Socio Research & Reform Foundation

Sir,

I would like to receive clarification for the below points:

a)        As a society having FCRA registration can we help other Institutions ( not belonging to us or neither registered with FCRA) acquire assets like Computers, Vehicle etc.,

b)        How should the assets – comp, medical equipment etc purchased for projects be treated in the FCRA Accounts – should it be treated as project expenses or as Assets of the NGO.

c)        Can we help an Institution where some of our sponsored children are studying improve the facilities of the school.

d)        How to deal with community projects?

Beulah S

Accounting Software with Audit Trail:

All companies are now required to maintain accounting system, which has audit trail. The Govt has amended Companies (Audit & Auditors) Rules 2014. In the proviso for Rule 3(1) it has stated that effective 1^st April 2022 every company which uses accounting software for maintaining its books of account, shall use only such accounting software which has a feature of recording audit trail of each and every transaction, creating an edit log of each change made in books of account along with the date when such changes were made and ensuring that the audit trail cannot be disabled.

A genuine question arises, is this rule applicable to companies only? While on the face of it, the amendment seems to be applicable to companies only, however it is quite likely that Tax Officers may insist on such software even for other forms of entities, including NPOs. This is particularly relevant considering now S.12A(1)(b) has been amended and sub-clause (i) requires that books of account and other documents are kept and maintained in such form and manner and at such place, as may be prescribed.

It would not be surprising, if NPOs are also asked to maintain books of accounts in similar format as required of companies.

Cash Basis of expenditure to be used for tax assessment of NPOs

It is now clear that an expenditure will be considered as application for an NPO only in the year which it is actually paid. This is because Explanation has been added to S.11(7) of the Act, which states

For the purposes of this section, any sum payable by any Trust or Institution shall be considered as application of income in the previous year in which such sum is actually paid by it (irrespective of the previous year in which the liability to pay such sum was incurred by the trust or institution according to the method of accounting regularly employed by it).

However if it has already been claimed in a previous year as application, than it will not be allowed again as application, when payment is made.

This amendment has been made effective from AY 2022-23, i.e. Financial Year 2021-22.

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

FCRA Renewal has been again extended to 30^th June 2022. A sigh of relief from the tension, that many of the NGOs who have been waiting endlessly for their renewal process to be completed, however the Dept. is yet to complete the process. It is quite likely that the Dept may yet extend the application, at the end of June, since it still has a vast majority applications pending, and whether it can complete its process during this 3 month period, is quite doubtful.

Covering a loophole which allowed organizations, which had not applied for renewal within the 5 year expiry period, to argue that they have applied before expiry of renewal, hence were eligible for renewal. Now the Notification makes it amply clear that only those organizations would be eligible for renewal, who have applied as per rules within 5 year 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.

A society registered under society act is running a educational institution.It is not yet registered under Sec 12A of Income tax act. In f y 2020-21 its revenue fee receipts from school are less than 1cr and after claiming all revenue expenses and depreciation there is loss in income and expendture account.It has received corpus donations worth Rs. 6 cr for builing and 90% of its corpus donations has been utilised for construction of school building.

Whether society can claim exemption u/s 10(23)(c) as its revenue receipts are less than 1cr.Whether whole of corpus received will be exempted .Which ITR FORM it is required to file ITR 7 OR ITR 5.

CA Arvinder Pal Singh

CBDT has extended the due date for the filing of various reports of audit under the provisions of the Income-tax Act,1961 (Act), in respect of the following compliances:

1. The due date of furnishing of Report of Audit (Form 10B) forNPOs for FY 2020-21 (which was earlier postponed to 15^th January 2022 has now been further extended to 15^th February, 2022;
2. The due date of furnishing Income Tax Return (ITR 7) for NPOsfor FY 2020-21 (AY 2021-22), (which was earlier postponed to 15^th February 2022 is hereby further extended to 15^th March, 2022;

Please click here to see the detailed Circular.

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

Dear Sir,  

We have following queries regarding FCRA :

1. Can advances be given to Project staff for expenses to be incurred in the field, If not, what is the remedy when the expenses can not be paid directly to the party.

2. Whether we can pay expenses of FCRA  nature from institutions/branches  & reimburse them back from FCRA. 

3. Are Statutory liabilities( PF, ESIC) compulsory to be paid from FCRA for FCRA project employees, or can be paid from non-FC & later reimbursements from FCRA.

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Thanks & Regards

Abhijeet
Vidya Bhawan Society

We are so happy to inform all of you all that Ministry of Home Affairs has extended the validity of FCRA registration certificates to 31^st March 2022. It is applicable to all those entities whose registration initially was due to expire between 29-9-2020 to 31-3-2022 (Notice: No. II/21022/23(22)/2020-FCRA-III, Dated 31^st December 2021). However the entities should have applied for renewal before their original expiry date.

The Extension letter has also clarified that in case of refusal to renewal, the entity cannot receive or utilize the funds after the date of refusal.

(click here for FCRA Notification)

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