Whether Interest earned on endowment fund from FCRA account can be transferred to other account i.e .INR account(non fcra account) for utilizing the same as written in the contract/agreement. However, in the FCRA return we can show the income earned from endowment fund (investments)during the year and expenditure as income transferred to INR account (90% of interest- for the purpose mentioned in the contract) and 10% balance as reinvested. Otherwise we are never able to spend the income earned from an FCRA account.
Can you share your views
Ramakrishnan Natarajan
Dear Ramakrishnan,
Let me presume endowment was received from a ‘Foreign Source’. If so any interest that you earn also remains a FCRA fund, and has to be spent out of FCRA Account only. Therefore 90% or whatever proportion that you need to spend, since this must be surplus in the Income & Expenditure A/c, for past years, it must be lying as a revenue reserve in your accounts. An NGO can always formulate projects or can spend on its own needs, from its internal accruals. FCRA does not prohibit you from either, all it requires that any FCRA fund must be spent from one of the FCRA A/c and accounted for in FCRA books.
Hope this clarifies.