Dear Sir/Mam,
Need your guidance regarding donation from Foreign National (Foreign Passport) doing business in India and having valid PAN card and Aadhar.
Does donation from this person through his/her SBI Account (India branch) be considered a Normal Donation or Foreign Donation (coming under FCRA Act) ? Can an NGO (Section 8 company) not having FCRA Certificate receive such donation ?
Please guide.
Regards,
Vikram Kanwar
Respected sir,
I’ve registered a trust through a lawyer on 6th feb 2021 in Mathura district of Uttar Pradesh but spelling of trust name on e-stamp is wrong. I’m president of the trust and would like to correct the spelling of the trust.
Kindly guide me and provide assistance.
Thanking you !
yours sincerely
Vagyakaar
We have the following query –
Can a charitable Trust having 80G and 12AA certificates, transfer funds into a vendor’s foreign account for services rendered outside India, but for a project in India? Would it flout any conditions of the grant of 12AA or 80G? The vendor could be an NRI with no account in India – or the vendor could be a foreign citizen.
Thank you
Ruby Kamdin
Director
One Billion Literates Foundation
There is some confusion regarding consequences of non-renewal before expiry of FCRA Registration Certificate. Many consider that in such a scenario, concerned entity cannot receive or utilize funds. This is based on reading of Rule 12(5), which is reproduced below:
Rule 12(5): No person whose certificate of registration has ceased to exist shall either receive or utilize the foreign contribution until the certificate is renewed. [Note:There seems to be a typographical error and seems intention is to read ‘either’ as ‘neither’, otherwise the intention of the rule is not clear.]
If one reads Rule 12(5) on its own, it states that once the certificate ceases, the entity can neither receive nor utilize the FC. To understand what does ‘cease’ mean, one needs to refer to Rule 12(6) alongwith accompanying Note 2.
Rule 12(6): If no application for renewal of registration is received or the application is not accompanied by requisite fee before the expiry of the validity of the certificate of registration, the validity of the certificate of registration shall be deemed to have ceased from the date of completion of the period of five years from the date of the grant of certificate of registration.
Note 2: If no application is received or is not accompanied by renewal fee, the validity of the certificate of registration issued on the 1st January 2012 shall be deemed to have ceased after the 31st December, 2016 and the applicant shall neither receive nor utilize the foreign contribution until the certificate of registration is renewed.
From Rule 12(6) and accompanying Note 2, the term ‘ceased’ of the FCRA registration is applicable only
before the expiry of the FCRA certificate.
Thus if Rule 12(5) & 12(6) are read together it can be said that an entity can continue to receive and utilize FC funds even after expiry date, provided the above two conditions have been complied with. Thus it is most important to ensure that renewal application alongwith the right amount of fee, is submitted before expiry of the renewal certificate.
While this could mean that an entity can neither utilize nor receive funds in FCRA accounts, however considering FCRA Dept imposed penalties on entities which received funds after expiry of their FCRA certificate in 2016, one should tread cautiously.
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Socio Research & Reform Foundation (NPO)
512 A, Deepshikha, 8 Rajendra Place,New Delhi – 110008
As many of you may be aware that recently new CSR rules have been brought by Ministry of Corporate Affairs. We provide below a summary of major change for your reference.
Societies & Trusts allowed to implement CSR projects
Draft rules proposed that only S.8 companies could implement CSR projects, thus denying a large number of NPOs, which were otherwise qualified. This could have dragged the law into courts, and also would have caused huge hardships on such entities, it seems better sense has prevailed and now such restriction has been removed. Only requirement remains is of 3 year track record of successful implementation of similar programs.
However all those who wish to implement CSR projects, must obtain a CSR Registration No. by filing Form CSR 1 on through MCA portal. The Form has following major requirements which a NGO must have
CSR funds must be ‘spent’ though can be done in more than one year
Changes made in 2019 in Section 135, have now been made effective and rules made. The provision requires that projects be identified between ongoing and otherwise. An ongoing project being a multi-year project, but should not be more than three years. The provision now allows funds relating to ongoing project to be spent in 1+3 years. That is funds remaining unspent in the year project has been initiated, can be transferred to a separate Unspent CSR Account within 30 days of the year-end, and can be spent over next three years. [S.135(6)]
If funds allocated remain unspent under any other project, the unspent amount would need to be deposited in one of the ‘funds’ specified under Sch VII, within 6 months of the year-end. Thus now any ongoing project can be completed in 4 (1+3) years. [2nd proviso of S.135(5)]. Thus in one way or other, funds required to be spent as per S.135(2) must be either spent or trfd to Sch VII fund or deposited in a separate bank account to be spent over next 3 years.
Penalties: In case of defaults, the company shall be liable to a penalty of twice the amount required to be trfd to a Sch VII Fund or ‘Unspent CSR Account’ or Rs 1 crore whichever is less. There is a penalty even on every concerned officer who is in default of this compliance of Rs 1/10th of the amount required to be transferred or Rs 2 lakh whichever is less. [S.135(7)]
Excess spending can be carried forward
In case of any spending in excess of CSR requirements, the company can carry forward the same and set-off against future CSR requirements. [3rd Proviso of S.135(5)]
CSR Policy & Annual Action Plan
Earlier CSR Policy was defined as a list of activities/projects, however now it is defined as a statement containing the approach and direction and includes guiding principles for selection, implementation and monitoring of activities. This is much better. Further it includes preparation of an Annual Action Plan, consisting of a list of approved projects, amounts allocated, implementation method (direct, by an implementing agency, its name, etc.) and fund utilisation modalities. However realising these details may not be fully ready at the beginning of the year, rules allow alteration in the Plan during the year. Though rules require that all alterations must be approved by the Board. [R 2(1)(f) & 5(2)]
Expenditure on Covid-19 allowed as CSR
Several amendments have been made over last year or so to allow expenditure on Covid-19 related activities as CSR.
Expenditure on Employees disallowed under CSR
Earlier rule only forbid CSR activities which were ‘only’ meant for employees. This rule could be easily circumvented to beat the spirit of law. Since an activity which benefited predominantly employees could ‘technically’ be allowed as CSR, since it included some community members and did not preclude community.
However the new rules have now gone to other extreme and do not allow any activity under CSR, under which employees [as defined under S.2(k) of Code on Wages 2019] benefit. [R2(1)(d)(iv)] This would mean, if a dispensary is being run, which covers both employees as well as community, the company probably cannot claim it as CSR expenditure or at least has to take out expenditure relating to employees. Mar’20 draft rule was more practical, it put a cap of 25% on employees. It would have reduced unnecessary complications.
Sponsorship of events:
Any activity supported by a company on sponsorship basis, which provides marketing benefits for a company’s products/ services is not allowed as CSR.
This could mean if an event is sponsored for an activity falling under Sch VII, and if only a company’s name is used, without advertising company’s products / services, then it may be allowed as CSR.
Assets created out of CSR Exp.
CSR Expenditure may result in creation of an asset, but it must not be capitalised in the books of the company. For example, if a CSR expenditure results in say an asset like water tank, then it can be handed over to a Public Authority [as defined under RTI] or to the community, say a community based organisation like SHG or CBO or even an FPO, etc. If the asset is say a mobile medical van, which needs to be operated on a regular basis, then it can be handed over to a registered NPO.
Under no circumstances, it can be retained by the company.
In fact in case any such assets exist in the books of the company at the time of effectiveness of CSR Amendment Rules 2021 (22-01-2021), the company needs to transfer the assets within 180 days of such effectiveness or another 90 days with the Board approval.
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Socio Research & Reform Foundation (NGO)
512 A, Deepshikha, 8 Rajendra Place,
New Delhi – 110008.
Respected Sir,
Greetings from Kutch Mahila Vikas Sangathan!
Let me in introduce myself, my name is Kamlesh Barmeda, and I have been working with Kutch Mahila Vikas Sangathan (KMVS) since 2007 as Finance Manager, Kutch Mahila Vikas Sangathan (KMVS) was founded in 1989 with the objective of organizing rural women of Kutch to facilitate their empowerment. The overarching mission of KMVS has been the empowerment of rural women; And foster their leadership – economic, political, social and cultural – through conscious-raising, organization and their mobilization into local collectives, capable of independently addressing gender inequities in their region.
Recently, the Govt. of India has made some changes in FCRA Law , We have studied the changes but I would not be able to understand the following issue and as experts we Kindly request to please help us to clarify the same.
After changes in FCRA , I would like to know and understand which cadre / nature of employees of Govt. not to be part of the Governing Board of the Trust, also want to know it includes? the Professor/ Teacher of School/ College getting Central or State Govt. grant?
Waiting for your reply and your kind cooperation for the same.
Thanking You,
Kamlesh Barmeda
Dear Members,
I would like to get advice on the following issue.
A sporting organisation holding FCRA registration has established a health care center PHC type in rural area in 2007 with foreign support. For the administrative purpose the organisation has created a Trust in 2010 consisting of the selected GB members from the same organisation and the land of the PHC is given to the Trust by the said organisation. So long the cost of PHC building construction, instruments, staff are maintained by the organisation based on an notary affidavit agreement with the Trust. In August 2020 some amount of foreign grant (about 4.5 lac) is received by the organisation for rebuilding the PHC’s tin – shed completely overthrown by the severe cyclone Amphan and started to work in middle of September 2020 on request of the Trust. In the mean time the FCRA amendment bill becomes effective. Now I like to know whether the FCRA holding organisation can spend for the rebuilding of tin-shed of the Trust’s PHC though the organisation spends directly and keeping all accountability with it.
I request to give advice how the repairing and rebuilding of the shed can be possible from the grant received from abroad by the organisation?
Please let me also have the suggestion what will be the utility of the grant if it is not permissible to spend for the purpose.
With best regards.
Samir Kr. Halder
Ashakiran Hospital Trust
Dear Members,
We have established non profit company under section 8 of Indian companies act 2013. Please let us know whether we should register for 80g and 12a or these two are already incorporated in section 8.
Dr.PSR.Sabhapathy
In earlier part we covered changes in Rules relating to
For seeing the changes re above, please go to the link: http://blog.srr-foundation.org/?p=4074
This post covers several other changes made in the Rules.
Organisations of Political Nature
A new sub-rule (2) has been brought up under Rule 5. It requires that any organization which undertakes activities which can fall under last two clauses [(v) & (vi)] under Rule 5(1) shall be considered as of political nature. Thus paving the way to allow FCRA staff / inspectors to decide which organization is of political nature, without any office order. [Rule 5(2)]
Eligibility for registration enhanced & codified
Earlier an organization to be eligible for registration, it had to be at least three year old and should have spent Rs 10 lakh on its core activities for the benefit of the society during the last three financial years. This was not codified, but was a practice followed by the Dept. Now the Govt has codified it under Rules.
The eligibility limit has been further enhanced to Rs 15 lakh. The, FCRA Dept has also been empowered to exempt any agency controlled by central or a state government from this condition. [Rule 9(1)( f)(i)]
The Dept has now further allowed to include any capital expenditure already incurred by an NPO as part of this eligibility expenditure, provided that the chief functionary to give undertaking that the assets will be vested with the organization and not to be diverted to any other purpose. [Rule 9(1)( f)(ii)]
Pending applications
All registration & prior permission applications pending at the time of commencement of these amended rules will need to open first FCRA Account, and provide details to FCRA Dept, before these are considered by the Dept. [Rules 9(1A) & 9(2A)]
Prior Permission
Cases or single/ major donor permissions / registrations
The above rules were part of practice of the Dept and have now been codified. [Rule 9(2)(f)(ii)]
The above rules have been specifically made in context of Prior Permission, considering that prior permissions are generally based on a single donor. However these are likely to be also applicable n case of registration, where the Indian entity mainly relies on one donor for the FC funds.
High Value permissions
A new rule has been put in place for permission of more than Rs 1 crore at the date of disposal of application, central Govt may permit funds to be rec’d in installments provided second & subsequent installments will be given only after submission of 75% UC of funds rec’d till that date and after field inquiry of the utilization of FC. [Rule 9A]
This raises a number of questions. Are UCs to be submitted to FCRA Dept ? Who will undertake field inquiry of utilization of funds ? If these functions have to be done by FCRA Dept, will fresh installments can be taken only after submission of its approval by FCRA Dept. This could put new hurdles in smooth utilization of FC funds. Right now it is not clear and one could interpret it as being submitted to donor only, but let’s wait & watch how this pans out in future.
New Fees
For registration now application fee has been fixed at
All fees have to be deposited on a Payment Gateway specified by the Dept, earlier these were supposed to be paid through demand draft or banker’s cheque. It may be noted while for first three bullets there are specific forms, for revision there is no form and application is to be made on Plain paper. For compounding it is to be made through electronic Form, but no Form No. is specified.
Renewal of Certificate
Considering some of the member based organizations have a very large number of members, asking all members of an Association to submit an affidavit could be totally ineffective. It should be made clear that requirement is for members of governing body and not general body.
This is likely to cause untold hardship to the NGOs who have applied in a timely manner, but the Dept has not been able to process the application. This will disrupt projects under implementation and will be another roadblock, just like stopping of transfers of FC to Indian registered NGOs.
Last Date for applying for renewal
Surrender of Certificate
Changes in bank accounts, name, address, aims, objectives or key members of Association
In addition to above, all changes
Socio Research & Reform Foundation (NPO)
512 A, Deepshikha, 8 Rajendra Place, New Delhi – 110008
FCRA Dept has now extended filing of Annual Return to 30th June 2021. As per the Notice this is done to enable NPOs to comply with following (based on FCRA Public Notice dt 23-11-2020):
Thus from the language of Public Notice, it appears that FCRA Dept wants NPOs to comply with the above changes. However it is not clear why opening of Bank Account is being insisted, since that has nothing to do with Annual return relating to 31st March 2020. However seems govt is insistence that all NPOs open there FCRA account in SBI, New Delhi Main Branch, at the earliest.
FCRA Dept had made Darpan Id mandatory in Oct’2017. An NPO had gone to Delhi HC against the same, who allowed NPO to file returns without Darpan Id, on the ground that it need not make its Adhar details public of its Trustees, which was required for getting Darpan Id. See earlier post http://blog.srr-foundation.org/?p=3652 .
Once again the notice reiterates, that NGO need not visit Parliament Street Branch, and can request any other Branch of SBI to facilitate. Though it may take some time for SBI branches to facilitate, but ultimately they should do it.
If in any doubt, please contact SBI Parliament Street Branch email id: agmcommercial00691@sbi.co.in .
So now anyone expecting transfer of FC funds from outside India, you may do so till the date of opening of account or 31st March 2021, whichever is earlier.
All new applicants must open bank account directly in SBI, Parliament Street with immediate effect.
Please note that FUNDS TRANSFER TO NGOS is not covered by above notice, no Indian NGO can transfer funds to another NGO, after effective date of Amendment Act, i.e. 29th Sept 2021.
Socio Research & Reform Foundation (NGO)
512 A, Deepshikha, 8 Rajendra Place,
New Delhi – 110008.
