Dear Sir/Madam
One of our client running charitable society having FCRA registration want to appoint collecting agent in foreign country for receipt of foreign donation.Agent will collect the amount in his account in foreign country and deposit the amount in Indian FCRA account of society giving list to the society with name and passport no of donee. Society will issue receipts to the respective donees.Is this legally possible and is there any RBI/FEMA violation by doing so?
CA Arvinder Pal Singh
This is a bit vague area, while there is no direct law which prohibits an Indian agency appointing an agent outside India. However please do remember, FCRA S. 1(2b) covers associate branches or subsidiaries, established outside India, of all bodies corporate registered or incorporated in India.
However, there are cases where Indian societies have arrangements with foreign NPOs, who make collections in foreign countries, and subsequently transfer these funds to Indian NGOs. This is what was traditionally called Sponsorship model. Indian NGOs treat these as funds rec’d from foreign NGOs. They maintain a communication link with the individual donors, giving them details about the progress of the progress of the project.
Another issue will be that of commission payable to such NPOs / agents. In the first model as suggested by you, if the Indian NGO issues receipt for Gross amount of donation, then IT authorities may question application of such amounts, if it is excessive.
Dear Sir/Madam
JEEVAN VIKAS SANSTHA running charitable society having FCRA registration want to appoint collecting agent in foreign country for receipt of foreign donation.
GUIDE THIS NGO
CHANDRAKANT KULBHAIYYA
SECRETARY
JEEVAN VIKAS SANSTHA