Dear Dialogue members,
I have a query regarding the income calculation of NGOs while calculating the tax liabilities. Please let me know “if the interest received on the bank deposits/ fixed deposits in an NGOs bank account should be calculated as income of the organization”? Thanks a lot for your support and guidance
Archana Kumari
Dear Friends,
One Indian Nodal Agency (first recipient) gave foreign funds to another NGO with FCRA (second recipient) for some specified project. The second recipient attended two training courses – one conducted by the first recipient and the second training course by another NGO without FCRA. The second recipient paid course fees from out of the foreign funds to both the first recipient and another NGO without FCRA. The questions are:
1. Should the first recipient credit the course fee into his FC Bank Account and show the course fee in his FC Account Books? OR Can he take it into his local account?
2. Is it wrong on the part of the second recipient to pay course fee from out of foreign funds to a Non-FCRA-NGO? Will the non-FCRA-NGO be taken to task by MHA for accepting foreign funds in the form of course fee?
Udayashankar
Dear Sir,
Many companies in India have foreign shareholding more than 50% due to liberalization of FDI policy. These would be “foreign source” as per section 2(1)(vi) of FCRA. Receipt of donation/contribution by NGO (not registered under FCRA) directly or indirectly by these Indian subsidiaries of Foreign Companies are presently violation of FCRA. Sec. 52 of FCRA states that applicability of FCRA is in addition to any other law in force for the time being.
Clause (iv) of circular No.21/2014 dated 18-6-2014 issued by MCA indicates that Expenditure incurred by Foreign Holding Company for CSR activities in India will qualify as CSR spend of the Indian subsidiary if, the CSR expenses are routed through Indian Subsidiaries and if the Indian Subsidiary is required to do so as per Section 135 of the Companies Act.
In this changed scenario, can one interpret that NGO (without FCRA registration) can receive donation/contributions from Indian Subsidiary of a Foreign Company, without any prior permission from Ministry of Home Affairs?
Looking forward to your considered opinion in this regard.
Thanks & regards,
Rajakumar K
Dear SRRF partners, kindly give answer to the following query.
At the time of registration of a Trust or a Society, all will not have their own buildings for the offices. They will provide the address where the Founder presently live. Suppose that the Founder has shifted his residence to another accommodation on rental basis. Now they have to apply for 12A and 80G etc. Which address is to be given in the applications? The address of registration or the address in which the Trust office is presently situated ie the place in which the Founder now resides.
My case is that our Trust was registered during 2008 and the Trust address also was given the address where I used to live. I had applied for 12A during Jan 2014 and given the address of registration. I was to shift to another address and the Inspector from Income Tax department will be visiting for verification during this month. Can we show the present address or old address which was the address at the time of registration? Unfortunately, the address of registration was a government accommodation and it was occupied by another family.
What the Income Tax laws tell about the addresses? Please clarify.
Dr. D. V. Jayakumar
Rural and Tribal Development Organisation
Itarsi-461111, MP
Dear Sir,
We are organizing a workshop on solid tumor (a type of cancer) in which we are expecting the participants from all over India. We will charge registration fee only. We will do all expenses like providing accommodation, to and fro train fare, local conveyance, material etc. There are chances of finding the sponsors also.
My question is being in NGO can we take this participation fee ? what kind of receipt we should issue, 80 G receipt ? will it count as misc income ? if this workshop is sponsored and getting funds from sponsors than will it be treated fund raising event ? will there be any tax problem ? may have impact on our 12a exemption status ? pls suggest how
should we deal with it.
ARVIND KUMAR
Recently Ministry of Corporate Affairs has issued a circular further clarifying the scope of CSR activities.
Only place it has given a negative opinion is expenditure on government servants, elected representatives, etc. whether of capacity building or of similar nature.
From the above it is clear that the government has taken quite a liberal attitude in application of schedule VII, and the approach seems to be to fit a CSR activity under one or other clause.
__________________________________
Socio Research & Reform Foundation (NGO)
512 A, Deepshikha, 8 Rajendra Place, New Delhi – 110008
e-mail: socio-research@sma.net.in;
website: http://www.srr-foundation.org
Dear sir,
Our NGO registered under societies Act is working since 2005 , We does not take any financial contribution. NGO activities mostly related to awareness building and advocating efficient water use practices & educating primary class students and village farmers about economic use of water. we also give our suggestions to Govt & local bodies on the issues related to water.
our yearly income from personal contribution by members & supporters remains under Rs.50000/-& all expenses are vetted and approved in general body meeting.
Presently we are filling our work report with annual balance sheet to Collector & Registrar of Societies
Do we require to file a tax return ? and to apply for PAN & to get audit our balance sheet through a CA.
please advice.
regards
D.D.Derashri
ME,FICA,FIE,FIV.
Secretary -PANIWALE-NGO
Resource Person -Waterpeople
Water Resource Consultancy firm
45-A-Subash Nagar
Ajmer Road
BHILWARA-311001
Budget is generally a disappointment for the NGO community, with only a very few benefits.
CSR expenditure of companies not to be tax deductible. Thus a big disappointment for companies, who now may resort to camouflage it under other sections. Or it may benefit NGOs who have S.35AC registration.
Other provisions for NGOs (generally referred to as Charitable Trusts)
Clarification provided for ‘substantially financed’
Certain educational & medical institutions registered under S. 10(23) (under sub-clauses iiiab & iiiad) are exempt from tax if ‘substantially financed by the Govt.’ Currently substantial has not been defined in the Act and courts interpret this based on other provisions in the Act. Govt will now specify exact % of total receipts (including donations, etc., if any), which will entitle the concerned institution to claim exemption from its entire income.
Claim both for Depreciation as well as cost of asset not to be allowed
A Trust which has included acquisition cost of an asset in the application amount, canot again claim depreciation.
Claims under multiple sections not allowed
If a charitable Trust has been registered / approved under. 12AA / S. 10(23), it cannot claim benefit under any other clause of S. 10, except for agriculture income.
Additional powers given to Commissioner for cancellation of S. 12AA registration
Commissioner given additional power to cancel S.12AA registration under following circumstances:
Relief in case of delayed S.12AA registration
In case of delayed registration under S. 12, any pending assessment on the date of registration would be considered for providing benefit under S. 12A, but not the assessments which are already complete.
Anonymous Donations
Tax calculation method on anonymous donations modified to streamline the same.
__________________________________
Socio Research & Reform Foundation (NGO)
512 A, Deepshikha, 8 Rajendra Place, New Delhi – 110008
e-mail: socio-research@sma.net.in;
website: http://www.srr-foundation.org
