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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ADDRESS :
47/6, Bima Nagar, Opp Jhansi Statue,
Ahmedabad, Gujarat.
 
Phone - +91 79 26749976
Cell - +91 9825434411
 
email- contact@kcjmngo.com
 
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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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ADDRESS :
47/6, Bima Nagar, Opp Jhansi Statue,
Ahmedabad, Gujarat.
 
Phone - +91 79 26749976
Cell - +91 9825434411
 
email- contact@kcjmngo.com
 
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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.

Video

Check this video on how to file FC4 return.

 

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

 

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.

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.

How to file FC6 return?

It is mandatory to file FC6 Return to FCRA department of Home Ministry, External Affairs by every NGOs India having FC registration. Last date for filling FC6 Return is 31st December. It is compulsory to file e-Return on the fcra website www.fcraonline.nic.in.

Though the filling procedure of FC6 return is very simple, here I present a video tutorial on how to file fc6 return?

Cleanup of NGO Balance Sheet before 31st March

BEFORE year ends on 31st March, NGO has to look out some points regarding its books of accounts.   An NGO has to prepare an Income & Expenditure Account, Balance Sheet and Receipts and Payments Account. In case of Income Expenditure Account and Receipts Payments Account, only current  year figures are taken and thus no cleaning process required for it.

However in case of NGO Balance Sheet, figures and items are carried forwarded from year to year. In many of the accounts, only opening balances are  carried down from years without having any transactions, and thus every year it is the duty of NGO Accountant to look at the Balance Sheet before 31st March, list out such types of dormant accounts and pass necessary journal entries to remove it, only after taking approval from higher designated person of the NGO.

Dormant Accounts in NGO Balance Sheet

Mostly Fund Accounts with very nominal balance, mostly in Unutilized Grants or Grants Receivables may be consider as dormant. If project was completed before 2 to 3 years back and if there is nominal balance either positive or negative, should be transfer to General fund.

Unused Bank Accounts

Because of emphasis of Government funded projects to open a Separate Bank Account for Project, it may be seen that in an NGO, more than 5 to 10 Bank Accounts are opened. As such, there is no limitation on Maximum number of Bank Accounts, it should be restricted for administrative smoothness. Secondly, some charges are debited every year even we do not use Bank Accounts. To avoid all such, it is lookout of accountant to identified such unused bank accounts and start procedure of closing it.

“Ghost” Fixed Assets

Some of the Fixed Assets in NGO are on paper but you could not find it physically. I say them “Ghost” Fixed Assets. All these type of “Ghost” Fixed Assets should be removed even from paper by passing resolution and journal entries.

TDS Receivable (Income Tax Refund Accounts)

TDS of NGO is deducted from consultancy, or on Interest on Fixed assets and such other types of Income. This TDS is claimed as refund in Income Tax Return of NGO. However due to slow process of Income Tax Department in issue of refund. These “TDS Receivable” Accounts are carried forwarded from years. Sometimes, refund is already deposited in bank account but not properly accounted for. Go to this link of Refund Status Website to check how much refund is pending and only those related refund accounts should reflect in the NGO Balance Sheet

Summary

NGO Balance Sheet is a financial mirror of any organization and thus it must be clean periodically, else the picture reflects, will not look transparent.

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.

Trust Assest use by Trustee

Can Trust Assets used by Trustee?

Trustees can not used Trust Assets for purpose other than official. Mostly Car, mobile phones, Air Conditions other furniture etc.. if used by Trustee or other related party, trust must have collect the hire charges for that.

One of the coolest incident i have read is as follow :

Once upon a time, there was an NGO. One day they bought a refrigerator for Rs.5,445. They kept it at the Managing Trustee’s house. The income tax people wanted to know the reason for this. The NGO said: ‘Our office building was not ready. We wanted to offer cold water to our Swedish donors’.

Result? Tax people rejected the explanation and withdrew the NGO’s income tax exemption. The High Court also confirmed it.

Moral of the story?

Make sure the Trustees or key persons do not use the NGO’s assets. And if they are used, recover hire charges from them.

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.