Query- Financial transactions to the Donor Agency Project Officer in India

Dear SRRF members,

We have received a new query under FCRA from P.Mallikarjuna Reddy’MAHITA- Hyderabad

• One of our Europe based donor agency has appointed project officer in

Hyderabad to monitor their projects in South India. Since the person doesn’t

have FCRA, the particular donor agency has requested MAHITA that they will send

the project amount to our organization account and in turn we have to take care

of the Project Officer’s salary, travel, Capacity Building workshops of their

donor agency partners and other administrative expenses as per the sanctioned

amount. The Donor Agency has agreement with the Project Officer directly and the

money is coming to our Bank Account. Mahita is working with the donor agency for

a long time and they are one of our primary donor agency.

• Based on the monthly expenditure statement submitted by the Person, we are

incurring his expenditure (Salary, travel, administration) through Cheque and we

are also deducting Professional Tax and TDS from his salary. The bills and other

expenditure incurred in his name and he is submitting every month to our


• We have an agreement with him in regarding to the maintenance of accounts,

maintenance of all vouchers and systems as per the sanctioned budget with the

particular donor agency.


In the recent time, one external financial person has raised objection that,

since the agreement is directly with the individual person vis-à-vis the donor

agency and our organization can’t facilitate this kind of financial process and

suggested us to take appropriate guidance in this issue.


In this regard, we would be thankful if you could inform us, whether we can

continue with this process or NOT? If this is not a good practice as per the

law, what would be the alternative, as neither the donor agency nor their

appointed Project officer doesn’t have FCRA account in India.


Thanking you,

P.Mallikarjuna Reddy

Finance Coordinator



Socio Research & Reform Foundation
(A Non Government Organisation)
512 A, Deepshikha, 8 Rajendra Place, New Delhi – 110008
Tele/Fax: +91-11-25821088, 25817157, 25722044
e-mail: socio-research@sma.net.in

This entry was posted in FCRA, TAX, LEGAL. Bookmark the permalink.

6 Responses to Query- Financial transactions to the Donor Agency Project Officer in India

  1. Subhash Mittal says:

    Dear Mr Reddy,

    An individual can receive funds directly from the donor under a consultancy contract, as long as the activities that he is performing do not indicate that he is undertaking an agenda for influencing the local public. In this regard, one needs to look more closely for the agenda of the workshops.

    Though Mahita can receive the funds and account for it as its own activity, but then problem is that officer has a direct contract with donor and possibly s/he reports to donor. Such a situation should be avoided.

    My sugggestion is that for activities like workshops, etc. donor should get into an agreement with yourself. However for monitoring, coordination, etc. donor can directly transfer the funds to the individual.

    warm rgds

    subhash mittal

  2. P.Mallikarjuna Reddy says:

    Dear Sir,

    Thanks for your suggestions and feedback. I would like to share you that:

    He is an Indian and He has agreement with Donor.

    For facilitating this process, we are not receiving any services charges.

    thanking you

    P.Malikarjuja Reddy

  3. Bhamidipati Soma Sastry says:

    Dear Friends,

    The donor transfers funds to MAHITA and MAHITA uses its funds as per the FCRA regulations. This is fine. So far as the project officer is concerned:

    1. He is not an Indian
    2. Has an agreement with donor.
    3. Is paid by Mahita

    Since he is not an Indian, MAHITA will have problems while deducting TDS and also in terms of depositing the same to the government. In case, the country to which the Project Officer belongs, has a bilateral tax treaty with India, he may be in a position to claim the TDS.

    A relation of employee and employer cannot be established since the project officer has an agreement with the donor. MAHITA has no basis for him to make payments either as salary or consultancy to the project officer.

    FCRA 2010 also includes “individuals” in the defination of person. MAHITA will in way be violating FCRA if they make salary payments to an individual who is technically not a staff.

    Thanks and regards,
    Soma Sastry

  4. Colombowala Zulkef says:

    It is presume that MAHITA is an NGO. It is not clear that MAHITA and donor has agreement for this type of services and MAHITA is receiving service charges for the same. It is therefore advice to have clear instruction agreement. MAHITA memorandum should cover this activity under object claws. Then it is possible to carry this activity legally.

  5. Hemant Kumar Nayak says:

    As the appointment agreement of program officer is with your donor agency hence it may creat statutory probelm. The program officer should be given agreement from your organisation. There should be approved budget and agreement for the capacity building other administrative cost for all the proejcts of your donor agency,then it should be fine.

  6. Jnanshekar says:


    The donor agency doesn’t require FCRA registration. Since MAHITA has FCRA designated bank account the donor can transfer the money to that account which in turn can be utilized for the project officer’s salary.


Comments are closed.