Posts

How to file Audit Report of Trust?

Audit Report of Trust

As per Income Tax Act, every Trust has to file Audit Report for the relevant Assessment Year in Form 10B.

E-Filling of Form 10B

This Audit Report of Trust has to be filled in Form 10B. It is mandatory to file this form online with Income Tax department website. This form is initiated by Chartered Accountant of Trust and later on approved by Authorized Representative (Trustee/secretary/chairman) of the Trust.

Last Date

Last Date for filling Audit Report of Trust in Form 10B is 30th September. So For Financial year 2013-14 last date is 30th September 2014.

Video Tutorial

Just go through our video below showing tutorial on how to file Audit Report of Trust.

Statutory compliance for ngo in india

Statutory Compliance for NGO after its registration

We have already discussed in this post about how to form NGO. After forming NGO in India, there are statutory compliance for NGO, which requires utmost care. Let us discuss all in detail, one by one.

PAN

After registration of NGO with State Charity Commissioner or Collector or Society Registrar, first thing is to apply for PAN of NGO. It is compulsory to apply for PAN after registration of NGO. You can apply PAN online through this website.

Registration u/s. 12A of Income Tax Act

Commonly known as 12A certificate, this registration is NOT mandatory. Purpose of getting this registration u/s. 12A is to get exemption from Income Tax on the Income of the trust, if all the conditions laid down in this section are fulfilled. You can check detail procedure here how to apply for 12A certificate.

Registration u/s. 80G of Income Tax Act

Again, this is NOT a mandatory one. However to give benefit of 50% or 100% exemption on donation to our donors, it is per-requisition to get the registration u/s. 80G of Income Tax Act. It is indirectly benefited to NGOs to raise funds. Go through this post for detail procedure to get 80G Certificate.

FCRA Registration

If there are possibilities to receive Foreign Funds for projects of NGO, a registration with FCRA department, Ministry of Home Affairs is compulsory. Without FCRA registration, NGO cannot receive any foreign donation or grants. Check more FAQs on FCRA here.

TAN

During the working of NGO at any point of time, if NGO become liable to deduct tax from source, it has to first apply for TAN. Like PAN , TAN application can be made online thought this website.

Service Tax Registration

Only when NGO is providing services like consultancy work or research activity etc… and if gross revenue from such activity cross the basic exemption limit of service tax, then NGO has to first apply for Service Tax Registration number. Again it is an online procedure and you can apply for registration here.

Professional Tax

Professional Tax is a liability of NGO to deduct from the salary of employee and deposited to Government. Professional Tax is State Government look out and thus different states of India having different rules for Professional Tax.

Retirement Benefit

Retirement benefits like Provident Fund, Gratuity, ESIC etc.. is applicable to NGO when it grow up and having employees more than prescribed limit in this acts.

Summary

Depending upon the work and size of NGO, you can either apply for all the above statutory compliance immediately after registration of NGO or you can apply as and when requirement arises.

ngo annual budget chart

Have you prepared NGO Annual Budget for Next Year?

Is it necessary to prepare NGO Annual Budget?

Yes 100% and why not? Every organization, irrespective of size and work pattern, has to prepare its Annual Budget, keeping main object in mind. An annual budget should be prepared, which is mainly activity wise. Have a look at below example.

Current Scenario of NGO Annual Budget

Currently, most of the NGOs prepare Budget to give it to Funding Agencies and only restricted to activities in which funding agency is ready to fund. Instead NGO Annual Budget is given to funding agency and ask to fund accordingly to particular activities. I understand practically one has to adjust with funding agency requirements, however annual budget is to be prepared as part of disciplinary excercise and looking to its benefit given below.

Benefit of preparing NGO Annual Budget

First and foremost benefit is to give clear cut idea about which activity an NGO is going to undertake next year, how much funds already available and how much efforts require to raise remaining funds. It also helps in achieving Long Term Objectives. If NGO is having its 5 years plan or 10 years plan, NGO annual budget becomes an effective tool to convert plans into actions. Look at below chart,  showing Funds already available and  to be raised.

 

Next year NGO Annual Budget in Annual Report

Annual Report of NGO should always contain some of the points. Refer our this post. One of them is to put Next year activity planning along with Annual Budget of next year. This will give readers an opportunity to see organization’s future goals in quantification manner.

Summary

Fund raising activity is one of the tough task in any organization. To make that task easy, it is necessary to prepare 5 years activity plan and prepare Annual Budget etc..

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.

myths-ARF

5 Myths about Advance Requisition Form in NGO

Advance Requisition Form is one of the important document which is very useful for Internal Control System. However there are many misunderstanding prevailing. Let us today, discuss five main myths regarding Advance Requisition Form in NGO.

Myths about Advance Requisition Form

 

1. Advance Requisition Form has to be prepared on Monthly

Generally, Advance Requisition form is to prepared on monthly basis. However it is not standard rule. NGO having more turnover can prepare it on fortnightly basis. Sometime, amount involved in project expenditure are not higher or geographical location of Field office is far from head office, even quarterly Advance Requisition From can be prepared.

2. Only Filed Staff has to prepare Advance Requisition Form

Anyone who is entitled to receive advance, has to prepare Advance Requisition Form in the NGO. Generally, in NGO, somehow, Management personnel receive advance money for project expenses or administrative expenses, are not preparing Advance Requisition Form. For Good Internal Control System,  even trustee or management is require to ask for advance only through Advance Requisition Form

3. It must be Accurate

Advance Requisition Form is kind of estimation of expenditure for next month. It may not be accurate. However care should be taken that figures of expenditure are purely on the basis of approved budget of projects and near to accurate.

4. Important only for giving Advance

Not at all, it is very good document for internal control system, one can check the track records of expenditures. Even comparison can be easily done for what advances ask and how it is used. So that there are many importance of one document, if prepare and analyze properly.

5. There is fixed format of Advance Requisition Form

Every NGO has to prepare format according to their requirements. Here you can find specimen copy of Advance Requisition Form. You can add or delete some of the information as per your requirements.

ARF

Summary

Once it is a part of the procedure of the NGO internal control system, it gives more transparency and efficiency in Financial and Management Control System

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.

Have you Change Board Members Since FCRA Registration ???

CHANGE  BOARD MEMBERS MORE THAN 50% UNDER FCRA

After taking FCRA registration, NGO has to take prior permission before making any change Board Members in excess of 50%.  This condition is mentioned in the “Undertaking”  given by the applicant at the time of making Application for Registration or for Prior Permission.

Details are provided below –

Where such provision mentioned?

it is not mentioned in the Act or the Rules, it becomes binding on all the organisations by virtue of the ‘undertaking’ . Look at the below specimen of ‘Undertaking’. It is a part of application form of FCRA registration  or prior permission.

Why this kind of provision?

The primary purpose of this law is to prevent unscrupulous practices where the FC registered associations are taken over by changing the governance structure.

How to compute 50%?

Let us take one example. In an organization there were 7 Board Members at the time of Application made under FCRA. Later on one by one three Board Members were resign. Now fourth Board Member also wants to resign. So as per above undertaking, an organisation has to take prior approval from FCRA Department before change take place with fourth Board Member.

What if Change Board Members happen due to death?

There may be a change of more than 50% in the board as discussed above for reasons such as death or election by voting etc. which are not in the control of the organisations. In such cases, the organisation should inform the Central Government immediately after such change has occurred and get retrospective approval.

What is remedy  If prior approval of such 50% not taken in ignorance of law.

In such cases the organisation should inform the Central Government immediately after becoming aware of such requirement and request for condonation of the lapse. The Central Government may consider the matter if the reasons are justified.

Is it serious offence ? what are consequences ?

The Supreme Court in CIT v. Nagpur Hotel Owners’ Association [2001] 247 ITR 201, held that the additional condition in a Form can be held to be mandatory only if the purpose and the scheme of the pertaining Act is threatened to be defeated. In this case, the Supreme Court held in favour of the Government, but made it very clear that any condition specified in a Form should be within the provisions of the Act and Rules. In our opinion, any change in the Board of Directors in the normal course of activity, does not seem to be a violation of FCR Act or the Rules

Recommendation

However, it is recommended that all organisation should inform the FCRA department and take prior approal wherever it is possible. Further, those organisations who have not taken permission, even after such change has occured, should apply for permission and condonation.

source – FMSF


Have Query ????? Ask Here  Or you can have Live Chat with our expert.


Do you show Disclosure of Related Party Payments ?

Disclosure of Related Party Payments

As per Accounting Standard 18, issued by Institute of Chartered Accountants of India, business entity has to show disclosure of Related Party Payments. This Accounting Standard is applicable from 1st April 2001. You can read full Text of AS 18 here.

NGO and Accounting Standard 18

AS 18 is also apply to NGOs  in some cases. NGO has to show such disclosure when salary, remuneration or any other payments made to Chief Functionary, Trustees or Top management and associated with NGOs.This disclosure will form part of annual audited financial statements.

Some Examples

Remuneration paid to Trustee, Managing Trustee, Chief Functionary
Consultancy paid to Trustee etc…
Consultancy paid to Related NGOs where one of the Trustee
However Reimbursement of Traveling Expenses to attend meeting is not covered by this AS.Where to show such disclosure

Generally, this disclosure is to be made in financial statement of NGO. As per Income Tax Act, even Auditor of NGO has to disclose such kind of payments to his Audit Report under section 10B. In my opinion to reflect greater transparency, one has to show it in Financial Statements, Audit Report and even in Annual Report of organization.

Summary

As public money involved in NGO, it is accepted that each and every transaction must be very very transparent. Such kind of disclosure serve the above purpose and also it works as an internal check system in broader senses.

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.

Portfolio Items