Can FCRA expenses be reimbursed to Non-FCRA A/cs?

Posted on January 6, 2022 by SRRF

Dear Sir,  

We have following queries regarding FCRA :

1. Can advances be given to Project staff for expenses to be incurred in the field, If not, what is the remedy when the expenses can not be paid directly to the party.

2. Whether we can pay expenses of FCRA  nature from institutions/branches  & reimburse them back from FCRA. 

3. Are Statutory liabilities( PF, ESIC) compulsory to be paid from FCRA for FCRA project employees, or can be paid from non-FC & later reimbursements from FCRA.

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Thanks & Regards

Abhijeet
Vidya Bhawan Society

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6 Responses to Can FCRA expenses be reimbursed to Non-FCRA A/cs?

  1. Subhash Mittal says:
    January 21, 2022 at 10:27 am

    1. Yes, staff can be paid advances, as per organisation’s policy. But please ensure cash advances are avoided, as per Do & Dont policy of FCRA.
    2. Your second question is not clear. By institution if you mean other NPOs than you cannot transfer any funds. However if these fall within the legal framework of VBS, than you are utilizing funds for your own purposes, and if utilization is for another organisation, than you should not transfer the funds. However please ensure that utilization meets the purposes for which the Grant amount has been rec’d.
    3. Whatever liability, which ultimately is being charged under FC should be paid from FCRA funds only. In case you can’t for any practical reason (say TDS refund in local account), than you may have no option, and ensure sufficient documentation exists for justifying the same.

    • Abhijeet says:
      January 31, 2022 at 5:07 am

      Dear Sirs,
      Thanks for your responses.
      For point no. 2 for example:
      1. A staff is employed in FCRA project & we have a general practice of giving staff quarters at nominal rates now the staff quarter rent is to be paid back to the parent organisation. Can this be paid back? Deduction is done from his salary & is due to be paid to the branch organisation. Can this be paid to them
      2. We have in-house stores for materials & stationery, the stores raise a bill to other branches of our organization. The same stationery is being purchased in the FCRA project. Now whether we can pay back to stores from FCRA?
      3. A machine is purchased in the FCRA project, however, the maintenance is done internally by one of the institutions in houses & they are raising bills for to FCRA project, now whether we can pay the machine maintaining institution?
      4. In the FCRA account we are receiving scholarships for our institutional students. Now that the School fees are due, can we transfer fees from the FCRA account to our institutions?

      • Subhash Mittal says:
        February 1, 2022 at 11:17 am

        While earlier most entities undertook such transfers without any compunctions, however if you do it now, risk is that FCRA authorities, may treat such practices as mixing of funds. It will be your ability to convince FCRA inspection/audit team that funds had to be spent from non-FCRA and hence being reimbursed now. But as said earlier, this is not risk-free.

      • Ancilla Tragler -Reach Out Trust says:
        February 11, 2022 at 1:00 pm

        1)Can FDs repeatedly renewed from foreign funds be encashed in local funds?
        2)Can Corpus be kept in local account?

        • Subhash Mittal says:
          February 17, 2022 at 9:07 am

          1. Once money deposited in FCRA A/c remains FC fund till it is utilised. Hence whether FCRA money kept in FD format or even in a debt related mutual fund, it will remain FC fund, till utilised or transferred to another. Even this last option is no longer available after Sept’20.

          2. If Corpus is rec’d out of FCRA fund, then it has to be disclosed in FCRA Balance Sheet and remains Corpus forever till utilised as per donor instructions.

  2. Narayanee Ayyappa says:
    January 9, 2022 at 1:49 pm

    For the query no 3, yes for the employees whose timesheet paid from FCRA account, its compulsory that the other statutory liabilities to be paid from FC account only.

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