Socio Research & Reform Foundation

If the Registration has lapsed due to some reason, how do the trust apply again after period of 4 months of expiry is also crossed.

Do we open another entry for the MHA site as previous password is not allowing this.

Anil Marya

Subsequent to amendments in FCRA through FCRA 2020, now the Govt. has brought out several major changes in the Rules. These changes have brought some clarity on earlier changes made in the Act. In this post we cover some of the key changes.

1. ‎”FCRA Account”: 

Entire process of opening of Bank Account atSBI New Delhi Main Branch (NDMB) at Sansad Marg has become slightly now more clear.

1. SBI FCRA Account cannot be operated immediately after opening the Account with SBI. One will need to take approval from MHA through Form 6C and once approval is submitted to SBI, only after that SBI will allow this account to be operated.
2. Please note this account is only for receipt of Foreign Contribution from abroad. Funds generated in India, say on sale of assets, refund of deposits, etc cannot be deposited in this account.
3. There is no need to transfer funds from your existing FCRA Account to SBI Account. In fact, you would not be able to transfer those funds to SBI, NDMB branch, since it is only for receipt of funds from abroad.
4. NPOs facing problem in opening of bank account at SBI NDMB branch may contact them at Telephone Nos. 011-23374143/4213/4390/4392 and write to them on email: fcra.00691@sbi.co.in.
5. This account can be opened till 31^st March 2021. Therefore, till such time SBI Account becomes operational, one may continue to use its current FCRA designated account. Though receipt of funds should be avoided, as FCRA authorities have not made abundantly clear, if funds can be rec’d from outside India, once FCRA Account with SBI has been opened, but not yet operationalised, pending MHA approval.

• Another FCRA Account:
• FCRA Authorities have allowed to retain current FCRA designated account with a status of ‘Another FCRA Account’ for keeping & utilization of funds. But please note intimation of its status to be used as ‘Another FCRA Account’ or opening of a fresh account to be used as ‘Another FCRA Account’ needs to be intimated to FCRA authority in Form 6C. Same form can be used both for FCRA Account at SBI NDMB Branch as well as use of ‘Another FCRA Account’.
• ‘Another FCRA Account’ is considered very important. In SRRF’s opinion all NPOs should continue to use current FCRA designated Account or another ‘FCRA Account’ should be continued. This will be useful, as following advantages can be gained by the NPO, by retaining the same.
• As funds presently lying in FCRA designated accounts cannot be transferred to SBI NDMB branch, hence NPO can continue to use this account to keep its present funds in the same account.
• Home branch advantage by retaining the account, as it will not be easy to operate & manage SBI, NDMB branch in a remote manner.
• As mentioned above, funds generated within India, from sale of assets, etc. cannot be deposited in FCRA account at SBI NDMB.

• Transfer of funds to other NPOs totally prohibited

Subsequent to changes in S.7, of FCRA Act 2010, now Indian NPOs cannot transfer any funds to any other NPOs. Rules have made it further amply clear by removing Rule 24. Even Annual return (FC4) now specifically requires information of transfer of funds to other NPOs, before 29-9-2020.

• Administrative Exps. Limited to 20%

FCRA amendment Act 2020 brought down administrative expenses to 20%. There are two schools of thought, which stated that this 20% limit is applicable only from 29^th September, date when the amendment was put in place. Another school of thought stated that once the amendment was made, all Annual returns filed after this date would require that Administrative Exps. Be 20%, irrespective of the period for which the retuen is applicable. While there is no direct clarity in the Rules regarding this dilemma, however I f one has to go by some indication, the Annual return (FC4) now requires that the NPO declares that administrative expenses do not exceed 20%.

Therefore SRRF would suggest that all NPOs now restrict their administrative expenses to 20% or below of total Foreign Contribution rec’d. It may be noted both the Act as well as Rules require limit to be 20% of FC rec’d and not total expenditure.

• Renewal of FCRA
• All FCRA renewal applications are required to have FCRA Account at SBI, NDMB.
• Major change is, i.e., last time in 2016 FCRA if not renewed NPOs while could not receive fresh FCRA funds after expiry date but could utilize the funds lying in their NPO Account. However this time Rule 12(5) states that an NPO can neither receive nor utilize FCRA funds in the FCRA Account. This will cause innumerable problems to the Sector, since it is the Dept which generally is at fault in delaying the renewal.
• There seems to be drafting error in these rules, as Rule 12(2) states that renewal application needs to be made within 6 months of the expiry of FCRA registration, while Rule 12(6) states that application for renewal alongwith fees should be received before expiry, otherwise FCRA will expire. It is suggested that all NPOs must file their applications at least 6 month before expiry date, considering different languages used in different rules.
• Renewal Fee has been increased to Rs 5000/-.

• Annual return (FC4)
• It seems Darpan Id & Adhar for members has been made mandatory.
• Annual Return while is almost same in terms of information required, however now requires 15 different declarations covering almost all compliance requirements covered for NPOs.
• Some of the disclosure requirements, which caused difficulties in tallying total utilization, amongst different disclosures in previous version of FC4, like assets, etc. has been made more logical.

Another blog will be posted to cover remaining changes, in a few days.

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Socio Research & Reform Foundation (NGO)
512 A, Deepshikha, 8 Rajendra Place,
New Delhi – 110008.

Dear Members,

I am working in NGO as Finance Manager. And i have some doubts regarding FCRA Administrative Expenses.

1. We had purchased a Vehicle from Mahendra and they have provided loan to Organization. Every month the premium and interest is paying through bank.

Now please tell me how to treat these while submitting FCRA Annual Returns.

a. Premium paid -> Admin / Programme Expenses
b. Interest paid – > Admin / Programme Expenses

2. We are also running a Hotel for Girls and Boys. We are incurring Electricity Charges, Electrical repairs to this Hostel. Can we show this as Administrative Expenses / Programme Expenses

3. In the previous year We had transferred FCRA Funds to other FCRA holder. Now the project was closed. They have transferred unutilized funds to our organization. How can we show this in our books of accounts?

Please help me sir. Your valuable guidance can help me a lot.

With regards,

Sirisha

As per the latest FCRA Amendment 2020 came into force for mandating specified branch namely SBI, New Delhi Main Branch, Sansad Marg, Delhi- 110001 for maintaining FCRA Designated Account. ‎

SBI, NDMB now created a designated FCRA cells to handle all the FCRA Account related queries. Their contact details are given below:

E-mail: fcra.00691@sbi.co.in
Contact: 011-23374143/4213/4390/4392.

Contact: 011-23374143/4213/4390/4392.

They have also issued format for Board Resolution and Multi Level Marketing (MLM) declaration, which we need to submit at the time of opening of account. (Click here for details Guidelines)

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Socio Research & Reform Foundation (NGO)
512 A, Deepshikha, 8 Rajendra Place,
New Delhi – 110008

Dear Sir,

I attended your Webinar session and it was very good and you clarify many of queries. I still have some specific query it will be great if you can reply to me.

• In the staffing cost of our project budget we budget admin and finance position for 1 person 100% and sometime 2 person but 50%:50%. These staff work 100% for project related finance work in the project, so can we treat them as under project direct cost as they are exclusive for the project and if project stop they will also go.
• In our project budget we have position call project director and their partially time allocation is budgeted in the budget but in organization they are working as ED or lead of the organization. Actually they are very much working in the project and doing most of the project related work. So can we treat them under project direct cost in case we have their proper job description, CV and their project related deliverable as supporting document.

I will be grateful for your reply

Thanks and regards

Asha

From today we start a series on common quries being raised by several NGOs to help better understand of resent FCRA changes

One of the queries is, if NGOs can receive funds in their present FCRA Designated Account (let’s call it ‘existing designated account’) from a foreign donor. Answer is unequivocal YES, that is the basic reason govt has allowed to open A/c by 31^st March 2021. Govt realized that it may take time to open bank a/c, and if no time slot is given, the whole Sector would come to stand still, since it would take time for thousands of NGOs to open bank account in SBI, Parliament Street.

Till the time bank account is opened, NGOs can receive funds in their existing designated account. However the day designated account is opened in SBI Parliament Street, from that day itself, no funds can be received in ‘existing designated account’. Also please note last day being 31^st March, all must open the bank account in SBI Parliament Street Branch before 31^st March 2021.

There is some confusion relating to what will happen to funds lying in the ‘existing designated account’ once SBI Parliament street account is opened. Is it to be transferred to SBI Parliament Street Branch? Answer is NO, the money lying in present account should remain there and can be ‘utilized’ from there itself. S.17(1) second para clearly states that another bank account can be opened wherever NGO wants to ‘keep or utilise’ funds. Thus money lying in your earlier designated bank account need not be transferred to SBI Parliament Street Branch. In any case money to be rec’d in SBI Parliament Street should be only ‘for the purposes of remittances of Foreign Contribution’. SBI Parliament Street Branch is not likely to accept any funds which are not coming from outside India.

Hope this clarifies a very important issue.

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Socio Research & Reform Foundation (NGO)
512 A, Deepshikha, 8 Rajendra Place,
New Delhi – 110008

SBI Parliament Street Account can be opened by 31^st Mar 2021
(based on FCRA Public Notice dt 13-10-2020)

Realising the practical problems for thousands of NGOs to open bank account, overnight in Parliament Street Branch, Govt has now given extension to open this account before 31^st March 2021.

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 31^st 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. 29^th Sept 2021.

Click for FCRA Notification

Socio Research & Reform Foundation (NGO)
512 A, Deepshikha, 8 Rajendra Place,
New Delhi – 110008

Govt. has shown un-characteristic rush to get FCRA implemented. It has notified the FCRA Amendment Act 2020 and made it effective from 29^th September 2020. The short Notification SO 3395(E) dt. 29^th September 2020 reads:

In exercise of the powers conferred by sub-section (2) of section 1 of the Foreign Contribution (Regulation) Amendment Act 2020, the Central Government hereby appoints the 29^th day of September 2020, as the date on which the provisions of the said Act, shall come into force.

Thus there is no doubt that the provisions of amendment Act have become effective yesterday, though how these would be implemented, NGOs have been left to fend for themselves, as there are no guidelines or amended rules on transfer of funds to partners (Rule 24 still on Rule book though can no longer be implemented), or how NGOs are supposed to open designated account with SBI New Delhi, or anyone else who has genuine difficulties or questions.

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Socio Research & Reform Foundation (NGO)
512 A, Deepshikha, 8 Rajendra Place, New Delhi – 110008

Dear Friend,

Thank you for giving information about amendment of FC rules 2020.

I request you to let me know how a rural Trust in Sundarban area can get prior permission for receiving foreign grant for health services.

With best regards.

Samir Kr. Halder