FCRA UPDATES – Huge Relief

Many organizations have lost their registration during the last few years for the reason of not filling FCRA return online. Time to time FCRA department had given many opportunities to such NGOs to file their returns. Many organizations were not even aware of filling returns online and sent hard copies of returns, which were not taken on record by FCRA.

As per the provisions of FCRA, if registration is cancelled, one can apply only after three years. However, major relief announced today by FCRA department for such organization, whose returns are pending. They can now file pending returns online and can apply for renewal within three months of this notice. Thus the last date is 31.10.2019.

Not only this but penalty leviable on such non-filling is also waived.

Download the notice from here.

This is not applicable to the organisations which are regular in filing annual returns and have filled all returns online.

Did I miss something?

Hope this will help you in your NGO, if you have any question,  you can ask here or chat with us. Also your comments are welcome on the above subjects.

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Confusion about Honorarium and Statutory Compliance

Confusions

Is TDS applicable on honorarium?

Should we deduct PF from honorarium?

Is honorarium considered equal to salary?

Does honorarium will consider as fees or consultancy

How to deduct professional tax from Honorarium?

Lots of confusion regarding honorarium and there is no statutory implications given in the Acts rules and define clearly what is honorarium however below is the dictionary meaning of honorarium

An honorarium is a small fee paid for a service that is usually done for free. It’s more of a thank you than a real, substantial paycheck.

 

It is clear from the above definition that the amount should not be substantial but a small fee is to be considered as honorarium. However, we have seen so many organisations in the budget using this word for the purpose of staff payments. And thus the confusion arises, is it treated as salary or should it consider as consultancy fee?

Irrespective of wordings of Approved Budget, it is highly recommended to look into the rules and regulations of the Act. Let us clear one by one with the statutory act applicable to it.

 

Income tax

As per the income tax Act, there is no word define as “honorarium”. But it is sure that honorarium should be considered as Income and person receiving it should pay tax on it if applicable.

TDS

TDS is a liability on NGO to deduct from the payment to staff if limit crosses. The honorarium is no exception. Need to deduct TDS on it either as a salary or as consultancy, depending upon agreement/appointment letter/contract between staff and NGO.  Thus TDS is to be deducted on honorarium if treated as regular salary (sec 192), as per basic exemption limit stated in the Income Tax Act of relevant Assessment Years. If honorarium treated as consultancy(sec 194J), then deduct TDS at 10%, if basic limit crossed.

Check out this TDS chart:- https://www.incometaxindia.gov.in/Pages/charts-and-tables.aspx

But do not consider it as a contract and deduct as 1% u/s 194C.  Honorarium can not befall under the definition given in section 194c.

Provident Fund

PF authorities always considered Honorarium as Salary. If your organization falls under the PF Act, and regular payments are made to the staff, PF should be deducted and paid.

Professional tax

Even professional tax authorities consider the Honorarium as Salary and asked to deduct Professional Tax.

Conclusion

So, Honorarium is very very vague word And need more clarification. It is advisable to make it very clear that payment to staff is either in the form of Salary or Consultancy Fees irrespective of the wording used in the approved budget.

Have doubts or want to share your thoughts, write in the comment section below.

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5 items which should not be there in Balance Sheet

Currently, NGOs are busy preparing their final account for the previous financial year. It is highly recommended that the NGO accountant and NGO Head should always go through the Financials (Income & Expenses) and Balance Sheet, instead of blindly relying on Auditor (Chartered Accountant) before its finalization. It is always desirable to clean up Financials before 31st March.

Following are some of 5 things which should not be part of your Balance Sheet.

1. Negative Cash Balance

Many times this happens when one project is short of funds and expenses are spent from another project. However, care must be taken that, cash is not falling negative. Whatever the reason may be cash should not go negative.

2. Negative Bank Balance

At the end of the financial year, in the pressure of completing projects or to spent funds, cheques for payment are issued but not cleared by 31 March and thus sometimes when the balance is low on the bank, it shows negative. Though from BRS, it is easy to understand such situations, on the face of the Balance Sheet, it doesn’t look good. Plan beforehand at the end of the financial year and avoid negative bank balance.

3. Fixed Assets

20 Computers funded by some funding agency 5 years back and still it is showing in your fixed assets at some value. Out of that, many are not in use, some are scrapped. Care must be taken that those assets are shown in the Balance Sheet which is in actual use and at the correct value. Remove ‘ghost assets’ on a regular basis.

4. Staff Advance

It is a good practice to see that all staff advances are settled before 31 March. This will help in a clean presentation of the Balance Sheet.

5. Suspense Account / Temp Account

These are accounting terms used to park figures for the time being. Once the query solved pr transaction is traced, it must be transferred to the appropriate account. Thus utmost care should be taken to see that these type of accounts do not come up in the Balance Sheet.

Conclusion

Basically, the Balance Sheet is the first document people will see when assessing your organisation’s financial strengths. Thus it is very important to present it in an accurate manner.

If you aware of any such other items which should not go in Balance Sheet, write in the comment box.

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How UDIN affects NGO Utilization Certificate?

UDIN is made compulsory from 01.02.2019 on all the Utilization Certificate of Grants.The first question comes in your mind what is this UDIN is all about? Oh God..another update or compliance? But, Do not worry. This is applicable to NGO Grant but not to be done by NGO itself. So, Let us discuss in detail what is UDIN and how its applicable to NGOs.

UDIN = Unique Document Identification Number

 

Back story of UDIN

Let us assume that, you have submitted an Audited Utilization Certificate to Funding Agency, which may be foreign funding or CSR or Government. How this Funding Agency verify the genuiness of this certificate?

So, there was no such way to verify the Certificate given by Chartered Accountant, that it is signed and certified by the Chartered Accountant or someone has faked his/her signature or whether the person is CA or not and so on. Institute of Chartered Accountants of India (ICAI), regulatory authority for CAs were getting such kind of complaints from agencies like Banks, Embassy, Income Tax, Funding Agency etc..

What is UDIN?

It is 12 digit unique identification number for every documents signed by Chartered Accountant as Certificate.

How UDIN Works?

ICAI has started a portal https://udin.icai.org . And make it mandatory for evry Chartered Accountant to get UDIN for each Certificate issued by them. ICAI has listed out 30 such kind of certificates for which UDIN is mandatory for now.

Under this list of 30, Point no 13,14,15 and 16 are specifically applicable to NGO grant. They are as under :-

  • Certificates for  funds/ Grants utilisation  for NGO’s
  • Certificates for  funds/ Grants utilisation  for Statutory Authority
  • Certificates for  funds/ Grants utilisation  Under FERA/FEMA/other Laws
  • Certificates for  funds/ Grants utilisation  Charitable trust/institution

Who is responsible?

Responsibility to generate and quote UDIN in each such certificate is with Chartered Accountant and not on NGO. However, it is advisable for NGOs to ask auditor to quote UDIN on each such utilization certificate. Also, after some times, once awareness created, funding agency will not accept UC without UDIN.

Check out this video

Any Query or Qustion? Contact us –

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Are you in the list of “Tax Exempted institutes”

As a good initiative of governance, Income Tax department has made the list public for all the institutes which are having tax exemption under various sections like 12A, 80G, 10(23c) etc..

You can search your organisation’s name in this list of exempted institutes by following method.

Step 1 : Go to this website –

https://www.incometaxindia.gov.in/Pages/utilities/exempted-institutions.aspx 

Step 2: Enter PAN number in Search Area

There are lots of fields are given for searching NGO in exemption lists, like Name, PAN, Sections, Text even as an advanced search like range, authority, dates etc.. But because the database is so huge, it is advisable to use your NGO’s PAN for searching purpose.

Step3 : Check the status

In case of any discripancies

You may get discrepancies related to your exemption status or not getting your name at all. Like I have experienced that, exemption for 12A is showing for particular organization but not for 80G.  Income Tax department has not put any button or email to contact regarding any query related to this utility or database. However, in “Contact us” page, toll free numbers are given where one can contact and raise their query.

Contact us if you have any further query.

 

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12A Registration of NGO online process

What is Sec 12A ?

Income of Organization registered as Charitable and Religious Institute under any Law of India will be exempted from Income Tax only if they get the Certificate under this section.

Sec -12A

It deals with exemption explanations.

Sec -12AA

It deals with the procedure for such exemption.

Benefits

1. Expenditure incurred for charitable or religious purpose will be allowed while computing income of the trust.
2. Accumulating or setting aside of income not exceeding 15%.
3. Generally Government Grants given to 12A registered Organisations only.
4. 12A is a pre-requisite to Apply for 80G Certificate.
5. For FCRA registration, 12A is mandatory.

Documents
Keep below documents ready before application

1. Copy of Registration Certificate.
2. Copy of Trust Deed / Society Deed/MOA.
3. Copy of PAN.
4. Copy of FCRA registration if any.
5. Copy of last 3 years Audit Reports.
6. Note on Activities.
7. List of Main Objects.
8. Copy of Documents evidencing modification of objects.
9. Copy of order of earlier rejection of 12A.

Notes :-

1. All the above copies must be self-attested by authorized person.
2. If certificate is in vernacular language, then get it translated in English and notarised it.

Procedure :-

Application need to be filled in Form No 10A by Online mode
only. Follow below steps to apply for 12A.

16 Steps for 12A Application

Step 1.Go to this website

https://www.incometaxindiaefiling.gov.in/home
Click on “Login”.

Step 2. Fill Login Details

Enter UserID = Organisation PAN.
Enter Password.
Enter Captcha .
Click “Login” .

Step 3. Go to “e-File”

Click on “Income Tax Forms”.

Step 4. Select Form Name = “Form No 10A …”

Step 5. Select Submission Mode = “Prepare and Submit Online”

Step 6. Select Jurisdiction

By default it is “CIT (Exemptions), your-city”.
If you have different jurisdiction, select accordingly.
Click “Continue”.

Step 7. Read Instructions

After that, Form 10A will be opened. Read Instructions carefully.

Step 8. Fill General Information of Form

Click on tab “Form 10A”
Fill General Information – Name, Address, Email, Mobile etc..

Step 9. Fill Trustee/Board Members Details

Step 10. Specify Objects of the Organisation

Tick appropriate objects as per your Organisation’s main objects.
Fill Point No 5,6,7 if applicable.

Step 11. Fill FCRA Detail, if applicable

Step 12. Fill Detail of Signing Authority

Name, Address, Phone, Email etc..

Step 13. Preview the Form

Download draft form in PDF and check correctness of details.

Step 14. Upload Documents

Upload scan copies of relevant documents.
Click on “Submit” button in the bottom.

Step 15. E-Verification of Form

There are three options to e-verify this form:-
1. If you have already generated EVC (E-Verification Code).
2. If you do not have EVC, click this, it will email you OTPs.
3. If you select AADHAR Option, OTP will be sent to Auhtorized person Mobile linked with AADHAR.

Step 16. Acknowledgement

After verification as above, a Transaction ID has been provided.
Note down that.
Also acknowledgement has been sent to given email address.
Take a print of it and keep it in file for future reference.

Time

Generally, within 15-30 days, a query raised by Assessing Officer asking for more documents or explanation.
If he is satisfied with all the information / documents submitted, certificate has been issued.

Consequences

Donation, Grant and any other income of Organisation is taxed as per Income Tax Slabs, if it is not registered under 12A. Thus, without 12A, Organisation is treated as commercial entity and is be taxed accordingly.

 

Contact Us

For any further query, please contact us

 

 

 

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FCRA : One and Final Chance to update NGO’s old Returns

Final opportunity for those NGO’s who missed to file FC returns from 2010-11 to 2014-15. FCRA department has allowed to file your FC return of old years without any penalty. It is clearly stated in the notification, that this is the one and final chance for NGOs to update their returns if fail to file.  Also, with the notification, list of 18523 NGOs, who have not filled FC return (or may be filled in paper format and not updated by FCRA department.) is attached with the details of all the years.

What you should do?

Go through this list and search your name with registration number and check the years where it is stated “No”. See below image.

How to file old returns?

Once you find out, which returns are pending or not updated to FCRA website, you need to file return online in form FC4.

Step – 1 Click on FC-4 Tab on left side of https://fcraonline.nic.in/home/index.aspx website
Step -2 Login with your ID and Password
Step -3 Click on the year in which return is pending. See below image in which for year 2013-14  is pending

Step -4 File FC-4 return and upload necessary documents and submit final return, if the documents are in PDF, software like soda pdf can also help with this.

Video

Check this video on how to file FC4 return.

 

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Register your .NGO domain

For the very first time, new domain extensions can help identify and distinguish your Non- Governmental Organization (NGO) as a validated organization within the crowded digital world.

.NGO will be exclusively available to the NGO community, requiring validation for local, national and global NGOs like yours who are looking to advance their missions.

Procedure to register .NGO domain

Step 1 = Go to this website https://pir.org/products/find-a-registrar/?sorter=ngo%20desc

Image 5

Step 2 = Check the company, which provides .NGO domain.

Step 3 = Go to any such company website and check your organization domain.

Image 6

 

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Track NGO FCRA Renewal Status

Many of the organization has already filled Renewal Form FC-3 as per new Rules Amended in December, 2015. If you have not still file FC-3 Form, check out my tutorial video on the same.

Once you filled, FCRA Renewal Form FC3, you have been allot a 10 digit File Number and you can track your application through it by following below steps, or alternatively you can watch video given in this blog at last.

Steps to Track Renewal Status

Step1 : Go to www.fcraonline.nic.in

Step 2: On the Right Side of the page, click Track Application in the Menu Item.

Step 3: Select FCRA Renewal Status from the list.

Step 4: Enter 10 digit file number of FC3 Receipt and enter captcha (access code)

Current Status

Currently, standard status showing : “You have been submitted your Application to Ministry of Home Affairs.

Tutorial Video

 

Conclusion

File FC3 Renewal form online before 15.03.2016 and frequently track your status on the website, hopefully it will be renewed before 31.03.2016.

Leave your query or experience in the comment box below.

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Info Video on FCRA Renewal

 

 

# Disclaimer
This video is prepared in the view to facilitate users to fill FC 5 form for FCRA renewal. Kindly refer FCR Act and Rules for accurate information. While we have made every attempt to ensure that the information contained in this site has been obtained from reliable sources, KCJMNGO is not responsible for any errors or omissions, or for the results obtained from the use of this information.

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