Giving grants to foreign entities

Posted on June 22, 2012 by SRRF

Dear Members,

I have a query for funds transfer from a local a/c to a foreign entity is possible or not?  We have 2 bank accounts (FCRA and local a/c).  We have funds in our local a/c.  This funds cannot be transferred to our FCRA a/c.  Hence, we would like to transfer funds to a foreign entity as a sub grant from our local a/c directly.  Kindly let me know, is it possible or not?

With regards

Alex

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3 Responses to Giving grants to foreign entities

  1. Mr. T. Kaithang says:
    June 23, 2012 at 12:42 pm

    Dear members,

    Receiving foreign contributions for our NGO work is governed by FCRA. Remitting grant to a foreign entity will be governed by FEMA/RBI regulations. Best to check them before you commit to do that.

    Kt
    (T.Kaithang)
    Finance Director,
    Emmanuel Hospital Association,
    808/92, Nehru Place,
    New Delhi. PIN 110019

  2. Arvind Kumar Singh says:
    June 23, 2012 at 12:37 pm

    Dear Alex,

    Following is the part of FAQ from site of MFA.

    Q. 19 Can foreign contribution be received in and utilised from multiple
    Bank Accounts?
    Ans. No fund other than foreign contribution can be deposited in the
    exclusive single FC account of a Bank, as mentioned in the order for
    registration or prior permission granted by MHA, to be separately maintained Page 7 of 23
    by the associations. However, one or more accounts in one or more banks
    may be opened for utilising the foreign contribution provided that no funds
    other than foreign contribution shall be received or deposited in such account
    or accounts and in all such cases, intimation on plain paper shall have to be
    furnished within 15 days of the opening of the account.
    Q. 20 Can foreign contribution be mixed with local receipts?
    Ans. No. Foreign contribution can not be deposited or utilised from the
    bank account being used for domestic funds. —

    Thanks & Regards

    (Arvind k Singh)

  3. Soma Satry says:
    June 23, 2012 at 12:33 pm

    Dear Alex,

    Greetings from Hyderabad!

    1. The transfer of funds from local bank account to foreign bank account and vice versa is not possible under any circumstances since this will amount to violation of FCRA.

    2. You have funds in local account. Do you want to transfer the funds to a foreign entity having an office in India or the fund is being transferred outside India.

    a. In case it is a foreign entity having registered office in India, the funds from your local account can be transferred to their local account

    b. In case the funds from you local account are transferred to outside India, there are certain RBI guidelines that have to be followed. FCRA per se will not come into picture since money is going out from local account.

    c. Also, I understand that the funds cannot go as grant. TDS will be applicable. Also check out for the “Double Tax Treaty” between India and the country to which the amount is being transferred. It may have some exemptions for this type of transaction.

    But definitely it is not a simple transfer transaction especially when it pertains fund transfer from 12a registered organization. The funds provided for charity in India should be used in India only and the benefit out of the activity should also be within India.

    I hope other may give some more clarity on the issue.

    Thanks and regards,
    B V Soma Sastry

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