Dear Sir,
We are running a clinic and for this we have purchased equipment out of FC grant. Day to day running cost of clinic i.e., Rent, elect charges, water charges, payment to sweeper and salary payment to staff is is also made out of FC grant.
We are charging a nominal amount of Rs. 30/- towards registration fee from the patients. We are also selling medicines ( at no profit) and other related items ( at no profit) to the patients and for this we are issuing receipt to the patients. In the receipt instead of mentioning it as registration fee and sale of medicine we are showing it as receipt from community contribution. Here I would like to mention that the medicines which we are selling is purchased out of the money received from patients on account of Community contribution and not from FC grant
My question is:
Do we need to deposit the registration fee and cost of medicine received from the patient in FC designated bank account ?
Do we need to issue receipt in the name of registration fee and sale of medicine / Spectacle instead of showing it as community contribution ?
Do we have to mention sales tax number / vat in case if we issue receipt showing it as sale of medicine / specs etc.
Thanks
Astha Clinic
This is one of the problem outcome of amendment in FCRA provisions. Explanation 2 under definition of Foreign Contribution states and I quote ‘The interest accrued on the foreign contribution deposited in any bank referred to in sub-section (1) of Section 17 (this deals with designated & Utilisation accounts) or any other income derived from the foreign contribution or interest thereon shall also be deemed to be foreign contribution within the meaning of this clause’. While one can understand the logic of this explanation, however how does one deal with the concept of ‘any income derived from the Fc or interest thereon’. On what basis any contribution received from Indian patients being run by Indian doctors can be deemed as FC. Such concepts are totally against the original definition of FC, i.e. donation, etc… made by a ‘foreign source’. Critical word being the foreign source.
Now if we start taking this chain of events to logical conclusion, we will never know which income is Fc and which is non-FC. I illustrate, that I give a livelihood loan to a fisherman to buy nets / boat. Now if I treat this money as Fc, then whenever fisherman goes fishing and sells his catch, does that money become ‘FC’. How absurd that would be but if we follow the definition strictly this is what we end up interpreting.
So sorry Astha Clinic, I do not have an answer to your problem. To me such small monies have to be treated as local monies and should be deposited in local accounts. However my answer is not based on legal definition but more on logic, which banker will allow me to deposit money collected from my local patients to be treated as FC money !!
Reply to your questions are:-
1) You need not deposit the money received from registration fee and sale of medicine/specs, as you have not purchased them from FC fund. You may deposit in your local fund account.
2) You may issue receipt for the actual cause of receipt and maintain separate account of the receipts. There is no harm in showing it as community contribution also.
3) For sale of medicine/specs etc. you should have governmental permission as well as sales tax number and should submit regular return of the sale proceeds. To avoid this, you may show the entire sale proceeds as community contribution, but how will you account for the cost involved by you in purchasing the medicines and specs? So, it is better to take all relevant permissions and issue receipts for actual cause, to avoid any trouble to your organization in future.
Dear Sir,
My suggestion about registration fee it can receive in cash in books of account and expenses in other necessary things. It is not deposits in bank this is my view .
Mustkim
ALAMB
Best is to seek professional advice after sharing complete details, in case you wish to have a concerted and logical opinion.