Rotation of Board Members in NGO

Do your organization have “Board Rotation Policy” ? Many funding agency and corporate asking this question before giving funds. It sounds irrelevant, but it is not. Every donor wants 100% utilization of single rupee, he donates to you. And every donor wants that an NGO should have highly effective governance. Today let us discuss this issue of rotation of board members or trustees in NGO from various view points.

Is it Mandatory?

First and obvious question is about its legal implications. As, there are various acts in india under which an organization can be registered, there is no such specific rule regarding board member rotation and about timing. However, this issue is mostly addressed in the Trust Deed or Memorandum of NGO. If there is a clause in your Memorandum or Trust Deed regarding change or rotation of Board Members, you must follow it strictly.

Of-course, it is beneficial

It is not mandatory to rotate board members of NGO, but the benefits of such policy are very obvious that one should follow this practice. First and foremost, it shows good governance prevail in your NGOs, if you have rotation policy at regular interval. Second, it gives impression that, your NGO is having separate identity than only one or two individual founder members. It gives NGO more life span, when second generation leaders are trained this way.

Rotation or Change?

Depends upon the scenario and what mentioned in Trust Deed. However, only changing designation of same persons over years will definitely gives sense to Donor about just implementing policy on paper and not in true senses. Thus, it is better to have a proper policy for mixture of both rotation and change.

What is best “Board Rotation Policy”

The best policy is one which include robust period for the person to be in the board of the trust. Good boards should always have agreed terms of office so that there is a regular turnover of trustees and boards remain vibrant. Two terms of three years with a review at the end of the first term is fairly typical. NGOs should adopt this as best practice.

Let the world knows – Disclouser

Once you have a policy for board rotation in your NGO, it is best practice to put the same in your Annual Return under some Compliance or Good Practice page.

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.

 

Final Part – How to get Income Tax Refund of NGO Quickly

Before moving into final part of blog on the series of “How to get Income Tax Refund of NGO quickly ?” , lets revise earlier procedures. First of all you need to check refund status and find out for which year/years refunds are pending. (Click here to know procedure for refund status). Then, check whether your refund/return has been processed properly or not. This is very important step. (Click here to check intimation u/s. 143(1)) 

Final procedure to get Income Tax Refund of NGO quickly

So, once you checked that refund you claimed in the return and processed is same, you can submit request for re-issue of Refund. Follow following steps :-

Step 1 : Login to Income Tax Websitehttps://www.incometaxindiaefiling.gov.in/home


Step 2 : Go to “My Account” -> “Service Request”


Step 3 : Click on “New Reuest” -> “Refund Reissue” and click “Submit” button.


Step 4 : Select the year for which you need to re-issue refund.

Step 5 : Fill the Correct Bank details

Hopefully, you will get the refund amount in the bank account you have given within 15 to 20 days. Hope this will be helpful to your organization. If you have any query or any other problem, write in the comment section of this blog or email to us.

How to get Income Tax Refund of NGO? – Part2

We have already seen in last blog that, how to check status of refund of your NGO for years.

How to get Income Tax Refund of NGO quickly?

Once, you list out which years Income Tax Refund of NGO not received, we need to find out the reasons for the holding of such refunds. There are reasons behind holding you return, some of them mentioned below –

  1. Mismatch of Bank Details given in return
  2. Case transferred to AO for scrutiny
  3. Refund is adjusted against demand of Assessment Year or Years
  4. Errors in Income Tax Return
  5. Mismatch of TDS claimed in Return with 26AS

Intimation U/s 143(1)

To follow up for refund, one of the important document is “Intimation u/s. 143(1)”. After processing Income Tax Return of your NGO, department generally informed you about this in the form called “Intimation u/s. 143(1)” . This document is emailed to email addressed you mentioned in the ITR. This is important to find out how your Return is processed and what errors are generated and why refund is pending. It looks like this.

There is basically comparison between what you have filled in your ITR and how it is processed at IT department. There has to be same figures for both the columns. What is important is point no 49, which states REFUND. See below :-

If this two figures are same (Department column may be more because of Interest), It means your Income Tax Return is processed properly.  If you have not received to your address, you can even request to send it again.

Request for re-issue of 143(1) Intimation

This is how you can request for re-issue of intimation of particular years.

Step – 1 : Go to https://www.incometaxindiaefiling.gov.in/home

Step -2 : Login with your password

Step -3 : In “My Account” click on “Service Request”

Step -4 : Now select “Request Type” – New Request and “Request Category” – Intimation 143(1)

Step -5 : Click Submit, then enter as below:

Return Type – Income Tax

Assessment Year – As per your excel

Category – Intimation U/s. 143(1)

Sub Category – Resend by Email

Step -6 : Click Submit. Within 2 to 10 days, you will receive an email form Income tax department with attached 143(1) Intimation.

 

So, once you compare all the years Income Tax Refund, which are pending, with 143(1) intimation, you need to now request for re-issue of Refund.

Coming Soon – Part 3 How to request for re-issue of Refund of NGO

5 Points to keep in mind while operating FCRA Bank Account

There are very strict rules regarding using Foreign Funds under FCRA (Foreign Contribution Regulation Act). Also, FCRA department has already cancelled licenses of many organization on the basis of non-compliance of rules and provisions of FCRA.

As per sec 17 of this Act, every NGO who has been registered under FCRA, has to open a separate Bank Account for receiving and utilizing foreign funds. Let us look at some of the 5 points you should keep in mind while operating FCRA Bank Account.

(1) Do not mix FC & NonFC Funds

Do not receive any funds other than foreign funds to your FCRA Bank Account. You can receive funds in Indian Rupees if it comes from foreign source. Utmost care should be taken while depositing cheques or giving bank account numbers to donor.

 

(2) Interest linking of FDs

You need to instruct very clearly to Bank regarding linking of FDs with your Bank Account. Care should be taken that only FDs from FC funds link with your FCRA bank account so as to receive interest in that bank account only.

 

(3) Online Donation

If you are accepting Donation online through your website or crowd funding website, your payment gateway should be capable of transferring FC money to FC Bank Account and NonFC money to NonFC Bank Account.

 

(4) Time Barred Cheques

Your accounting system should be such that at the every month, all the cheques which are time barred will be cancelled and reversed in the books of account automatically. Otherwise, what happen, in FCRA return expenses were reported, while your balance in FC bank accounts not reduced that much.

 

(5) Sub – FC (Utilization) Bank Account

If you have open a Sub-FC Bank Account for project utilization, do not accept funds directly in that bank account. You have to accept FC funds in Main FC account always and then transfer to Sub-FC Bank Account.

 

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.

How to get CSR Funding for your NGO ?- Internal Control System

Why a company having huge CSR funds and want to implement genuine projects, should give funds to your organization ?  This is the question you should ask to yourself and do not indulge into the malpractices as mentioned in this part 1 of this CSR series.

How to get CSR funding for your NGO?-PART 1

Most of the organizations are good at what they are doing in terms of implementing projects and grass root work, but they are not good in maintaining documentations and showing their good work to the world. Read this Part 2 blog, where I mentioned how you should showcase your good work.

How to get CSR Funding for your NGO ?- Program Quality – PART 2

Before we go ahead with Part 3 of this series regarding maintenance of Financial and Internal Control System, look at this latest news regarding spending Rs. 2,80,00,00,00,000 in last three years under CSR by the companies.

Accounting and Financial Control System

When you are approaching companies for CSR funding, it is almost prerequisite that NGO’s Accounting and Financial Control system is matched with the industry standards. You have to remember this:-

  • Regular Accounting (zero backlog)
  • Accurate Accounting
  • High Quality of Supporting (Single rupee spent hast to be  supported by Bills and Vouchers)
  • Strong Internal Control System
  • Watertight Cash Management System
  • Efficient Advance Management System

 

Statutory Compliance

No company will be ready to fund your organization if you have not followed all the Statutory Compliance. As a first step, list down the following compliance and check which  you followed in your organization. For remaining compliance, why you are not following it. Take expert opinion whether it is applicable to your NGO or not.

  • 12A – 80G
  • TDS
  • Income Tax Act
  • GST
  • FCRA
  • PF
  • ESIC
  • Professional Tax
  • Trust and Society Act

 

Governance

How your NGOs working is governing by the members ? Is your NGO is  one man army? Is it look like Proprietorship or Partnership Firm? Whose taking decision and how? These are some of the questions which may be asked at the time or per-scrutiny of project.

  • Authority Matrix
  • Decision Flow
  • Rotation in the Board Members
  • Election or Selection procedure of new board members
  • General Meeting and Executive Body Meetings
  • Maintenance of Minutes of such meetings
  • Intimation of Change in the Board Members

 

Policies

Following policy documents should be prepared and implemented in the NGO

  • Financial Policy
  • HR Policy
  • Accounting Manual
  • General Work Policy
  • Anti Corruption Policy
  • Gender Policy
  • Child Policy, if applicable

Hope the above information will be useful to you in getting CSR funds. We will discuss in next part of this series on how to approach companies for CSR funding.

Part -4 How to approach companies for CSR funds? – Coming Soon

Disclaimer : This blog is purely for the education purpose and author is NOT providing any services to get CSR funding.

Change in objects of NGO – Whom to intimate?

Every NGO, whether registered as Trust or Society or Sec8 Company has very specific main objects. However, sometimes during the lifespan of trust, it need to change (add or modified) some of the objects already stated in the constitution of the NGO.  The question is to whom NGO should intimate regarding the change.

Registration Authority

Depending upon the entity, NGO should intimate to the authority under which it got registration originally. Suppose, NGO is registered as Trust under the Bombay Public Trust Act and Society Registration Act. Then, intimation should be sent to Charity Commissioner and Society Registrar. It is mandatory to intimate the authority.

FCRA Department

If NGO has FCRA registration, at the time of registration, nature of association is to be mentioned. There are five types of nature of association specified in the Act. They are Religious, Cultural, Economic, Educational, Social. It is advisable to check the registration certificate of FCRA where it is clearly mentioned. If NGO has change its objects and which is not mentioned in the registration certificate, NGO has to file Form FC6 regarding change of objects of the trust.

Income Tax Department

 

After the amendments in Income Tax Rules 2018, Income tax department has notified on 19.02.2018 ,If you are a registered charitable trust, society or a company registered u/s 8 of the Indian Companies Act 2013 and if you have changed or amended the objects of your organization, the Income tax Act 1961 now requires your organization to apply afresh for registration u/s 12A in the new online Form 10A. This must be done within “thirty days from the date of such adoption or modifications of the objects”.

Donor / Funding Agency

It is not mandatory, but advisable to even intimate about change in main objects of the trust to donors and Funding Agency. It is a good practice.

How to get CSR Funding for your NGO ?- Program Quality

How to get CSR funding for your NGO? – PART 1

We have seen in last blog here (How to get CSR Funding for NGO?) , what NGO should not do to get CSR funds. Let us see now what NGO should do to get CSR funding. How your should prepared your NGO for CSR funding. One of the important aspect is how effectively your NGO implement the given project i.e. Program Quality.

Program Quality

Obviously, as a Chartered Accountant, I can not suggest about how to implement program effectively, but yes, I can suggest on how to maintain documents in such a manner, so that it can easily draw an idea about NGO working.

Past and Current Programs

Programs, which are completed in last five years should have been documented properly. There has to be proper file for each program containing all the documents starting from agreement, budget, all financial utilization certificates, quarterly reports, photographs and note on impact of the program. I suggest to have a “Program Closure Card”, a brief summary of Program. Please see below example.

This is illustration how Program Closure Card look

This is illustration how Program Closure Card look

 

Future Program

Every company ask full project plan for which you need CSR fund. Thus, NGO should have keep ready such kind of different project plans – mainly divided in two parts, short term plans and long term plans. Many CSR companies even provide funding for ongoing project or contribute in Long Term Project Plan of NGO.

Coming Soon – How to get CSR funding for your NGO? – PART 3

 

Cashbook of NGO

After, note ban, cash book is getting more importance. Some of the entities also getting notice from Income Tax Department to submit cash book. So, let us today discussed, some of the points related to cash book.

1. Manual V/s Computerized Cash Book of NGO

Now a days, all the books of accounts are maintained on computer, so it is difficult to find manual cash book of ngo. However, for better management and internal control purpose, it is required to have a Manual Cash Book along with the computerized cash book of NGO. There are many benefits to have manual cash book, like, daily cash checking and authorization, no cancellation or deletion, no rectification of amounts etc…

Thus if you maintained manual cash book along with the computerized cash book, that definitely increased the credibility of your accounting and control system.

2. Negative Cash Balance

For any reason, it is not accepted to go cash in a negative balance. Check the cash balance and see whether at any point of time it goes negative or not. To check negative cash balance in Tally go to cash book – F6 Daily breakup

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3. Unnecessary Withdrawals

Many a times major chunk of cash is withdrawn from bank for some event and event is cancelled later on.  At that time it is advisable to deposit the same amount to the bank. Many a times while checking cash book, it found that cash is withdrawn even though there was a enough cash balance on the books. This situation creates doubts about the genuine transactions of cash.

4. High and Law Cash balance

What should be  the average cash balance in the NGO. As such there is no such norms on the amount. However, it is advisable to keep low cash balance in the NGO. To check high and low cash balance in Tally,  go to Cash Book -> F6 Daily Breakup -> F12 Configure -> Show High Low Details – YES

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Hope this post on Cash book of NGO will give you some information on how your cash book should look. Check out your cash book and above points before its too late. Please give your comments and suggestion in the given below comment section.

Income Tax Return of NGO

All you need to know about Income Tax Return of NGO – ITR7

As last date of filling Income Tax Return of NGO is approaching, it is necessary that we should keep in mind some of the points related to Income Tax Return of NGO. Generally, NGOs are exempt from Income Tax and thus any TDS deducted will be given as Refund.

Read this blog – How to get Income Tax Refund of NGO quickly

Form No

Form No is ITR 7

Download Link

You can download ITR7 for Income Tax Return of NGO from here.

Last Date

Last date for filling return is 30th September

Hard Copy or Online

It is now mandatory to file ITR7 only online. NGO need to login to income tax website and fill the form to upload.

Signature

This online form is to be digitally signed by the Authorized person. So mostly DSC of managing trustee can work.

Details – Income

In the Income Tax Return of NGO, it is necessary to give information regarding the details of Income of NGO – mostly they are –

  • Voluntary Contribution – Corpus
  • Voluntary Contribution – General
  • Grants – (FC grant separately)
  • Government Grants
  • Other Income like Bank Interest, FC Interest and any other income
  • Business Income if any should shown separately

Details – Application of Funds

Also need to fill details regarding how the above income is used – application of funds

  • Expenditure shown in the Income and Expenditure Accounts
  • Amount set apart or carried forward
  • Depreciation etc..

Details – Others

Many other information are needed to be filled in the Income Tax Return of NGO like

  • All the Registration details, 12A, 80G, 35AC, FC Details
  • PAN and Address of all the Trustees
  • TDS information
  • Investments of NGOs etc..

Conclusion

Mostly, Income Tax Return of NGO filled by their Auditor or CA. However it is necessary for NGO accountant and top management to at least go through all the details of draft ITR7 and only ask CA to upload finally.