Sunday, 18 March 2018

Charity Commissioner orders religious trusts to help poor farmers with funds to help their daughters get married.

Maharashtra State Charity Commissioner ShivKumar Dighe vide circular No. 533 dated 6th March 2018 urges trustees of religious trusts with surplus or unspent funds to help poor farmers of the state with funds to help their daughters get married. 
In this Marathi circular, the commissioner invokes Section 69 of the Maharashtra Public Trusts (MPT) Act 1950 under which he has general superintendence over the administration and carrying out the purposes of the MPT Act. 
The charity commissioner also has powers under the Act to issue directions for proper utilisation of funds.

Very recently about 35,000 farmers had walked one hundred and eighty kilometres from Nashik to Mumbai with demands for economic justice and create awareness about their plight. Among other issues, reportedly many farmers have committed suicide as they have no money to get their daughters married. There are also instances of daughters committing suicide to save their parents from getting into a debt-trap,
The state charity commissioner’s initiative while good in intent could also be inferred as the state’s interference with the autonomy of these trusts. The charity commissioner has every right under law to regulate charitable and religious trusts. However, he cannot override the discretionary powers vested in the trustees and should refrain from getting into ‘control mode’.

Underutilised funds should indeed be used for public good. But, what is 'public good' should be left to the discretion of the trustees and the directions provided under the trust deed of every trust.

Mid-Day, a popular tabloid, quotes Dighe: "Thousands of such religious trusts under our umbrella would be asked to donate a portion of their unused funds for public welfare. The money the public donates for God that lies unused in the trusts' bank accounts, can be used for the marriages of farmers' daughters. All the trustees have to follow the instructions."

Mr. Dighe is a man of action and many admire him for his bold, new and much required initiatives.

Deregistering defunct trusts
With more than 800,000 religious and charitable trusts and societies registered in just the state of Maharashtra, Mr. Gighe has undertaken the task of de-registering all trusts and societies which have failed to file their audited annual financial accounts. 

Reportedly by now ten per cent or close to about 80,000 such organisations have been de-registered. 
Read more about this in our earlier Blog Post of 29th December 2017  

Addressing disputes
Mr. Dighe has also embarked on a mission to end disputes in trusts registered under the Maharashtra Public Trust Act in a time-bound manner. As part of the action plan he has directed all joint, deputy and assistant charity commissioners across the state to prepare a list of trusts with disputes. 

Mr. Dighe is reported to have said: "I have asked them to call a meeting of trustees of all such trusts, hear their grievances and draft an action plan to resolve the disputes. If there is a need, I will not hesitate to step in to resolve the disputes. Our aim is to end litigation among trustees."

Cracking the whip on hospitals
Mr. Dighe is also best known for streamlining medical treatment for the poor in leading charitable hospitals. When he found blatant violation of the rules at Nanavati Hospital in Mumbai he imposed a penalty of INR 500,000 on the trustees of the hospital trust for failure in discharging what was their duty and a compliance under state law. 

He later took on many other charitable hospitals in order to ensure that as per the scheme drafted by the Bombay High Court, ten per cent beds are reserved for poor patients. Although here again we have instances of the good intent of law being misused by state politicians who arm-twist the hospital administration to admit their otherwise well-off relatives, party or constituency workers.  

While concluding, we cannot but help reproducing this very apt quote:

Monday, 12 March 2018

Fresh registration u/s 12A of Income tax if objects are amended

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”.

Finance Act 2017 had inserted clause (ab) after clause (aa) of section 12A(1) of Income tax Act 1961 according to which if a trust or an institution has been granted registration and subsequently it has adopted or undertaken modifications of the objects which do not conform to the conditions of (the original) registration, it shall be required to obtain fresh registration by making an application within a period of thirty days from the date of such adoption or modifications of the objects in the prescribed form and manner.

Accordingly Rule 17A has been substituted by the Income-tax (First Amendment) Rules 2018, with effect from 19th February 2018. The amended rules provide for application for registration of charitable or religious trusts as under:

Application for registration of charitable or religious trusts

Application for registration of a charitable or religious trust or institution shall be made in Form No. 10A.

This application is to be made under clause (aa) or clause (ab) of sub-section (1) of section 12A.
  • Clause (aa) of section 12A(1) provides for application for (new) Registration of the trust or institution.
  • Clause (ab) of section 12A(1) provides for fresh (re) registration of Trust where a trust or an institution has been granted registration and subsequently it has adopted or undertaken modifications of the objects which do not conform to the conditions of registration.

Documents to be furnished with Form 10A

Application in Form 10A shall be accompanied by the following documents:

  • Self-certified copy of the instrument creating the trust or establishing the institution (e.g. Trust Deed or Memorandum & Articles of Association)
  • Self-certified copy of registration with Registrar of Companies or Registrar of Societies or Charity Commissioner.
  • Self-certified copy of the documents evidencing adoption or modification of the objects, if any (e.g. Scheme of Management approved by the Charity Commissioner or duly registered Deed of Amendment or order the court, if any and as the case maybe)
  • Certified copy of the annual reports of the trust/institution for a maximum three immediately preceding financial years, if applicable.
  • Note on the activities of the trust or institution.
  • Self-certified copy of existing order granting registration under section 12A or section 12AA, as the case may be.
  • Self-certified copy of order of rejection of application for grant of registration under section 12A or section 12AA, as the case may be, if any.
  • Under digital signature, if the return of income is required to be furnished under digital signature.
  • Through electronic verification code in a case not covered in above clause.

Mandatory E-Filing of the Form No. 10A

Form No. 10A shall be furnished electronically.

Verification of Form No. 10A

Form No. 10A shall be verified by the person who is authorized to verify the return of income under section 140, as applicable to the Assessee.

Please note that the old Form No. 10A is no longer valid. From 19th February 2018 the substituted Form No. 10A has been made available on the E-filing portal of Income tax.

Monday, 5 March 2018

Bombay High Court imposes fine of Rs. 4,50,000/- on Ram Nagar Trust for delay in compliance

Justice Gautam Patel recently passed an order directing 'Ram Nagar Trust' to pay Rs. 1,000/- per day for the 450 days delay (Rs. 4,50,000 in aggregate) to the defendant in the suit filed by the trust in 2009.

The court noted that in September 2016, the high court had framed issues in the suit and directed both the plaintiff (trust) and the defendants to submit before the registry an affidavit of documents they would be relying on. Last week when the suit came up before Justice Patel, the trust's lawyer sought a week's time to submit the same. This was opposed by the defendants who claimed that time and again adjournments were being sought by the plaintiff trust. Agreeing to this, Justice Patel in his order said, "No more adjournments. No more 'tareek pe tareek'. Enough is enough".

"That a court will endlessly grant adjournments is not something that parties or advocates can take for granted. Nor should they assume that there will be no consequences to continued defaults and unexplained delay," Justice Patel said.

The court added that fixing random figures like Rs 5,000 or Rs 25,000 was counterproductive as parties think such costs are negligible. "The costs must be real. They must be sufficient to convey the message that non-compliance with our orders brings consequences; that these consequences are inevitable and unavoidable; and the consequences are not some piffling trifle," Justice Patel said.

He refused to accept the contention of the plaintiff's lawyer that it was a charitable trust and that the suit pertained to land for educational purposes. "This is even more shocking. That a trust should be so utterly negligent about its own case is reason enough to warrant immediate action against the trustees and have every one of them removed. A public trust has a higher duty of care, not a lower one," the court said.

"We will make exceptions for the poor, the illiterate, the helpless. They will receive our protection. But, educated trustees charged with a solemn fiduciary duty will not get a free pass only because they claim to espouse some worthy cause," Justice Patel noted.

Saturday, 3 March 2018

Does your overseas employee, consultant, intern or volunteer have the right visa?

Several NGOs in India are now appointing foreigners as full-time or part-time employees, consultants, interns or as volunteers. However, we find to our dismay that persons who work or volunteer at these NGOs often come to India on improper visas. In most cases foreigners who come to volunteer in India come on ‘tourist visa’. This is disallowed and historically volunteers who come to India on tourist visas have been deported on arrival.  

Let’s look at some of the options:

Employee/Consultant: A foreigner cannot work in India without having requisite employment Visa (E-Visa) permitting him/her to work in India and his/her total annual remuneration must not be less than US $ 25,000.

Volunteer: The person concerned must obtain E-Visa even if he/she desires to come to India to serve as a volunteer (without salary) with an NGO registered in India. Such a Visa is granted by the Indian Mission or Post abroad with special endorsement on his/her E-Visa “To Work with NGO — (Name of the NGO and place of work)” subject to usual checks and formalities.

At its absolute discretion, the NGO may provide the volunteer with board and lodge or provide per diem or honorarium. However, since the person is a volunteer and in India on a volunteer visa, the NGO is not bound under law to pay any remuneration to such a volunteer.

Validity of E-Visa: The foreigner may be granted a multi-entry E-Visa for 1 year initially.

Registration & other formalities: All registration formalities as per rules, after his/her arrival in India, should be strictly complied with and the registration must be done with the FRRO/FRO within 14 days from the date of his/ her arrival in India.

The visa may be extended by the FRRO/FRO beyond the initial visa validity period up to a total period of 5 years from the date of issue of the initial E-Visa, on a year to year basis, subject to good conduct, production of necessary documents in support of continued employment and no adverse security inputs about the foreigner. 

Change of employer (NGO) by the foreigner during the currency of the E-Visa is not permissible.

Intern: An intern is essentially a trainee or apprentice who is appointed in order to gain experience or training. Such an individual is usually paid a ‘stipend’ as per the Apprentice Act. However, an NGO may appoint an intern without paying a stipend.

Before 1st April 2017, it was mandatory for foreigners to obtain an ‘Employment’ visa or a ‘Business’ visa (depending on case-by-case reviews) for pursuing internships in India. However, foreigners who meet certain criteria can now acquire an ‘internship’ visa.

Intern visa is a relatively new addition to the group of Indian visas, introduced for foreigners intending to pursue internships in Indian with companies, educational institutions, and NGOs.

Validity: The period of the Intern visa would be restricted to the duration of the internship program or one year, whichever is less.

Who would qualify? Intern visa may be granted to a student after he/she completes graduation/post-graduation. The gap between the completion of graduation/post-graduation and the commencement of the internship should not exceed one year.

Visa conversion: Conversion/extension of the Intern visa into Employment visa or any other type of visa is not permitted.

Other requirements: If the internship duration is more than 180 days, the intern is required to register with the concerned Foreigner’s Registration Office (FRO) within 14 days of arrival.

Earnings (if any) of the foreign national from the internship would be subject to the Indian Income Tax Act.

The intern can have single/double/multiple entries in India during the stated internship period.

If the internship is in a company, the intern should draw a minimum remuneration of INR 7,80,000 per annum to be eligible for this visa. At an NGO it could be a token ‘stipend’ or no stipend, provided the intern’s Board and lodge is taken care of. 

All NGOs and foreigners desirous to work with an NGO in India, even if on voluntary basis without any remuneration, should ensure compliance of the regulations.

NGOs should ensure that all employees, consultants, interns or volunteers are provided with clear appointment letters stating roles, responsibilities and the terms and conditions of the appointment. The employee, consultant, intern or volunteer in turn should sign the appointment letter in acceptance. 

NGOs should also minimise risk by insuring all employees, consultants, interns or volunteers or require them to come to India with comprehensive travel insurance covering life, health, accident, theft, etc. 

PIO/OCI: PIO (Person of Indian Origin) or OCI (Overseas Citizen of India) card holders do not need to get a separate employment, intern or volunteer visa and are not required to register with FRRO for seeking employment. They may take up employment in all areas except mountaineering, missionary and research work and other work requiring Protected Area Permit (PAP) and Restricted Area Permit (RAP).

Friday, 2 March 2018

Linking Aadhaar with various services

There have been reports in certain sections of the media that the Supreme Court has rejected a plea which sought an extension of the deadline for linking Aadhaar to various services (E.g. Bank accounts, PAN, telephone etc.). Whatsapp messages have been going viral that this so-called rejection by the Supreme Court means the linking “needs to be done as soon as possible”. This is incorrect!

The fact is the Supreme Court has said that it will not extend the Aadhaar linkage date beyond 31st March 2018 by delivering a judgement before 31st March 2018. The Supreme Court has nowhere stated or even hinted that it will be mandatory now to link Aadhaar to everything.

The Supreme Court will decide on this contentious issue before 31st March 2018 and it will not extend the date of its judgement and that’s all.