Socio Research & Reform Foundation

Dear Members,

I would like to get advice on the following issue.

A sporting organisation holding  FCRA  registration has established a health care center PHC type  in rural area in 2007 with foreign support. For the administrative purpose the organisation has created a Trust  in 2010 consisting of the selected GB members from the same organisation and the land of the PHC is given to the Trust by the said organisation. So long the cost of PHC building construction, instruments, staff are maintained by the organisation based on an notary affidavit agreement with the Trust. In August 2020 some amount of foreign grant (about 4.5 lac)  is received by the organisation for rebuilding the PHC’s tin – shed  completely overthrown by the severe cyclone Amphan and started to work in middle of September 2020 on request of the Trust. In the mean time the FCRA amendment bill becomes effective. Now I like to know whether the FCRA holding organisation can spend for the rebuilding of tin-shed of the Trust’s PHC though the organisation spends directly and keeping all accountability with it.

I request to give advice how the repairing and rebuilding of the shed can be possible from the grant received from abroad by the organisation?

Please let me also have the suggestion what will be the utility of the grant if it is not permissible to spend for the purpose.

With best regards.

Samir Kr. Halder
Ashakiran Hospital Trust

Dear Members,

We have established non profit company under section 8 of Indian companies act 2013. Please let us know whether we should register for 80g and 12a or these two are already incorporated in section 8.

Dr.PSR.Sabhapathy

In earlier part we covered changes in Rules relating to

• Opening of FCRA Account at SBI Main Branch, New Delhi
• Maintaining another FCRA Account for keeping & utilization of Funds
• Transfer of funds to other NPOs under S.7 totally prohibited
• Administrative Exps. Limited to 20%
• Renewal of FCRA
• Changes in Annual Return (FC4)

For seeing the changes re above, please go to the link:  http://blog.srr-foundation.org/?p=4074

This post covers several other changes made in the Rules.

Organisations of Political Nature

A new sub-rule (2) has been brought up under Rule 5. It requires that any organization which undertakes activities which can fall under last two clauses [(v) & (vi)] under Rule 5(1) shall be considered as of political nature. Thus paving the way to allow FCRA staff / inspectors to decide which organization is of political nature, without any office order. [Rule 5(2)]

Eligibility for registration enhanced & codified

Earlier an organization to be eligible for registration, it had to be at least three year old and should have spent Rs 10 lakh on its core activities for the benefit of the society during the last three financial years. This was not codified, but was a practice followed by the Dept. Now the Govt has codified it under Rules.

The eligibility limit has been further enhanced to Rs 15 lakh.  The, FCRA Dept has also been empowered to exempt any agency controlled by central or a state government from this condition. [Rule 9(1)( f)(i)]

The Dept has now further allowed to include any capital expenditure already incurred by an NPO as part of this eligibility expenditure, provided that the chief functionary to give undertaking that the assets will be vested with the organization and not to be diverted to any other purpose. [Rule 9(1)( f)(ii)]

Pending applications

All registration & prior permission applications pending at the time of commencement of these amended rules will need to open first FCRA Account, and provide details to FCRA Dept, before these are considered by the Dept. [Rules 9(1A) & 9(2A)]

Prior Permission

• A new sub-rule has been inserted requiring person seeking prior permission for receipt of specific amount to submit a specific commitment letter from the donor. This was again a practice, however now same has been codified. [Rule 9(2)(f)(i)]

Cases or single/ major donor permissions / registrations

• A new condition has been put for common members between Indian & foreign donor organization.
• the chief functionary of Indian organization, must not be ‘part’ of the donor organization. ‘Part’ has not been defined, but earlier undertakings were taken from applicant organizations to confirm that the Chief Functionary was not an employee of the donor organization.
• 75% of the office bearers or members of the Indian governing body shall not be the members or employees of foreign donor organization.
• In case donor being a single individual, that individual shall not be chief functionary or office bearer of the recipient person and further office bearers or governing body members shall not be family members or close relatives of the donor.

The above rules were part of practice of the Dept and have now been codified. [Rule 9(2)(f)(ii)]

The above rules have been specifically made in context of Prior Permission, considering that prior permissions are generally based on a single donor. However these are likely to be also applicable n case of registration, where the Indian entity mainly relies on one donor for the FC funds.

High Value permissions

A new rule has been put in place for permission of more than Rs 1 crore at the date of disposal of application, central Govt may permit funds to be rec’d in installments provided second & subsequent installments will be given only after submission of 75% UC of funds rec’d till that date and after field inquiry of the utilization of FC. [Rule 9A]

This raises a number of questions. Are UCs to be submitted to FCRA Dept ? Who will undertake field inquiry of utilization of funds ? If these functions have to be done by FCRA Dept, will fresh installments can be taken only after submission of its approval by FCRA Dept. This could put new hurdles in smooth utilization of FC funds. Right now it is not clear and one could interpret it as being submitted to donor only, but let’s wait & watch how this pans out in future.

New Fees

For registration now application fee has been fixed at

• Registration : Rs 10,000/- [Rule 9(4)(b)]
• Prior Permission : Rs 5,000/-  [Rule 9(4)(a)]
• Renewal : Rs 5,000/-   [Rule 9(4)(a)]
• Revision Application for FCRA Order : Rs 3000/- [Rule 20]
• Compounding Application : Rs 3000/- [Rule 21]

All fees have to be deposited on a Payment Gateway specified by the Dept, earlier these were supposed to be paid through demand draft or banker’s cheque. It may be noted while for first three bullets there are specific forms, for revision there is no form and application is to be made on Plain paper. For compounding it is to be made through electronic Form, but no Form No. is specified.

Renewal of Certificate

• Now renewal application must accompany affidavit from each of the office bearer and member giving an undertaking that they will inform of any violation of the Act (Format AA). [ Rule 12(2)]

Considering some of the member based organizations have a very large number of members, asking all members of an Association to submit an affidavit could be totally ineffective. It should be made clear that requirement is for members of governing body and not general body.

• All renewal applications to be submitted along with details of ‘FCRA Account’ in SBI, NDMB Branch. [Rule 12(2A & 2B)]

• FCRA rules now propose that NGOs cannot receive or utilize FC funds after the date of expiry of FCRA registration.  [Rule 12(5)] It further states that all unutilized FC and assets created out of FC, would vest in the prescribed authority, till the FCRA is renewed or till fresh registration granted. [Rule12(6A)]

This is likely to cause untold hardship to the NGOs who have applied in a timely manner, but the Dept has not been able to process the application. This will disrupt projects under implementation and will be another roadblock, just like stopping of transfers of FC to Indian registered NGOs. 

Last Date for applying for renewal

• Further there seems to be some drafting error as Rule 12(2) says that the application is to be made within 6 months from the date of expiry of the FCRA certificate. While under Rule 12(6), it is clearly mentioned that the renewal application must be rec’d before the expiry of the validity of the registration certificate. For purposes of clarity and abundant caution, please ensure application is submitted at least six months prior to expiry of registration certificate.

Surrender of Certificate

• A new provision has been brought for voluntary surrender of FCRA certificate through Form FC-7. [Rule 15A]
• Surrender of certificate as per S.14A will deem to expire on the date of acceptance of the application by the Dept. [Rule 10(2)]

Changes in bank accounts, name, address, aims, objectives or key members of Association

• All changes in name of the association, address within the State, aims & objects, banks both FCRA designated & utilization, office bearers/key functionaries/members mentioned in the application for grant of registration /prior permission / renewal as the case may be have to be updated on FCRA portal.
• It may be noted that all changes would be effective only after final approval of the Dept.

In addition to above, all changes

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

FCRA Dept has now extended filing of Annual Return to 30^th June 2021. As per the Notice this is done to enable NPOs to comply with following (based on FCRA Public Notice dt 23-11-2020):

1. Opening of FCRA Account with SBI, New Delhi Main Branch, Sansad Marg.
2. Upload Adhar details of all office bearers / directors / key functionaries, etc.
3. Upload affidavits of all office bearers / directors / key functionaries, etc.
4. Obtain Darpan Id from Darpan portal

Thus from the language of Public Notice, it appears that FCRA Dept wants NPOs to comply with the above changes. However it is not clear why opening of Bank Account is being insisted, since that has nothing to do with Annual return relating to 31^st March 2020. However seems govt is insistence that all NPOs open there FCRA account in SBI, New Delhi Main Branch, at the earliest.

FCRA Dept had made Darpan Id mandatory in Oct’2017. An NPO had gone to Delhi HC against the same, who allowed NPO to file returns without Darpan Id, on the ground that it need not make its Adhar details public of its Trustees, which was required for getting Darpan Id. See earlier post  http://blog.srr-foundation.org/?p=3652 .

Once again the notice reiterates, that NGO need not visit Parliament Street Branch, and can request any other Branch of SBI to facilitate. Though it may take some time for SBI branches to facilitate, but ultimately they should do it.

If in any doubt, please contact SBI Parliament Street Branch email id: agmcommercial00691@sbi.co.in .

So now anyone expecting transfer of FC funds from outside India, you may do so till the date of opening of account or 31^st March 2021, whichever is earlier.

All new applicants must open bank account directly in SBI, Parliament Street with immediate effect.

Please note that FUNDS TRANSFER TO NGOS is not covered by above notice, no Indian NGO can transfer funds to another NGO, after effective date of Amendment Act, i.e. 29^th Sept 2021.

Click to See Notification

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

If the Registration has lapsed due to some reason, how do the trust apply again after period of 4 months of expiry is also crossed.

Do we open another entry for the MHA site as previous password is not allowing this.

Anil Marya

Subsequent to amendments in FCRA through FCRA 2020, now the Govt. has brought out several major changes in the Rules. These changes have brought some clarity on earlier changes made in the Act. In this post we cover some of the key changes.

1. ‎”FCRA Account”: 

Entire process of opening of Bank Account atSBI New Delhi Main Branch (NDMB) at Sansad Marg has become slightly now more clear.

1. SBI FCRA Account cannot be operated immediately after opening the Account with SBI. One will need to take approval from MHA through Form 6C and once approval is submitted to SBI, only after that SBI will allow this account to be operated.
2. Please note this account is only for receipt of Foreign Contribution from abroad. Funds generated in India, say on sale of assets, refund of deposits, etc cannot be deposited in this account.
3. There is no need to transfer funds from your existing FCRA Account to SBI Account. In fact, you would not be able to transfer those funds to SBI, NDMB branch, since it is only for receipt of funds from abroad.
4. NPOs facing problem in opening of bank account at SBI NDMB branch may contact them at Telephone Nos. 011-23374143/4213/4390/4392 and write to them on email: fcra.00691@sbi.co.in.
5. This account can be opened till 31^st March 2021. Therefore, till such time SBI Account becomes operational, one may continue to use its current FCRA designated account. Though receipt of funds should be avoided, as FCRA authorities have not made abundantly clear, if funds can be rec’d from outside India, once FCRA Account with SBI has been opened, but not yet operationalised, pending MHA approval.

• Another FCRA Account:
• FCRA Authorities have allowed to retain current FCRA designated account with a status of ‘Another FCRA Account’ for keeping & utilization of funds. But please note intimation of its status to be used as ‘Another FCRA Account’ or opening of a fresh account to be used as ‘Another FCRA Account’ needs to be intimated to FCRA authority in Form 6C. Same form can be used both for FCRA Account at SBI NDMB Branch as well as use of ‘Another FCRA Account’.
• ‘Another FCRA Account’ is considered very important. In SRRF’s opinion all NPOs should continue to use current FCRA designated Account or another ‘FCRA Account’ should be continued. This will be useful, as following advantages can be gained by the NPO, by retaining the same.
• As funds presently lying in FCRA designated accounts cannot be transferred to SBI NDMB branch, hence NPO can continue to use this account to keep its present funds in the same account.
• Home branch advantage by retaining the account, as it will not be easy to operate & manage SBI, NDMB branch in a remote manner.
• As mentioned above, funds generated within India, from sale of assets, etc. cannot be deposited in FCRA account at SBI NDMB.

• Transfer of funds to other NPOs totally prohibited

Subsequent to changes in S.7, of FCRA Act 2010, now Indian NPOs cannot transfer any funds to any other NPOs. Rules have made it further amply clear by removing Rule 24. Even Annual return (FC4) now specifically requires information of transfer of funds to other NPOs, before 29-9-2020.

• Administrative Exps. Limited to 20%

FCRA amendment Act 2020 brought down administrative expenses to 20%. There are two schools of thought, which stated that this 20% limit is applicable only from 29^th September, date when the amendment was put in place. Another school of thought stated that once the amendment was made, all Annual returns filed after this date would require that Administrative Exps. Be 20%, irrespective of the period for which the retuen is applicable. While there is no direct clarity in the Rules regarding this dilemma, however I f one has to go by some indication, the Annual return (FC4) now requires that the NPO declares that administrative expenses do not exceed 20%.

Therefore SRRF would suggest that all NPOs now restrict their administrative expenses to 20% or below of total Foreign Contribution rec’d. It may be noted both the Act as well as Rules require limit to be 20% of FC rec’d and not total expenditure.

• Renewal of FCRA
• All FCRA renewal applications are required to have FCRA Account at SBI, NDMB.
• Major change is, i.e., last time in 2016 FCRA if not renewed NPOs while could not receive fresh FCRA funds after expiry date but could utilize the funds lying in their NPO Account. However this time Rule 12(5) states that an NPO can neither receive nor utilize FCRA funds in the FCRA Account. This will cause innumerable problems to the Sector, since it is the Dept which generally is at fault in delaying the renewal.
• There seems to be drafting error in these rules, as Rule 12(2) states that renewal application needs to be made within 6 months of the expiry of FCRA registration, while Rule 12(6) states that application for renewal alongwith fees should be received before expiry, otherwise FCRA will expire. It is suggested that all NPOs must file their applications at least 6 month before expiry date, considering different languages used in different rules.
• Renewal Fee has been increased to Rs 5000/-.

• Annual return (FC4)
• It seems Darpan Id & Adhar for members has been made mandatory.
• Annual Return while is almost same in terms of information required, however now requires 15 different declarations covering almost all compliance requirements covered for NPOs.
• Some of the disclosure requirements, which caused difficulties in tallying total utilization, amongst different disclosures in previous version of FC4, like assets, etc. has been made more logical.

Another blog will be posted to cover remaining changes, in a few days.

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

Dear Members,

I am working in NGO as Finance Manager. And i have some doubts regarding FCRA Administrative Expenses.

1. We had purchased a Vehicle from Mahendra and they have provided loan to Organization. Every month the premium and interest is paying through bank.

Now please tell me how to treat these while submitting FCRA Annual Returns.

a. Premium paid -> Admin / Programme Expenses
b. Interest paid – > Admin / Programme Expenses

2. We are also running a Hotel for Girls and Boys. We are incurring Electricity Charges, Electrical repairs to this Hostel. Can we show this as Administrative Expenses / Programme Expenses

3. In the previous year We had transferred FCRA Funds to other FCRA holder. Now the project was closed. They have transferred unutilized funds to our organization. How can we show this in our books of accounts?

Please help me sir. Your valuable guidance can help me a lot.

With regards,

Sirisha

As per the latest FCRA Amendment 2020 came into force for mandating specified branch namely SBI, New Delhi Main Branch, Sansad Marg, Delhi- 110001 for maintaining FCRA Designated Account. ‎

SBI, NDMB now created a designated FCRA cells to handle all the FCRA Account related queries. Their contact details are given below:

E-mail: fcra.00691@sbi.co.in
Contact: 011-23374143/4213/4390/4392.

Contact: 011-23374143/4213/4390/4392.

They have also issued format for Board Resolution and Multi Level Marketing (MLM) declaration, which we need to submit at the time of opening of account. (Click here for details Guidelines)

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

Dear Sir,

I attended your Webinar session and it was very good and you clarify many of queries. I still have some specific query it will be great if you can reply to me.

• In the staffing cost of our project budget we budget admin and finance position for 1 person 100% and sometime 2 person but 50%:50%. These staff work 100% for project related finance work in the project, so can we treat them as under project direct cost as they are exclusive for the project and if project stop they will also go.
• In our project budget we have position call project director and their partially time allocation is budgeted in the budget but in organization they are working as ED or lead of the organization. Actually they are very much working in the project and doing most of the project related work. So can we treat them under project direct cost in case we have their proper job description, CV and their project related deliverable as supporting document.

I will be grateful for your reply

Thanks and regards

Asha

From today we start a series on common quries being raised by several NGOs to help better understand of resent FCRA changes

One of the queries is, if NGOs can receive funds in their present FCRA Designated Account (let’s call it ‘existing designated account’) from a foreign donor. Answer is unequivocal YES, that is the basic reason govt has allowed to open A/c by 31^st March 2021. Govt realized that it may take time to open bank a/c, and if no time slot is given, the whole Sector would come to stand still, since it would take time for thousands of NGOs to open bank account in SBI, Parliament Street.

Till the time bank account is opened, NGOs can receive funds in their existing designated account. However the day designated account is opened in SBI Parliament Street, from that day itself, no funds can be received in ‘existing designated account’. Also please note last day being 31^st March, all must open the bank account in SBI Parliament Street Branch before 31^st March 2021.

There is some confusion relating to what will happen to funds lying in the ‘existing designated account’ once SBI Parliament street account is opened. Is it to be transferred to SBI Parliament Street Branch? Answer is NO, the money lying in present account should remain there and can be ‘utilized’ from there itself. S.17(1) second para clearly states that another bank account can be opened wherever NGO wants to ‘keep or utilise’ funds. Thus money lying in your earlier designated bank account need not be transferred to SBI Parliament Street Branch. In any case money to be rec’d in SBI Parliament Street should be only ‘for the purposes of remittances of Foreign Contribution’. SBI Parliament Street Branch is not likely to accept any funds which are not coming from outside India.

Hope this clarifies a very important issue.

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