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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

How to get Income Tax Refund of NGO quickly?

Income Tax Refund of NGO

Mostly, TDS is deducted by Banks on the Interest income of NGO. As, NGOs / Trusts are having 12A certificate of Income Tax Exemption, there is no tax on income of NGO and thus all TDS amount is to be refunded by Income Tax Department. However, due to technical and other problems, Income Tax Refund of NGOs are pending with the IT Department for many years. Lets have a look on how to get Income Tax Refund of NGO quickly. But before that you need to first make sure Income Tax Return of your NGO is properly filled in ITR7 form.

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

Also need to check which years refunds are pending and why. So lets find out how to check status of refund of ngo.

There are two ways to check Income Tax Refund of NGO

1) from NSDL Website.

Go to this website : https://tin.tin.nsdl.com/oltas/refundstatuslogin.html , enter your PAN, Assessment Year and Captcha.

 

It will show you the status of your Refund. If Refund is already issued,it will show date when refund is credited to your Bank Account. If your refund was send by Department, but due some errors like wrong Bank Account Number or any such technical issues, it was returned and not credited to your Bank Accounts. In such a case you have to apply for re-issue of Refund. Third possibility is that your case is transferred to AO for scrutiny and thus refund is on hold.

2) With your login ID and Password

If you have login ID and Password of Income Tax Website, you can login and check status from there. If you do not have password, ask to your CA or consultant who has filled your online return.

Importnat Tip

You must keep password of your Income Tax Website with you. Never allow to give email or phone of your CA in your NGO return.

 

Go to this website :- https://www.incometaxindiaefiling.gov.in/home and login with UserID (your NGO PAN) and password.

Go to “My Account” button and click on “Refund/Demand Status”. Under this tab it will display Assessment Year, Status, Reason (for Refund Failure if any) and mode of payment.

Conclusion

Do not only rely on your CA or consultant for Income Tax Refund of NGO. Check your status of refund as mentioned above. In my next blog I will show you steps on how to get refund quickly, after checking refunds of which years are pending.

How to get Income Tax Refund of NGO quickly? – Part 2

Accounting of Grants for NGOs

Do you know how Grant is presented in your NGOs Financial Statements? As REVENUE or as LIABILITY ? This is one of the crucial question regarding accounting of Grants for NGOs. Generally, we depend on the Chartered Accountants on how our Financial Statements are prepared and presented. Sometimes presentation of Financial Statements become misleading and serve no purpose.

Today we learn how to do accounting of grants for NGOs which is more appropriate in present days.

Introduction – Accounting of Grants for NGOs

There is no clarity Inida regarding how grants should be presented. We have Indian Accounting Standard 20 which mainly dealt with  accounting of Government Grants and not grants for specific projects from Funding Agencies. However, considering Indian Accounting Standards #20 and US Statement of Financial Accounting Standard #117, we can derive following three methods of presenting Grants in the Financial Statements.

Option A – Grants treated as Revenue

Here, we consider Grants Received as Revenue of the current year whether it is related to current year or for next years. Thus, when two years project is sanctioned and total grant received in the first year only, we treat full grant as income of first year. See below image to understand presentation in Financial Statements.

 

In this method, you can see above that unspent grant of Rs 40 clubbed in Income and Expenditure Account as “Excess of Income over Expenses” . Due to this, it becomes difficult to know what funds lying in the I/E Account. Check out the Balance Sheet where I/E Account show Rs. 50 which comprise of Unspent Grants and Other Income.

Option B – Grant treated as Liability

Here, it assumes that, grants and funds received for specific project, is the liability of organization and not Income. Thus whatever grant received, whether for current year or next years taken to Balance Sheet and considered as Liability. Expense from such grant then deducted from the liability and net amount shown in the Balance Sheet. Checkout below how Financial Statements look if we treat Grant as Liability.

In this method, Balance Sheet present correct financial position. However, Income and Expenditure does not show much revenue except income earned by NGOs like Non Specific Donations and Interest Income.

Option C – Best of the above Two

Due to limitations of both the above method, we should presented financial statements as per this hybrid method using best of both the above methods. In this method, we consider that much revenue for current year which actually spent during the year and remaining balance transfer to next year as “Unspent or Unutilized Grant”. Lets have a look, how the financial Statements presented under this method.

In this method, Income Expenditure Account and Balance Sheet showing correct information and in self explanatory manner.

Conclusion

In India, there is no such proforma available in any Act regarding presentation of Financial Statements of NGOs. Thus as per my opinion it is advisable to follow accounting of grants for ngos as per option C – Hybrid method, which is self explanatory and showing correct information.

Note – In all the above three methods, presentation of Receipts and Payment Accounts would not change.

For any questions or query hit the 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.

12A certificate for NGO

How to get 12A certificate for NGO

As we aware that after NGO registered, there are many statutory compliance to be fulfilled. One of them is to get exemption certificate from Income Tax. As per Income Tax Act in India, NGOs are exempted from tax under section 12A.

Why Sec 12A registration required?

NGO is registered for non-profit activities. However, there may be income of NGOs. If NGO does not have registration certificate under section 12A of Income Tax Act, It has to pay tax as per normal rates. So to get income tax exemption, it is necessary to have 12A certificate.

Procedure to apply for 12A Certificate

NGO has to apply to the Commissioner of Income Tax (Exemption Department) in Form No 10A. See below video for detail procedure.

Details to be fill in Form 10A

1. Name and Address of the Trust

2. Name, Address, Occupation of the founders / trustees

3. Date of Registration

Documents to be attached

1. Certified Copy of Registration Document

2. Certified Copy of PAN

3. Certified copy of Memorandum of Trust

Conclusion

It is a very simple process to file this form. After filling this form, Commissioner of Income Tax, if find that all the conditions laid down in Sec12AA are fulfilled, issue 12A certificate for exemption from Income Tax.

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.

Donation in cash for more than Rs. 10000

Donation in Cash

Can an NGO collect donation in cash? yes. NGO can collect donation in cash. However it is advisable to take donation by cheque and make the system transparent.

Income Tax Act and Cash Donation

From 1/04/2013, the donor will not get any tax benefit for donation in excess of Rs. 10000 unless such sum is paid by any mode other than cash.

As per the new sub section 5(d) to section 80G of the Income Tax Act 1961, any payment exceeding a sum of ten thousand rupees shall only be allowed as a deduction if such sum is paid by any mode other than cash.

Consequences

From the NGO point of view, NGO can accept donation in cash for more than Rs. 10000, but does not issue receipts claiming 80G exemption. From donor point of view, he can not get exemption under section 80G.

Also note that Rs. 10000 limit is per year per donor means a single donor cannot give more than Rs. 10000 in cash in entire year.

Applicability

This amendment will take effect from 1/04/2013 in relation to A.Y. 2014-15 and subsequent Assessment years.

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.

NGO Regulatory Authority in india

In India, Non Government Organization or Non Profit Organization can be registered under any legal entity. Mainly following entities are prevails in India –

  • Proprietary Concern
  • Partnership Firm
  • HUF
  • Company
  • Association of Persons, which includes – Trust, Society, Union, Institute etc…

NGO Regulatory Authority in India

For NGO or NPO, mainly three separate entity status possible, either registered as company, trust or society. These three have their own benefit and disadvantages. Different legal status regulated by different legal acts and laws in India. Lets look at the various NGO regulatory authority in India :

 Legal Status Act Aply Remarks
Company NGO can be registered as company under Section 8 of The Companies Act, 2013 Earlier it was Section 25 of The Companies Act, 1956
Trust NGO can be registered as trust under Indian Trust Act, 1882 However, every state has its own Trust Act. Like in Maharshtra and Gujarat, The Bombay Public Trust Act, 1950
Society NGO can be registered as Society under The Societies Registration  Act, 1860 However, every state has its own Act. Like in Gujarat, The Gujarat Co-operative Societies Act, 1962

Summary

Once NGO is registered under any of the above statute, there are number of other registration has to be taken depending on the need and requirements, e.g Sec 12A exemption, 80G certificate, FCRA registration, 35AC exemption registration and so forth.

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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