Socio Research & Reform Foundation

Dear SRRF Team,

I am writing to inquire if any excess funds donated to an FCRA account can be transferred back to the donor?

I am a foreign citizen who had partnered with an FCRA approved Indian non-profit to implement a project in India. I am just an individual not associated with any organization and had donated money from my personal bank account to fund this project. With the project now close to finishing, the organization has unspent funds in their FCRA account that I would like to request back. Can the remaining money be simply transferred back into my personal bank account? I was going through your forum and found conflicting information. Any guidance would be appreciated. 

Thank you. 

Regards,
Anuja Jani 

Dear Members,

I like to know whether the building and assets made by foreign donation collected by an organisation holding FCRA can be given to another organisation on lease basis. Whether lease or rent is permissible by the Ministry of Home affairs.I request to let me know the issue soon please.

Regards

Samir Kr. Halder

Sir,

I have a query that our NGO BRWAS is Registered Under Societies Act 1961, WB (Not FCRA Registered)

A NRI servicing in Singapore. He wants to transfer money for development of School in India .
Can he transfer from his Singapore Bank account?

Gopal Ch Mondal

Thanks for providing information on 80G donations which is really helpful. I have following further queries:

1. Do we need to report all the donations and grants i.e. FCRA and Local or only Local?
2. If FCRA also then what do we need to provide in the unique identification number specially foreign corporate/companies registered outside India?
3. If any donor is an Indian and he/she doesn’t provide his/her PAN or Aaahaar as they don’t want to claim any 80G benefit then how to deal with it or we don’t need to file the same in the statement of return?

Regards

Chander Shekhar

Till FY 2020-21, all donors who gave donations to NGOs, could claim tax benefit under section 80G on the basis of self declaration and attachment of a receipt issued by the NGOs receiving donations. The receipts normally have details of the donor and IT Order reference under which the NGOs had received registration under S.80G. This was open to misuse. Hence effective FY 2021-22, the Tax Dept requires that the NGO should upload details of all donations on IT website in a prescribed format (Form BD). Then NGOs would download the certificates of donations (Form BE) for each donor from IT website itself. In this blog, requirements as well as the deadlines are summarized.

Form 10BE:  This is the format of certificate now prescribed under new Rule 18AB, which every NGO, who receives donation under Section 80G(5)(ix) and Section 35(1A)(ii),  must issue to every donor after downloading from the IT website.

The donation certificate should identify the NGO through its PAN No. and also give the Order No. and the date under which the NGO has been granted approval for S.80G or S.35 registration. Please note this number should be the same as recently issued by the Dept for approval of S.80G registration. This facilitates the identification of the NGO who is issuing this certificate. The certificate apart from giving the name, address of the donor, amount and type of donation, would also disclose any of the following details

• PAN No. or Adhar No.
• In case donor does not possess any of the above details, then s/he can give any of the following ID (Passport No. / Election Id / Driving License No./ Ration Card No.) or any other other Id as disclosed by the donor at the time of giving donation.
• No S.80G deduction is allowed, if donation is in cash and above Rs 2000/-.

The certificates are required to be given to each donor by 31^st May 2022.

Form 10BD: This is a return thatan NGO has to file once a year. For FY 2021-22, the NGO would have already received the donations, it should have already collected all necessary information as mentioned above. This should be now filled in Form BD before the last date. It may be noted that a person can revise this Form, if details filled are subsequently found to be incorrect or require revision for any reason. For FY 2021-22, last date for filing the return is 31^st May 2022 (being 60 days after year-end). The purpose of this return is to understand total donations rec’d by an NGO, it also brings transparency and better control in claims made by donors.

It may be noted, that in case an NGO is not being able to comply with the above requirements, any tax deduction that a person may receive otherwise, may not be available.

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

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.