Socio Research & Reform Foundation

As per latest FAQ issued by FCRA Dept., a company incorporated in India will not be treated as ‘foreign source’, even if it has operations in more than two countries. To see latest FAQs please visit https://fcraonline.nic.in/home/PDF_Doc/fc_faq_04102022.pdf

It may be noted that under S. 2 (1) (j) (iii) of FCRA 2010 Act, a foreign company is treated as Foreign Source. S.2(1)(g) defines Foreign Company. One of its sub-clause, (g)(iv), further defines multi-national corporation (MNC).

The definition of MNC is a company incorporated outside India, and includes, and has a subsidiary or a branch or place of business in two or more countries or operates in two or more countries. Thus the first condition of the definition requires that the company be incorporated outside India. Question arises then why FCRA Dept has clarified that a company incorporated in India, will not be treated as a MNC.

Well there are some views which consider that a company even if incorporated in India, but if it is a subsidiary of a foreign company should be treated as Foreign Source. The Dept has now made it clear that any company which is incorporated in India, even if it operates in more than two countries should not be treated as MNC for the definition of Foreign Source.

The clarification still does not cover if a subsidiary of a foreign company would be treated as foreign source. Although we would like to point out that the original amendment in Finance Act 2016 had made it quite clear that it never considered subsidiaries to be still covered as Foreign Source. Further Ministry of Home Affairs placed a written clarification stating that the purpose of the amendment (Click here for press release) was to ensure that the definition of ‘foreign source’ remains consistent with the FDI Policy of the Government of India; and provisions of the Companies Act, 2013 and the Companies (Corporate Social Responsibility Policy) Rules, 2014. Therefore we hope with this clarification, now we all can state that if funds have been rec’d from an Indian company than it will not be treated as foreign source.

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

CBDT has extended the last date for filing of audit report of Charitable Organization (NPO)  for the AY: 2022-23 to 7^th October 2022. Earlier it was to be filed by 30^th September. (click here for CBDT Notification)

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

It is a happy news for all in the NPO Community that MHA has extended FCRA registration validity by six months to 31^st March 2023.

This is applicable to all those who applied before the due date i.e. before expiring of 5 year original validity period. (click here for FCRA notification)

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

Whether Interest earned on endowment fund from FCRA account can be transferred to other account i.e .INR account(non fcra account) for utilizing the same as written in the contract/agreement. However, in the FCRA return we can show the income earned from endowment fund (investments)during the year and expenditure as income transferred to INR account (90% of interest- for the purpose mentioned in the contract) and 10% balance as reinvested. Otherwise we are never able to spend the income earned from an FCRA account.
Can you share your views

Ramakrishnan Natarajan

Many organizations who have received adverse order from FCRA and who wish to challenge the same, have little choice except filing a writ petition in the High Court. Going to High Court is both expensive and lengthy, and may not be the first choice of an entity.

FCRA has provision of Section 32, which allows any person registered under the Act to file for revision of any order issued by the FCRA Dept within one year of the Order having been communicated to that person. However most do not know how to file a revision application, as no detailed procedure had been prescribed by the FCRA Dept. Rule 20 stated that application can be filed on a plain paper. However considering FCRA Dept has stopped taking physical documents, many were at a loss on how to proceed in the matter. Now vide an Order dt. 12 August 2022, the Dept has stated that w.e.f. 1^st September 2022 an application under Section 32 for revision of a order issued by FCRA Dept shall be made in electronic form through FCRA website.

To further explain the matter it has come out with FAQ on the issue, it specifically forbids to send Revision application through post, but to be posted online at FCRA website.

Once you go to FCRA website select from main options, ‘Services Under FCRA’ and the sub-heading ‘Revision Application against Section 32, FCRA 2010’.  Link at the FCRA website is https://fcraonline.nic.in/FCR.aspx?Resp_Id=44

For FCRA Order and FAQs please click here

Looking forward to contribution of Dialogue members on the same.
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Socio Research & Reform Foundation (NPO)                       
512 A, Deepshikha, 8 Rajendra Place,
New Delhi – 110008.

Dear Members,

Some NGO treat ” Grant utilised ” as Grant Receipt/Income in both – Financial statement and in ITR.

They do not show Grant Received as  Grant receipt/ income.

Is it the correct way as per income tax act ?

Thanks & Regards

Amrut Mistry

Compounding of offences along with penalties

Notes:
1- The amount of penalty shall not be more than the value of the foreign contribution received.
2- Changes mentioned above effective from 1-7-2022.

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

• Qtly disclosure of FC rec’d no longer required
  Rule 13 (b) which required that FC rec’d in a quarter needs to be disclosed within 15 days has now been removed from FCRA rules. This means there is no need for publishing FC received on quarterly basis, either on organisation’s website or on FCRA website.

• Limit exempting reporting of FC from relative increased to Rs 10 lakh
  Present exemption of reporting to FCRA Dept (through FC-1) of an FC received from a relative has been increased from Rs 1 lakh to Rs 10 lakh in a financial year. Time limit for reporting the same has been extended from 30 days to three months.

• Increase in Time Limit of reporting changes
  Earlier all changes in bank accounts, trustees, address, etc. which were required to be reported to FC Dept within 15 days of the change now has been extended to 45 days.

• Revision u/section 32 can be made only through a prescribed document
  There are very few remedies available to a person aggrieved by an order of FCRA Dept. Revision under Section 32 is one of the only remedy available for a person aggrieved from a Order of FCRA Dept. Under this section, a person can make an application for revision of the Order within one year of such an order.
  
  Earlier a Revision could be made on a plain paper, however now the Dept has stated that it should be submitted in electronic format to be specified by the FCRA Dept.

All the above rules have been amended effective 1-7-2022.

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

We are happy to inform you all that Ministry of Home Affairs re-extended the ‎validity of registration certificates of such entity whose validity was extended till 30 June 2022 vide Public Notice dated 24 March 2022 and whose renewal application is pending will stand extended till 30 September 2022 or till the date of disposal of their renewal application, whichever is earlier.

The validity of FCRA entities whose validity period is expiring during 01 July 2022 to 30 September 2022 and have applied/apply for renewal before expiry of 5 years validity period will stand up to 30 September 2022 or the date of disposal of renewal application, whichever is earlier.

The new date for all the organizations whose validity of registration falls between ‎above period will be 30 September 2022.(click here for FCRA Notification)‎

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