Query on FCRA

Dear S.Mittal Sir,

I have attended your FCRA workshop held in Chennai on 8th July (organized by CSO Partners). I have a query on transferring our FC fund to a few un-registered organization. This is mentioned that as per Rule 23(4), a FC registered organization can transfer its fund subject to maximum 10% of total FC receipt by taking prior permission from MHA through Form-10. I have the following queries on this

1. Do we need to fill separate Form-10 for each organization whom we are planning to transfer funds in this financial year or can we put the names of all the organisation in annexure of a single FC-10
2. Do we need to give details of projected receipts during the year to proof that total amount to be transferred will be 10% of receipts.
3. Can we transfer the fund after filing Form-10 or we have to wait for getting the permission letter from Department. How long Department will take to give us the permission.
4. Do we need to attach any permission letter from District Magistrate of the place where the beneficiary organization will be located.
5. Can we fill Form-10 online.

Looking forward for your response.

Thanks & Regards

Pragya
Team Leader-Accounts

Villgro Innovations Foundation
III Floor, IIT Madras Research Park Building
Kanagam Road, Taramani,
(Behind TIDEL Park),
Chennai – 600 113

Mob: 91-8144308874

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28 Responses to Query on FCRA

  1. uday chaturvedi says:

    Dear Friends,
    Does the circular enable Panchayaths ,which are created through an amendment to our Constitution, to seek foreign funds?
    I think, yes, even before the Circular by virtue of certain provisions in the Amendment. Till now, no Panchayath attempted to
    be aggressive. After all, even the Election Commission did not use its nuclear teeth till Seshan began biting effectively.
    Udayashankar

  2. Jiwan P Saha says:

    One more question :

    Whether transfer of FCRA funds to other FCRA regd orgn also requires permission from FCRA dept ?

    Regards,

    Jiwan

    • BV Soma Sastry says:

      Dear Mr. Saha,

      Greetings from Hyderabad!

      There is no need to seek any kind of approval from MoHA for transfer of funds from one FCRA registered organization to another. It is important that you collect a letter from the donee that they have not been proceeded against under the FCRA since the day of registration. This is one of the conditions attached to the transfer.

      Thanks and regards,
      B V Soma Sastry

    • Subir Ghosh says:

      Dear All,

      In my opinion , transfer of FCRA Fund to another FCRA regd origination (in FCRA Bank A/c) need not to go through permission formalities (even act is also silent). But the recipient organization needs to receive fund as sub grantee of the programme for which the donor transferred fund.

      Looking forward for any other opinion on this.

      Regards,
      Subir Ghosh

    • Collen says:

      Dear Mr.Jiwan,

      Its not necessary to get the permission from FCRA Department but get the copy of the FCRA reg. Certificate from the person to whom you are making the payment. This will assure you that your payment is FCRA A/c.

      Thank you

      Collen

  3. Jiwan P Saha says:

    Dear Subhash Ji,

    I have attended your session at Kolkata . I have some questions on FCRA :

    1) We are partnering with Safdarjung Hospital for a study , can FCRA funds be given to them , if yes, is there any approval required ?

    2) In case of other hospital for a similar kind of study , what is the requirement ?

    3) If you are hiring some research orgn and paying out from FCRA funds , what is the FCRA requiement ?

    4) Publication of funds received on public forum for more than Rs. 1 crore , can we advertise this on our own website , is it sufficient ?

    Regards,

    Jiwan

    • BV Soma Sastry says:

      Dear Mr. Saha,

      Greetings from Hyderabad!

      We are partnering with Safdarjung Hospital for a study , can FCRA funds be given to them , if yes, is there any approval required ?
      – You can give funds to Safdarjung hospital in the form of grants if they have a registration under FCRA. If there is no FCRA then you can only reimburse the expenditure to Safdarjung by retaining the original bills.

      In case of other hospital for a similar kind of study , what is the requirement ?
      – The same applies to all other hospitals for similar kind of work

      If you are hiring some research orgn and paying out from FCRA funds , what is the FCRA requirement ?
      – In case you are paying consultancy to a research organization, then the only requirement is a contract with the organization and a copy of the PAN card for TDS

      Publication of funds received on public forum for more than Rs. 1 crore , can we advertise this on our own website , is it sufficient ?
      – From the query that you have raised, the understanding is not that you advertise the receipt of funds in excess of 1 crore on website. The interpretation is that the audited statements should be made available in a public forum viz. annual report, news paper, website etc.

      Thanks and regards,
      B V Soma Sastry

      • Subhash Mittal says:

        Dear Mr Saha,

        While my dear friend Soma Sastry has already responded to most of your queries. I would like to just add that in case Safdarjung Hospital is a govt entity then it may be be exempted from FCRA. As per a circular dt 1-7-2011, any institution constituted under a central or state act and their accounts requiring compulsory audit by CAG, then such institution are exempt from FCRA.

        We will soon also try to put this notification on SRRF’s website.

        with warm rgds

        subhash

      • jiwan says:

        Thanks for the reply. Much appreciated.

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  6. Valan Caritas says:

    Dear sir,

    Greetings from Caritas India!

    It is no problem to make fixed deposit to other bank .it is supposed to Section 11( 5) of the Income Tax Act.Which ever bank you are depositing that bank should be a approved by the RBI .

    Regards,

    Valan

  7. Debashish Mohanta says:

    Dear Subhash ji

    Now I am very clear. In our case, we are advancing the mony and treating expenditure only after receiving the expenditure statement.

    Thank you so much for initiating dialogues thru this forum.

    With best regards,

    Debashish

  8. Arvind Kumar says:

    Dear Mittal ji

    I would like to have valuable suggestions on this issue. Can we do investment of FCRA funds in the form of FD’s etc in other bank ?

    With best regards,

    Arvind

  9. TK Balappan says:

    Sir

    I was one of the participants at the workshop conducted at AMA at Ahmedabad.

    I have a small query.
    Is a University run by the Government covered under the FCRA?

    Shall be grateful for your advice.

    T.K. Balappan
    Centre for Environment Education
    Ahmedabad.

  10. Subhash Mittal says:

    Dear Uday

    This is one of the relaxation that the present FCRA has given. Scholarships, stipends (I would think feIlowships to individuals also get covered) is out of FCRA now.

    Earlier S. 7 of FCRA 1976 Act specifically required that any citizen receiving above Rs 36000/- of such receipts in a financial year needed to intimate the central Govt. under Form FC-5. However under the 2010 Act no such specific provision has been included, further under S. 4 (g) even otherwise prohibited persons have been allowed to receive FC without any limit.

    rgds

    subhash

  11. Bharat Gupta says:

    Subhashji,

    Greetings!

    Regarding the recent srrf dailogue regarding the status of Individuals in FCRA , In my opinion, Mr. Prasanna’s & Debashish Mohanty’s query has a justification & may just require a further clarification.
    As also referred in your earlier communications, Section 7 of FCRA 2010 and Rule 24 of FCRR 2010 refers to transferring funds to ‘persons’ and not ‘Associations’ only. ‘Persons’, as per the new definitions include Individuals as well. Letter of Joint Secretary of 11.5.11 reg. rule 24(2) also refers to ‘persons’ only. (This was not clearly defined under FCRA 1976 and hence ‘Individual’ recipients were kept out of the FCRA ambit by NGO’s/practioners and the route was used frequently by NGO/MFI’s and other NGO’s)

    But again the new Form FC-10 that is designed for seeking Ministry’s approval for transferring funds, refers to Associations only in point no.2 -‘Recepient Association’ ! Individuals don’t seem to be covered here! Hence, your clarification also seems to be correct in this context.

    This creates the confusion!

    If you also feel the need, we could take this up again with the MHA/ Mr. Sarma.

    Clarifications could come in through a letter or susequently as footnotes in revised form FC-10. Moreover, another clarification/correction in the FC-10 that may need to come in is under point 2(i)(b)- Indian Trust Act 1882 under which only the private trusts are registering which are not under the ambit of FCRA (as I understand). The existing ‘not for profit’ public Trusts register their Trust Deeds only under the registration act of 1908 or with the Charity commisioners in the States where applicable!

    Thank again for the opportunity given to learn during the SCF seminar at Jaipur. Sending this mail only to you & not to the group.

    Regards

    Bharat Gupta

  12. Subhash Mittal says:

    Dear Bharat

    It will be a pleasure if you respond to the egroup. I am sure you will really be a great help in answering several of the queries coming on the group. My only concern is that the group is becoming a bit too FCRA centric. However I can see that there is a lot of demand for such clarifications.

    Since the inclusion of ‘individual’ in the definition of person is causing a bit of confusion to a number of persons, I am taking the liberty of marking it to the group for wider dissemination.

    Regarding your comment on individuals (others may see Bharat’s comment below) I can see that present definition of person is causing some confusion, however let us not forget the purpose of the FCRA, i.e. that largely the Act is really applicable to NPOs (exception being S. 3). This discussion basically has started with S.7 stating prohibiting transfer of funds to other persons. I agree that person includes individual, however the prohibition for receiving funds is basically on ‘person having a definite cultural, economic, educational, religious or social programme’ (S.11). Obviously individuals would not have such mandate and for me the simple logic is that purpose of S.7 is to allow transfer of FCRA funds to unregistered entities. Let us not read too much into it, otherwise there are several places which could cause confusions.

    Once again request you to respond to queries raised by members wherever you consider it appropriate.

    with warm regds

    subhash

  13. Prasanna says:

    Dear S Mittal Sir,

    Thank you so much for your valuable advices to so many queries across this board. Your reply to Debashish’s query is absolutely clarified. Further to the said query, per your clarification, you said “…(1) as compensation for services offered by the individual …” – (a) Will it attract any TDS?, (b) What if he receives amount for his services as well as for the group of people working under him?, (c) Only grants and donations come under the purview of Rule 24(4) or even advances also fall under this? and finally (d) this compensation paid is actually a program expenses. Do we still consider as program expenses from the new law standpoint? I am really sorry for bothering with so many questions. But, I have great confidence in you that you are so gracious to answer my queries.

    With high regards,
    Prasanna Kumar

  14. UdayaShankar says:

    Dear friends,
    What about the rule related to fellowships to individuals? “If any one receives FC more than Rs.36000/- one has to submit some form (NO.?) to MHA” was the old rule. Any new provision in its place?
    Udayashankar

  15. Subhash Mittal says:

    Dear Prasanna,

    Hope clarification provided earlier to Debashish has clarified any doubts that you may be having.

    subhash

  16. Subhash Mittal says:

    Dear Debashish

    What Mr RoyChoudhary is referring to is slightly different, then your question.

    Your question that whether funds can be transferred to an individual under Rule 24(4). Basic issue is that accountability of utilising foreign contribution is of the person who receives it or the subsequent recipient. In case subsequent recipient happens to be unregistered entity than Rule 24(4) becomes applicable. Thus this Rule is not applicable in case of individuals.

    An individual can receive FC fund from such an entity basically only under two ways (1) as compensation for services offered by the individual or (2) as benefit under the programmes being run by entity. Under both these situations funds given to individual would be disclosed as Utilisation under Annual Return by the entity who has received FC. Only exception being advances, which would be treated as expenditure only on receipt of expenditure statement.

    Hope this clarifies your query.

    warm rgds

    subhash mittal

  17. Prasanna says:

    Dear S Mittal sir,

    As per the extended definition of person includes the individual. Does this transfer, from FC to individual not fall under the ambit of FC?

    Regards,
    Prasanna

  18. Subhash Mittal says:

    Thank you Choudhary sahib. This is exactly what would enrich all of us, i.e. share from each other’s expereince.

    subhash

  19. Wg Cdr SS Roychoudhury says:

    Dear Subhashji,

    As advised by you earlier, we will be transferring FC money to individual’s bank a/c only.With lot of difficulty we have been able to motivate them to open individual bank a/c. I think this answers the querry of Debashish.

    Regards,.

    Roychoidhury

  20. Debashish Mohanta says:

    Dear Subhash Mittalji,

    Thanks for providing such clarifications.

    I need to know whether we can transfer FC money to an individual’s bank account who does not have permission to receive FC for the purpose of running activities. Does FC-10 applies to him?

    Looking forward to hearing from you.

    Kind regards,

    Debashish Mohanta
    HRLN

  21. Subhash Mittal says:

    First of all I must thank Pragya for agreeing to share the Query she raised with SRRF Dialogue members. I felt that the query would be relevant to a number of persons and sharing would have a wider benefit.

    It may be stated that the following opinions have been given for general awareness of SRRF Dialogue memebrs and do not form any contractual relationship between the opinion giver or the person receiving these information or taking action based on the same.

    Transfer to Unregistered Organisations is covered by Rule 24(4) and not Rule 23(4).

    1. Can we use a single Form-10 for covering more than one such organisations ?

    While there is no specific requirement on how many organisations can be covered under one form and is more of a practical decision. However considering that DM’s counter-signature would be required for such transfers, it would be more practical to have separate form for each organisation.

    2. Whether details would be needed to be given if total amount to be trfd would be limited to 10% of total receipts ?

    It may be relevant to note that Form FC-10 does not have any column requesting information about total FC of the organisation transfering the funds.

    Hence while rule requires that the total FC to be trfd should be less than 10% of total FC, however since no provision for information is given in the Form. A declaration to this extent should suffice. Keep the inormation handy in case you are asked to provide the same.

    3. Can we transfer the funds after filing Form FC-10 or should we wait for the permission letter. How long such a permission could take ?

    You need to wait for the permission. While there is no time limit specified by the Dept. within which this application will be approved.

    We all hope that it wil be done in an expeditious manner and at the max. not more than 90 days.

    4. Do we need to attach permission letter from DM of the district where transferee organisation is located ?

    Transfer Application needs to be countersigned by the DM having jurisdiction where funds are to be ‘utilised’. Hence it is suggested that Form FC-10 be countersigned by the concerned DM.

    DM is required to take decision within 60 days of the receipt of such request.

    5. Can we fill Form FC-10 online ?

    .No.

    Online facility is available only for Registration, Prior Prmission and Annual Returns.

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