Is legislative framework against sustainability in NPOs

Dear Members, ‎

I am working on registering a not-for-profit which will involve itself into research activities in ‎technology. The outcomes will be mostly public goods, in terms of papers, open source code, etc. ‎At the same time, it may generate IP, income from licensing IP and ownership (equity) in ‎companies that come out of the work of the center. This will be used for sustaining the center. ‎

As far as I know, there is restrictions by the IT Act that organizations (for Section 8/Trusts which ‎have IT exemption) can’t own equity and also, their total income (from commercial activities) ‎should not be more than 20% of all receipts. ‎

‎- Does this mean that a not-for-profit cannot generate income to pay off for their expenses? If ‎that is the case, then how do not-for-profits become sustainable?‎

‎- Can NFP own patents or equity? ‎

Thanks for the help.‎

Posted in FCRA, TAX, LEGAL | Leave a comment

Last Date for Filing FCRA Return for FY 2017-18 extended to 31-March-2019

FCRA Dept made DARPAN ID mandatory for filing FCRA Annual Return (FC-4) for all organization, although several NGOs could not generate Unique ID from the Darpan website. FCRA Dept has now stated that on representation made by various NGOs facing difficulties in generating Unique ID under the DARPAN Portal , it has extended the last date of filing of mandatory FCRA return for the year ending March 2018 from 31st December 2018 to 31st March 2019 vide its notification No. II/21022/58(370)/2018-FCRA(MU) dated 29/12/2018.

This is for information and for some respite for organisations who could not comply with FCRA’s requirement of registration on Darpan portal.

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FCRA Registration suspended of 156 NGOs whose have not migrated to PFMS

In Dec’17 FCRA Department had ordered NGOs to open their FCRA bank account with the banks integrated with Govt PFMS system within one month of its notice dated 21/12/2017. Most NGOs opened or shifted their bank account to PFMS compliant bank till June 2018, remaining NGOs were served a show-cause notice.

The FCRA Department has now come out with an order suspending FCRA of 156 NGOs for not complying with the orders. Their FCRA has been suspended for a period of 180 days.

During the suspension period, the NGOs cannot withdraw or deposit any foreign contribution in their bank accounts. Donor agencies funding these NGOs should not disburse any more funds till the FCRA registration is restored.

It also seems that some of these have already changed the bank, though the details have not been updated in FCRA database. FCRA Dept has stated that in case there are NGOs who already have migrated to a PFMS compliant bank and its name still appears on the list, they should send an e-mail to enclosing proof of bank letter.

In case NGOs have not done so, they can still do so, and then request FCRA Department to restore your FCRA.

_______________ ‎
Socio Research & Reform Foundation (NGO)
‎512 A, Deepshikha, 8 Rajendra Place, New Delhi – 110008

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Is GST applicable on GRANT received by a Society

Dear Sir,

We are a Society registered under Societies Registration Act, 1860. Majorly, our receipts are GRANTs, both FCRA and non-FCRA.

We are registered under GST. Want to know, whether GST applicable on a GRANT (both FCRA and non-FCRA grants)?



Posted in FCRA, TAX, LEGAL | 8 Comments

Can an NGO continue to receive money under FCRA Renewal

Good afternoon

I wanted to know if an NGO whose FCRA is under renewal, can they continue to receive FC money.



Posted in FCRA, TAX, LEGAL | 3 Comments

Show Cause Notice issued to 1775 NGOs for non-submission of mandatory ‎Annual Return

In May 2017 and again in April 2018, FCRA Department issued a public notice ‎asking NGOs to submit missing annual returns online from 2010-11 to 2014-‎‎15 without payment of any penalty. However, many NGOs still have not ‎complied with the directive issued by the FCRA Department.‎

On 16th November 2018, the FCRA Department has now come out with a show ‎cause notice directing 1,775 NGOs to explain why should their FCRA not be ‎cancelled. Last date for this is 1-Dec-18. List can be accessed on the following link:‎
FCRA Notice 16-11-2018
‎ ‎
NGOs are advised to check their name attached with notice, if their names ‎appear on the list, send a letter to MHA explaining why the return was missing. ‎

In case you have already submitted the annual returns and your name still ‎appears on the list, please send an e-mail to enclosing ‎proof of submission along with annual return. ‎
‎ ‎
‎_______________ ‎
Socio Research & Reform Foundation (NGO)
‎512 A, Deepshikha, 8 Rajendra Place, New Delhi – 110008

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GST Implications for NGOs on transfer of goods outside state

Dear Sir/ Madam,

PO has been raised by an NGO for printing documents to a printing agency and in this PO the shipment address is mentioned outside Delhi and the billing address is mentioned as Delhi because vendor belongs to Delhi. The vendor himself couriers the consignment on behalf of NGO outside Delhi. PO states that the freight charges will be paid to Printing Agency as per actual.

1. Can printing agency raise the freight bill to NGO? Or is there any other way out?
2. Is it required to generate e-way bill by the printing Agency to dispatch the materials?
3. Is there any GST implication? (Let me clear that this shipment is not for furtherance of business)
4. Will it be GST bill or IGST bill?
5. on POD printing agency can write the name of NGO as a consignor.

Looking forward to hearing from you.

thank you.

Ravi Shankar

Posted in FCRA, TAX, LEGAL | 1 Comment

How CSR Defines Normal Course of Business?‎

Dear Members

Greetings for the day!‎

May I invite comments on the clause for CSR ACTIVITIES as per CSR Rules 2014 para 4(1) under Sec 135 ‎of the Companies Act, 2013, “The CSR activities shall be undertaken by the company, as per its stated ‎CSR policy, as projects or programs or activities (either new or ongoing), excluding activities ‎undertaken in pursuance of its normal course of business.”‎

So a Sec 8 company/ foundation/ NPO of a Private Limited (Subsidiary of an International Company) if ‎has a common Key Management Personnel (KMP) as also the Foundation is directly promoting the main business of the Pvt Co which ‎is a “Tech partner” & sourcing the “products”, will this constitute a conflict of interest & violate the ‎above rule?‎



Posted in CSR | 2 Comments

No GST on religious, yoga or meditation programme by such ‎registered organisation

Ministry of Finance has come out with a Circular (No. 66/40/2018) dt 26 Sep ‎‎2018 stating that entity registered under S.12AA for the purposes of ‎advancement of spirituality, religious activities or yoga’ would not be subjected ‎to GST on any amount charged towards fee or any consideration towards, ‎camps or classes for organizing religious, meditation or any other spiritual ‎programme, including towards any lodging boarding costs. ‎

However if the entity is involved only for organizing accommodation, etc. and ‎does not organize the programme, in such case, GST would become applicable, ‎even on compulsory donation. ‎

It may be further noted any other programme of music, dance, dance aerobics, ‎etc. would be subject to GST. ‎

Socio Research & Reform Foundation (NGO)
512 A, Deepshikha, 8 Rajendra Place, New Delhi – 110008

Posted in FCRA, TAX, LEGAL | 2 Comments

Is it possible for NGO to open branch office outside India

Dear Members,

Is it possible for a Trust (NGO) to open a branch office outside India, If required modification can be done in Trust deed?

We can take assumption that we’ll not use any funds raised in India for that office whether it is FCRA or Local.

Vikas Pandey

Posted in FCRA, TAX, LEGAL | 2 Comments