Dear SRRF members,
We have received a new query under Income Tax from Mr. Subodh Ram’ CFO- BRLPS
Bihar Rural livelihoods promotion society (BRLPS) is World Bank aided project implemented by Govt Of Bihar . Recently BRLPS has got fund from National Institute of Rural Development Hyderabad on behalf of MORD ( Ministry of Rural Development ) for transfer the fund to another NGO(ASA) who is implementing agency for Mahila Kisan Shasktikaran Pariyojana for NIRD . BRLPS is working as fund routing agency for ASA with due verification of terms and conditions issued by MORD. ASA has made contract with BRLPS. Transferred fund is part of grant in aid from Central Government.
Pl suggest us whether TDS will be applicable on fund transfer to ASA from BRLPS?
Looking forward to your response.
With warm regards,
Tanvi
____________________________________
Socio Research & Reform Foundation
(A Non Government Organisation)
512 A, Deepshikha, 8 Rajendra Place, New Delhi – 110008
Tele/Fax: +91-11-25821088, 25817157, 25722044
e-mail: socio-research@sma.net.in
Dear All,
In case the money is being paid to an NGO as donation/ grant, the question of TDS does not arise at all. Grants-in-aid being voluntary money (and can not be said to arise from any contractual position), is therefore outside the ambit of either 194C/J. The NGO should however be registered u/s 12A.
Another confusion presently arising is that many Companies are adopting the “service contract” route to fund NGOs’ to carry out their CSR mandate. And therefore, in such cases, the corporate(s) are deducting TDS u/s 194C/J as the case may be. This situation may also be avoided in case such money is given out as Grant and not as service contract moneys.
Thanks
Deepak Bansal
I think Mr Deepak Bansal has given a very good response to query of Mr Subodh Ram of BRLPS. Hope he has found it useful.
Mr Bansal has also covered issue relating to Grants given under CSR programme. I just would emphasis that please ensure that contracts that you sign under such programmes are not service contracts, but Grant / Donation contracts. The agreements should be written in such a manner that it clearly comes out that the NGO is not acting as an agent of the CSR body but has as much stake in implementing the project successfully, since the NGO is accountable to the community. Thus in the agreement that the NGO signs clear role of the two agencies should be brought out and the agreement should emphasis it as a Partnership rather than a contract. Role of CSR organisation becomes as a fund provider to achieve certain objectives under its charter, while the NGO is undertaking the project to achieve objectives of its own charter.
Sometimes CSR organisations coming from corporate background have difficulty in understanding such concepts of partnership. Perhaps there is a need for representative organisations of NGOs to bring out Guidelines on ‘Partnerships’. This will go a long way in removing such irritants, which basically result in treating NGOs as contractors / sub-contractors.
with warm rgds
subhash mittal
Dear Friends,
If some humor is permitted, let us visualize one of the two(CSR, NGO) is squint eyed then there is no eye to eye meeting necessitating search for a squint eyed partner!
Friends, there are many positive examples of partnership between Industrial houses (SDTT/ SRTT and NGOs. Business houses may be a bit different – may not be as open as Industrial houses. Industrial houses may not like to partner with politician or contractor inspired NGOs.
Uday
Mr Subhash Mittal has emphasized the issue very clearly and at the same time also raised another very important issue of developing a partnership guideline for CSR agency and implementing NGO. Somebody should take lead.This will go a long way in impacting the development scenario in the country. Further, a training module/manual also needs to be developed for joint training of CSR and NGO representatives.This will help in better understanding between both partners which will result in better implementation.
Thanks
Subodh
Dear Subodh,
The funds are being received by you in the form of grant -in -aid from NIRD and the funds in turn will be transferred to implementing agency. The funds will be transferred as a grant and will not attract any TDS as long as the implementing agency to which you are transferring the funds has been registered under section 12a of the IT Act.
Thanks and regards,
B V Soma Sastry