Hello
I found your website through internet. I read many of articles and it’s give me very good knowledge.
I am living in Canada and working with few NPO here.
My question is regarding sponsoring the education from Canada. How we can directly sponsor the poor children education in India.
We have talked with few NGO in India who are running free or nominal fee based education institution. some have FCRA and some doesn’t.
Can Canadian NPO directly pay fees of student once fee letter received from institution.? Most kids are selected by us. NPO directly wire transfer the total INR of fees to Indian institution as Fee towards XYZ kid.
Is this come under FCRA or exempt for FEE. ?
Regards
Dharmesh Patel
Dear Dharmesh,
Technically, the amount paid by the Canadian NPO to the Indian education institution is not a donation but “Fees” which would be a commercial/business income. For e.g. if a college in India admits a foreign student, the amount paid by the foreign student to the college is not donation but fees in the hands of the college.
Business income are not covered under FCRA and therefore in my opinion this amount received by the institution in your case would not be covered under FCRA, provided they issue an invoice/bill of supply on your NPO’s name for such receipt and not a “donation receipt”.
The actual beneficiaries in this case are the students (individuals) and the question would be whether FCRA would be applicable to the students. For this, we have to interpret the FCRA rules regarding “gifts”, since this amount could be considered as “gift” from a foreign donor by way of payment of education “fees”.
Below I have provided to you a link, regarding Gifts under FCRA. This is a document prepared by FMSF.
FCRA Applicability to Gifts received by Individuals
This is only my view and request you not to take any actions based on my views.
Dear Mr Patel,
Regarding your question on education Fee directly to NPOs. Yes you can pay fee directly to the NGOs. Conditions are
1. The concerned NGOs in India to whom you will pay must have FCRA registration or obtain Prior Permission to receive funds from a foreign source, i.e. an NPO registered in Canada.
2. Please enter into a formal agreement for whatever amount you decide to remit, to ensure sufficient documentation of donation / grant and purpose that it is meant for.
Hope the above is helpful.
Good point brought out by Ritesh, that treat school fees as ‘Fees’. In fact in such a case, School Fees payable will not be treated as donation, and therefore will fall out of the scope of FCRA. Thus schools which are not registered under FCRA can also receive the same, since their normal course of business is running school for which they can receive the Fees.
Dear Mr Dharmesh
Thanks for your compliments.
Hope your query will resolve soon by blog members.
Team SRRF
Dear sir,
Foreign exchange in any form and for any purpose must be either through FCRA / FEMA. If not then it is illegal even for the purpose of education. So please be sure that you follow the rules else you will be putting the recipient to great hardship.
– Oliver Rayi
Under FEMA all current account transactions are freely permissible unless prohibited. Therefore, if the recipient is getting the money on account of “tuition fee” for and on behalf of specified students, it is a current account transaction. If it is a donation for a Scheme with recipient having freedom to choose the beneficiary, FCRA will come into play, I suppose. Kindly clarify.