri or by any other name by or under which a person enters into an agreement with a specified number of persons that every one of them shall subscribe a certain sum of money (or a certain quantity of grain instead) by way of periodical instalments over a definite period and that each such subscriber shall, in his turn, as determined by lot or by auction or by tender or in such other manner as may be specified in the chit agreement, be entitled to the prize amount.

Explanation.--A transaction is not a chit within the meaning of this clause, if in such transaction,--

(i) some alone, but not all, of the subscribers get the prize amount without any liability to pay future subscriptions; or

(ii) all the subscribers get the chit amount by turns with a liability to pay future subscriptions. [Chit Funds Act, 1982 (40 of 1982), s. 2(b)]