Workshop Report – Compliance with Lokpal and Lokayukta Act by NGOs – July 7, 2016

Workshop on Facilitating Compliance with Lokpal and Lokayukta Act 2013 organized by Socio Research & Reform Foundation (NGO)-SRRF

SRRF’s Centre for Responsible CSO Boards (CSObGOV) organized  a half day session Facilitating Compliance with Lokpal Act by NGOs at India International Centre (Annexe) on Thursday 7th July 2016 form 2:00 PM to 5:PM

The workshop discussed the latest provisions in the Lokpal & Lokayukta Act 2013. It particularly looked at the applicability of the Act to NGOs, explaining the provisions, going through the format of Returns prescribed (field by field) and consequences of non-compliance. The aim of the workshop was to facilitate NGOs comply with the legislation and bring clarity on this issue to the Sector.

There were 70 (+) participants at the workshop from CSOs (NGOs), and individuals involved and working in this sector.

After a welcome by the President of SRRF, Mr Vijay Sardana, which set the context for the consultation in the light of the need for CSOs to be accountable and transparent, since they performed such an important development role in the country. Mr Sardana highlighted the fact that the Act could be a way to strengthen Boards with strong and good governance and leadership. His note was then added to by CA Subhash Mittal, by highlighting the fact that the Act and its ramifications needed to be looked at in the context of a difficult environment for NGOs and the need for greater accountability and transparency, and ways and means to bring a positive focus on the good development work that CSOs (NGOs) do.

First Technical Session by Mr Mittal covered – major provisions of the Act; applicability to NGOs; annual return filing; consequences of not filing; and current status of implications.

Mr Deepak Bansal then went into the details of the preparation of the annual returns and took the audience through this part, section by section.

The entire proceedings were interspersed with lively questions and repartees.

Some of the key concerns that were voiced were as follows:

  • This Act seeks to cover individuals who either work in CSOs (NGOs) or are Board and Executive Committee members- the obligation to report was not of the organization but of the individual.
  • As of now the returns have to be filed in with the competent authority mentioned in the Act by 31st July 2016; most people felt this was unrealistic
  • Board members were resigning, as would HNIs (High Net-worth Individuals) who have joined these Boards to contribute to development of society through resources and their expertise. They are not remunerated for these efforts in the NGOs that they support
  • Putting this information on websites of MHA violates the confidentiality of this information for the individual concerned
  • Many aspects of the Act are linked to interpretation for example to what extent staff is covered and which staff. Are all Board members covered or only those who hold the office of a Secretary, Treasurer or Chairperson.
  • NGOs should take up the issues with the right and competent authority in the MHA – appreciating the ambit and focus of the Act but asking for clarifications as well as why it should apply only to CSOs (NGOs) who only deal with limited resources as opposed to the Corporate sector and its office bearers
  • The implementation has been postponed many times when the Act earlier applied only to Public servants who were Government employees
  • A final recommendation was to join up Groups on this issue and develop a concrete action plan to take to the right authority in the Government with recommendations for changes ASAP – include the comments from this workshop- in a preliminary letter to this authority followed by a meeting.

The session closed with a vote of thanks by Ms. Alka Pathak, Member, Core Team, SRRF’s Centre for Responsible CSO Boards and some high tea for the participants.

Socio Research & Reform Foundation (NGO)
512 A, Deepshikha, 8 Rajendra Place, New Delhi – 110008
e-mail:; website:


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Clarification on Lokpal Act

Dear Members,

Now that NGOs are under the purview of Lokpal Act, many clarifications are required:

  1. What ‘executive’ mean as per the Act? Would it mean ALL staff?
  2. Would all trustees become ‘executives’ or only those who are remunerated by AT?
  3. Do the ‘executives’ have to fill in the returns every year till they are with the Trust or only during the year when the Trust received more than “One Crore only” from the Central Government or “Ten Lakhs” from foreign source?
  4. What is the grant from Central Government? Only if directly received or through a State Health Society, NGO partner? WOuld it be applicable to all those partners who received parts of this One Crore/ten Lakhs also through the Trust?
  5. What are the Return forms? If not available, when they would be?
  6. What is included in the term Wealth, does it mean immovable and movable property, investments, ornaments, cash and bank? How to value the wealth? Value at the time of purchase? Or current value? Wealth of only the ‘executives’ or ‘the family’ or ‘the spouse’?

Kindly advice.

Thanks and regards

Dhruv Mankad

Posted in Accountability | 11 Comments

Impact of changes in Definition of CSR Companies

Dear Members,

In terms of the recent amendment to FCRA under the Finance Act, 2016, Indian companies with more than 50% foreign shareholding will no more be considered a foreign source under the FCRA provided that the the nominal value of share capital in such companies is within the limits specified for foreign investment under the Foreign Exchange Management Act, 1999. Therefore, an Indian company with more than 50% foreign shareholding will be able to make contributions/grants/donations to other organizations without the requirement of FCRA approval. Will it impact anyhow on the companies having 100% foreign shareholding private limited companies.


N K Sinha

Posted in CSR | 3 Comments

Huge relief to FCRA Pentities for late filing of returns

FCRA Dept has come out with a notification No. 1521 dt 16 June 2016 slashing compounding Fees for late filing of the return.

As per the new notification, following are the new slabs for the penalties.

S. No. Offence Penalty amount
1. Non-furnishing of Annual Return for 3 months after 31st December 2% of FC rec’d during the year or Rs 10,000 whichever is less
2. Non-furnishing of Annual Return after 3 months but upto 6 months after 31st December 3% of FC rec’d during the year or Rs 50,000 whichever is less
3. Non-furnishing of Annual Return after 6 months but upto one year after 31st December 4% of FC rec’d during the year or Rs 2 lakh whichever is less
4. Non-furnishing of Annual Return after 1 year but upto 2 years after 31st December 5% of FC rec’d during the year or Rs 5 lakh whichever is less
5. Non-furnishing of Annual Return after 2 year but upto 3 years after 31st December 10% of FC rec’d during the year or Rs 10 lakh whichever is less

It may be noted that the major reduction in penalties is due to replacing of phrase ‘whichever is more’ to ‘whichever is less’. This will be a major relief as earlier penalty procedures were amounting to lakhs and lakhs of penalties, even forcing organizations to abandon their organisatons.

The notification also states that in all those cases, where penalties have already been imposed using the old rates, nothing can be done. Once again an arbitrary decision, not based on legal principles.

Socio Research & Reform Foundation (NGO)
512 A, Deepshikha, 8 Rajendra Place, New Delhi – 110008
e-mail:; website:

Posted in FCRA, TAX, LEGAL | 5 Comments

Foreign Trip for government officials and MPs by a FC registered organisation

We are a foundation established 30 years back and working on health sector on Policy advocacy and knowledge dissemination with women’s right framework being the ultimate motive.

As part of Policy advocacy, the foundation interacts with Government officials, select Members of Parliament (champions) and Industry leaders to advocate Family Planning issues and policies at the various meetings that they attend. To make this happen, constant meetings are done with various Government officials in Health Ministry both at Centre as well as State Government level to highlight various methods of Family Planning and also how the existing delivery mechanisms like ANM, ASHA etc. can be best used to increase reach. The Champions normally help the programme in bringing Government’s and people’s attention on Family planning issues at various levels whether it be at consultative committee meetings, forums, media interaction or public meetings. To this extent they are briefed about methods of Family Planning, indicators on FP, expenses committed by State and Central Government on FP and how this can be advocated to people at large.

Industry leaders also help in the same cause by speaking about Family Planning issues in various forums that they participate like various Chambers, public debates, discussions and conferences on Women’s right to delaying marriage, child delivery, spacing between children etc.

The foundation intends, as part of Policy Advocacy and other programmes, to organize a field visit to a foreign country where family planning methods like delayed marriage, spacing, availability of basket of contraceptives have been implemented in a successful manner. The visit would include meetings with development organizations, policy makers, field implementers etc.

The foundation would bear the cost of travel, stay, food and also pay per diem charges of the Government officials, Champions and also for its own staff. Intimation would be given in writing to Government department and MPs with a request to seek requisite approvals from the respective authorities.

As per Section 3(1) of Foreign Contribution (Regulation) Act 2010, Government servants, member of any legislature inter alia are prohibited from accepting foreign contribution. But it does not clarify if an FC registered organization can spend “foreign contribution” on such persons.

The activity of the foundation is planned under the donor agreement and the cost would be borne out of FCRA grant(foreign contribution).

The following queries emerge:-

  • Is it right to spend FCRA money on exposure tours?
  • Can the foundation pay the per diem charges to the government officials and MPs? If so can we give them Dollars?
  • Should the foundation seek copies of internal approvals of the Government for this tour to support our expenses?
  • Are there any other precautions that the foundation needs to take so that no provision of FCRA is contravened?

Raam Kumar

Posted in FCRA, TAX, LEGAL | Tagged , , | 6 Comments

Lokpal Compliance by NGOs

Procedure to be followed by office bearers of NGOs to comply with latest amendments under The Lokpal & Lokayuktas Act 2013

The Lokpal & Lokayuktas Act 2013 was one of the last legislation enacted by UPA Government  before demitting office in 2014, under pressure from the anti-corruption movement spearheaded by Shri Anna Hazare at the time.

The Act is to provide a constitutional body for probing corruption in the Government  including Prime Minister, Minister, legislature and other public servants. S. 14 (g) & (h) identified in what situations officials of NGOs can be covered.

S.14 (g) covered all bodies including NGOs which receive support from the Government for a specified amount. It covered any person who has been a director, manager, secretary or other officer of every society or association of persons or trust, by whatever name called, wholly or partly financed by the Government and the annual income of which exceeds such amounts as the Central Government may by notification, specify. This the Central Government has now by notification[1] has notified to be Rs 1 crores.

While Director, manager, secretary or other officer of every society or association of persons or trust has not been defined, it is clear that it covers persons who are in a position to take day to day decisions, meaning office bearers and key full-time officials of an NGO, such as CEO/ED, etc. are likely to be covered by the Act.

Similarly S. 14 (h) classifies officials of a Voluntary Organisation receiving more than Rs 10 lakh through FCRA in a year as public servants.

For the purposes of monitoring public servants, S. 44 of the Act requires filing of annual return of assets and liabilities (base being 31st March) by 31st July of that year. Assets and liabilities are to include those of spouse and dependent children. The exact provisions are given in the accompanying Box.


The Government has now come out with a notification[2] appointing the competent authority for the purposes of compliance to S.44[3] by public servants as classified under S.14(g), (organizations receiving support from the government). As per this the Minister Incharge of the Ministry which provides funds to NGOs would be the competent authority. In case of multi-ministries providing the grant, the competent authority would be the Minister Incharge of the ministry providing the largest grant. Notification further clarifies that the competent authority may change from year to year according to the grant amount and the ministry providing the grant. It also states that a copy of annual return filed with the ‘competent authority’ may be filed with other ministries who have given the grant, ostensibly for information only, since the other ministries are not the compliance authority. Return will need to be filed till the grant provided has not been fully exhausted.

Similarly to enable compliance by public servants as classified under S.14 (h), the Central Government  by notification[4] on 20th June 2016 has notified Minister Incharge of Ministry of Home Affairs as the competent body (organizations receiving more than Rs 10 lakh grants under FCRA). The notification also states that the returns will continue to be filed till such time that the donation amount so received is not fully exhausted.

Socio Research & Reform Foundation (NGO)
512 A, Deepshikha, 8 Rajendra Place, New Delhi – 110008
e-mail:; website:

[1] SO 2155 dt 20-6-2016
[2] SO 2154 dt 20-6-2016
[3] Although the notification does not per se mentions S.44, however the purpose of the competent authority to comply with as stated in the notification makes it very clear that it is covering S.44 of this Act.
[4] SO 2156 dt 20-6-2016

Posted in Accountability | 8 Comments

Can same project be funded both by FC and Non-FC Funds?

Dear Sir,

I have been following up srrf dialogue through a friend of mine. I would be glad to be a member of this group.

I am associated with VACHAN, an NGO registered as a society and a trust and functioning in Nasik district, Maharashtra. It is a registered organization under FC(R)A.

We are implementing a community based health program as a partner with a support organization which is providing technical and financial support.

For this project. we were receiving funds from Indian source. However, during FY 2016-17, we have been intimated that some parts or whole line items of the budget would be sourced as FOREIGN CONTRIBUTION.

Now, this raise some doubts which require your expert opinion:

Query 1: Is it allowed under the amended Foreign Contribution Rules and Regulations, 2010, to receive Indian and Foreign contribution for the same project?

The donor has inserted a clause about distribution of the funds, this includes Foreign Contribution which this donor has received and is re-transferred

“The fund requisition format for 6 months duly signed by the head of the organization and accompanied by the latest financial report need to be sent. The first installment of funds will be released for 6 months, 2nd installment will be for 3 months and for the remaining 3 months the partners are expected to incur the expenditure and the donor will ” reimburse the expenses as per the year 3 budget)”

This would mean that we would have to provide advance from funds available under the FC account for the remaining three months.

Query 2: Can FC(R)A allow to use FC available for a specific project as advance to another one under FC account? It would be an advance booked in FY 2016-17 and would be reimbursed in FY 2017-18. This is important because balance amount under the FC account (Bank statement) would not match the balance as per Annual FC Returns FC 4.

Thanks and regards

Dhruv Mankad
5 Gokul Apartments
Usha Kiran Society
Trimbak Road
NASIK 422002

Posted in FCRA, TAX, LEGAL | 9 Comments

List of foreign donors on Prior Permission of FCRA Dept

FCRA Dept has further increased number of foreign organisations on Prior Permission List, which means that an NGO before receiving funds from these organisations would need to take prior permission from the FCRA Dept. It is likely that bankers may also not allow automatic credit from these funding agencies. Following is the current list (20 June 2016) of such organisations.

  1. 350.Org
  2. Avaaz, USA
  3. Bertha Foundation
  4. BIC, USA
  5. Caritas International
  6. Catholic Organisation of Relief and Development Aids (CORDAID)
  7. Climate Work Foundation (CWF), USA
  8. Compassion International, USA
  9. Dan Church Aid (DCA)
  10. Danish Institute of Human Rights (DIHR)
  11. Danish International Development Agency (DANIDA)
  12. Family Federation for World Pease and Unification, South Korea
  13. Greenpeace International
  14. HIVOS, Netherlands
  15. ICCO Stretegische Samenwerking (ICCO), Netherlands
  16. Inter Church Pease Council – Pax Christi (IKV-PC), Netherlands
  17. Mercy Corps, USA
  18. National Endowment for Democracy (NED)
  19. Sierra Club USA
  20. World Movement of Democracy (WMD)
  21. Open Society Foundation

We give credits to Accounts Aid Team for bringing the above info to our attention.
Socio Research & Reform Foundation (NGO)
512 A, Deepshikha, 8 Rajendra Place, New Delhi – 110008

Posted in FCRA, TAX, LEGAL | Tagged , | 10 Comments

Applicability of IFRS to S.8 Company

Dear Madam/Sir

We are registered under Sec25 of companies act 1956. Kindly let us know whether sec25 company (NGO’s) have to follow internal financial reporting system (IFRS)?

If yes, then can you share some format relating to IFRS reporting.

Thanks & Regards

Trupti Nahar

Posted in FCRA, TAX, LEGAL | 3 Comments

Backward Integration – Is it really CSR?

Dear All,

Over a million hectare of Tribal lands are in virtual occupation of ITC in Andhra Pradesh, Telangana and elsewhere. They are doing this under CSR ? This backward integration is part of business and is being pushed under the carpet of CSR. Is this fair? Morally? Ethically?Legally?

I got laughter bursting as I read the following in their Web Site. How cunning it is? This fraud upon our Constitution, on our Adivasi communities is an open secret.

Here’s how ITC’s social outreach programme works

The biggest reason for ITC’s CSR success is the way almost all the major sustainability initiatives have been wedded to the company’s core business, either providing an input source for a business or backward integration. As a result, divisional chief executives and their teams lead each of the initiatives, making them something more than just another CSR programme.

For instance, the famed e-Choupal initiative led by the agri-business division is a major sourcing base for the company’s packaged food and FMCG business, while its social forestry programme supports the paper and paperboard business. ITC has, in the last few years, undertaken massive animal husbandry initiatives covering ten lakh milch animals which will form the base for the proposed foray into the dairy business early next year.

There’s more to ITC’s CSR initiatives than these backward linkages. In the last few years, the company has spent considerable money on developing renewable energy infrastructure. And now, renewable energy meets almost 38% of ITC’s total energy requirements which is indeed remarkable considering the huge manufacturing base and hotels. The target is to increase this to 50% over the next five years. All the premium luxury hotels are certified green buildings making ITC the greenest luxury hotel chain in the world.

ITC has consciously chosen the path less travelled. A path that has led it to create sustainable livelihoods for 5 million people. For ITC this is an expression of a commitment beyond the market. Of a conviction that country must come before corporation. Of a true pride in being Citizen First.

What is ‘Corporate Citizenship’
Corporate citizenship is the extent to which businesses are socially responsible for meeting legal, ethical and economic responsibilities placed on them by shareholders. The aim is for businesses to create higher standards of living and quality of life in the communities in which they operate, while still preserving profitability for stakeholders.

BREAKING DOWN ‘Corporate Citizenship’
As demand for socially responsible corporations increases, investors, consumers and employees are now more willing to use their individual power to punish companies that do not share their values. For example, investors who find out about a company’s negative corporate citizenship practices could boycott its products or services, refuse to invest in its stock or speak out against that company among family and friends.

Chatti Mahatma Gandhi Aashramam,
Chatti Post, Chinthur Mandal,
Khammam District, Andhra Pradesh,
Pin Code: 507129.

Posted in CSR | 1 Comment