Transfer outside India

Dear All,

Greetings from CWS, Hyderabad!

While I was browsing the website of SRRF, I came across a presentation which had the following 4 points.

  1. Grants to NGOs outside country
  2. Grants to sister concerns outside country
  3. Payment for procurement of goods / services from outside India
  4. Payment for travel expenses of Indian Board members / staff

In case of 1 and 2, I seek some clarity from all of you. If grants are given to organizations outside India:

  1. How do we account the grant?
  2. Will the auditor in India take cognizance of the audit report of outside country and audit our books? This is important in the context that most of donor agencies are seeking audited report on actual expenditure although IT Act allows the grant to be treated as expenditure.
  3. 3 establishes a vendor-vedee relation but in case of consultancy:
    • What should be done for TDS? Can we deduct TDS and if yes, how do we deposit to the exchequer?
    • Can the consultant claim TDS upon filing of returns in his home country?
  4. I am not seeing problem in 4 as it amounts to more or less a reimbursement of expenses and would attract certain provisions of IT and RBI.

Kindly comment on the issue for further clarity.

Thanks and regards,
B V Soma Sastry
Director – Finance and Admin
Centre for World Solidarity
12-13-438, Street No. 1, Tarnaka
Secunderabad 500 017
Andhra Pradesh

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2 Responses to Transfer outside India

  1. B V Soma Sastry says:

    Dear Subhashji,

    Greetings from CWS!

    Many thanks for clarifying the issues. Will revert in case I have any further doubts in this regard. This will definitely help us in our work.

    B V Soma Sastry
    Director – Finance and Admin
    Centre for World Solidarity
    12-13-438, Street No. 1, Tarnaka
    Secunderabad 500 017
    Andhra Pradesh

  2. Dear Soma,

    The issues that you have raised need to be understood in the background that for sending grant outside India, one needs specific permission from CBDT, otherwise Indian Tax authorities would disallow such grants, since when S.12A benefit is given to Non-profits on the condition that income that they generate would not be taxable, as long as it is applied anywhere in India. Once you decide to apply it outside India, the basic premise of tax exemption is not fulfilled.

    In background of the same, I respond to your queries as follows:

    1. It should be done as for any other grant. Debiting amount transferred as Grant Outside India (exempted under CBDT permission….. )
    2. In case the auditor outside India is registered and is authorised to provide audit certificate on lines required in India, Indian auditor would rely upon the same or if not, would qualify expenditure to that extent.
    3. TDS of non-residents is covered under S.195. One would need to consider relevant Double Taxation agreement. Normally a certificate in form 15CA/15CB is required from a chartered accountant before remitting any funds to a non-resident.

    Hope the above clears the doubts raised by you and is helpful in your work.


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