Dear Members,
I like to know whether the building and assets made by foreign donation collected by an organisation holding FCRA can be given to another organisation on lease basis. Whether lease or rent is permissible by the Ministry of Home affairs.I request to let me know the issue soon please.
Regards
Samir Kr. Halder
Sir,
I have a query that our NGO BRWAS is Registered Under Societies Act 1961, WB (Not FCRA Registered)
A NRI servicing in Singapore. He wants to transfer money for development of School in India .
Can he transfer from his Singapore Bank account?
Gopal Ch Mondal
Thanks for providing information on 80G donations which is really helpful. I have following further queries:
1. Do we need to report all the donations and grants i.e. FCRA and Local or only Local?
2. If FCRA also then what do we need to provide in the unique identification number specially foreign corporate/companies registered outside India?
3. If any donor is an Indian and he/she doesn’t provide his/her PAN or Aaahaar as they don’t want to claim any 80G benefit then how to deal with it or we don’t need to file the same in the statement of return?
Regards
Chander Shekhar
Till FY 2020-21, all donors who gave donations to NGOs, could claim tax benefit under section 80G on the basis of self declaration and attachment of a receipt issued by the NGOs receiving donations. The receipts normally have details of the donor and IT Order reference under which the NGOs had received registration under S.80G. This was open to misuse. Hence effective FY 2021-22, the Tax Dept requires that the NGO should upload details of all donations on IT website in a prescribed format (Form BD). Then NGOs would download the certificates of donations (Form BE) for each donor from IT website itself. In this blog, requirements as well as the deadlines are summarized.
Form 10BE: This is the format of certificate now prescribed under new Rule 18AB, which every NGO, who receives donation under Section 80G(5)(ix) and Section 35(1A)(ii), must issue to every donor after downloading from the IT website.
The donation certificate should identify the NGO through its PAN No. and also give the Order No. and the date under which the NGO has been granted approval for S.80G or S.35 registration. Please note this number should be the same as recently issued by the Dept for approval of S.80G registration. This facilitates the identification of the NGO who is issuing this certificate. The certificate apart from giving the name, address of the donor, amount and type of donation, would also disclose any of the following details
The certificates are required to be given to each donor by 31st May 2022.
Form 10BD: This is a return thatan NGO has to file once a year. For FY 2021-22, the NGO would have already received the donations, it should have already collected all necessary information as mentioned above. This should be now filled in Form BD before the last date. It may be noted that a person can revise this Form, if details filled are subsequently found to be incorrect or require revision for any reason. For FY 2021-22, last date for filing the return is 31st May 2022 (being 60 days after year-end). The purpose of this return is to understand total donations rec’d by an NGO, it also brings transparency and better control in claims made by donors.
It may be noted, that in case an NGO is not being able to comply with the above requirements, any tax deduction that a person may receive otherwise, may not be available.
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Socio Research & Reform Foundation (NPO)
512 A, Deepshikha, 8 Rajendra Place,
New Delhi – 110008.
Sir,
I would like to receive clarification for the below points:
a) As a society having FCRA registration can we help other Institutions ( not belonging to us or neither registered with FCRA) acquire assets like Computers, Vehicle etc.,
b) How should the assets – comp, medical equipment etc purchased for projects be treated in the FCRA Accounts – should it be treated as project expenses or as Assets of the NGO.
c) Can we help an Institution where some of our sponsored children are studying improve the facilities of the school.
d) How to deal with community projects?
Beulah S
Accounting Software with Audit Trail:
All companies are now required to maintain accounting system, which has audit trail. The Govt. has amended Companies (Audit & Auditors) Rules 2014. Requirement, which the companies were earlier required to comply effective 1-4-2022, now need to comply with the same effective 1-4-2023. Thus the Govt. has relaxed this requirement and it is now required to be complied effective FY 23-24.
CSR Form 2 filing requirement postponed to 31st May 2022
CSR Form 2 for FY 2020-21 was required to be filed by 31-3-2022, however realizing this being first year, companies require more time to work on it, the Govt. has postponed it by another 60 days to 31st May 2022.
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Socio Research & Reform Foundation (NPO)
512 A, Deepshikha, 8 Rajendra Place,
New Delhi – 110008.
Accounting Software with Audit Trail:
All companies are now required to maintain accounting system, which has audit trail. The Govt has amended Companies (Audit & Auditors) Rules 2014. In the proviso for Rule 3(1) it has stated that effective 1st April 2022 every company which uses accounting software for maintaining its books of account, shall use only such accounting software which has a feature of recording audit trail of each and every transaction, creating an edit log of each change made in books of account along with the date when such changes were made and ensuring that the audit trail cannot be disabled.
A genuine question arises, is this rule applicable to companies only? While on the face of it, the amendment seems to be applicable to companies only, however it is quite likely that Tax Officers may insist on such software even for other forms of entities, including NPOs. This is particularly relevant considering now S.12A(1)(b) has been amended and sub-clause (i) requires that books of account and other documents are kept and maintained in such form and manner and at such place, as may be prescribed.
It would not be surprising, if NPOs are also asked to maintain books of accounts in similar format as required of companies.
Cash Basis of expenditure to be used for tax assessment of NPOs
It is now clear that an expenditure will be considered as application for an NPO only in the year which it is actually paid. This is because Explanation has been added to S.11(7) of the Act, which states
For the purposes of this section, any sum payable by any Trust or Institution shall be considered as application of income in the previous year in which such sum is actually paid by it (irrespective of the previous year in which the liability to pay such sum was incurred by the trust or institution according to the method of accounting regularly employed by it).
However if it has already been claimed in a previous year as application, than it will not be allowed again as application, when payment is made.
This amendment has been made effective from AY 2022-23, i.e. Financial Year 2021-22.
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Socio Research & Reform Foundation (NPO)
512 A, Deepshikha, 8 Rajendra Place,
New Delhi – 110008.
FCRA Renewal has been again extended to 30th June 2022. A sigh of relief from the tension, that many of the NGOs who have been waiting endlessly for their renewal process to be completed, however the Dept. is yet to complete the process. It is quite likely that the Dept may yet extend the application, at the end of June, since it still has a vast majority applications pending, and whether it can complete its process during this 3 month period, is quite doubtful.
Covering a loophole which allowed organizations, which had not applied for renewal within the 5 year expiry period, to argue that they have applied before expiry of renewal, hence were eligible for renewal. Now the Notification makes it amply clear that only those organizations would be eligible for renewal, who have applied as per rules within 5 year validity period.
Click here for FCRA Notification
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Socio Research & Reform Foundation (NPO)
512 A, Deepshikha, 8 Rajendra Place,
New Delhi – 110008.
Filing Dates
Some of the important issues covered in the Form are as follows:
CSR obligation for the year (Para 5(c) & 6): One of the most important figure being now asked for is the CSR amount obligation for the year. Company has to provide a complete detailed working of this. This is a good development, as it will make CSR obligation amount to be arrived at very transparent. Company would also know what it is obligated to spend during the year.
Project Details (Para 7(b)(i)&(ii)): Each Project has to be identified and listed on the Form. In fact Ongoing projects, one would need to give Project ID too.
CSR obligation for previous period (Para 10(a)): Any CSR obligation not spent effective FY 2020-21, needs to be specified and if any spending against the same, would need to be detailed Project-wise. It may be noted that a company is allowed to take up even new projects from unspent funds, but need to be disclosed. This is new, this was not mentioned in the Rules.
In case a company has spent any unspent CSR funds for FY 2014-15 to FY 2019-20, same should be disclosed. It may be noted that though a company is not required to spend this money, however in case a company does spend old obligations (this may happen in case of public sector companies), it needs to be disclosed, again project-wise.
Capital assets created through CSR spending (Para 12): All assets which have been created through CSR spending needs to be disclosed, alongwith details of who is holding the same.
Website (Para 4(b)): The Form asks for weblinks of various information which are required to be disclosed on website. Please make sure your company has a website with weblinks to all the information required to be posted. This includes Composition of CSR Committee, CSR Policy, CSR Projects approved by the Board and Impact Assessment reports.
CSR Set Off (Para 4(d)): In case a company has spent more than CSR compulsory requirement, then same can be set-off over next 3 years. Such year-wise details has to be provided in the Form. Since the rules became effective only from FY 2020-21, hence this set-off rule is applicable only from that year only.
Signing Authority: The Form has to be signed by at least someone who is a director on the Board. This means now directors are directly responsible for disclosure of all CSR details. It may be noted that any false statement/certificate and false evidence attached are punishable offences under S.448 and S.449 respectively.
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Socio Research & Reform Foundation (NPO)
512 A, Deepshikha, 8 Rajendra Place,
New Delhi – 110008.
A society registered under society act is running a educational institution.It is not yet registered under Sec 12A of Income tax act. In f y 2020-21 its revenue fee receipts from school are less than 1cr and after claiming all revenue expenses and depreciation there is loss in income and expendture account.It has received corpus donations worth Rs. 6 cr for builing and 90% of its corpus donations has been utilised for construction of school building.
Whether society can claim exemption u/s 10(23)(c) as its revenue receipts are less than 1cr.Whether whole of corpus received will be exempted .Which ITR FORM it is required to file ITR 7 OR ITR 5.
CA Arvinder Pal Singh
