Tuesday, 16 January 2018

Doing Good Index 2018 – Maximizing Asia’s Potential

The inaugural Doing Good Index examines the enabling environment for philanthropy and private social investment across 15 Asian economies. Encompassing four areas – tax and fiscal policy, regulatory regimes, socio-cultural ecosystem, and government procurement – the Index reveals how Asian economies are catalyzing philanthropic giving. India is one of the economies covered under this study spearheaded by the Hong Kong bases Centre for Asian Philanthropy & Society (CAPS), with the Centre for Advancement of Philanthropy (CAP) as also GuideStar India partnered as program partners for India.

The Index serves as a unique and useful body of data for Asian governments, as well as for nonprofits, foundations and charities in Asia, to learn from each other. At a time when policy is evolving, the social sector is growing, and interest in philanthropy is rapidly developing, the DGI shows the potential for Asia to leapfrog and become a leader in social innovation.

If the right regulatory and tax policies were in place, Asian philanthropists could give over US$500 billion, contributing to the US$1.4 trillion annual price tag needed to achieve the Sustainable Development Goals.

The Doing Good Index was released today (16th January 16, 2018) in Hong Kong and a copy of the report and its findings can be found at the CAPS website: http://caps.org/our-research/doing-good-index-2018

To view the YouTube video, go to: https://youtu.be/uTNo7y5relM

Program Partners from across the 15 Asian Economies including India will meet in Bangkok, Thailand on 18th & 19th January 2018 to discuss the dissemination strategy and chalk out an effective approach to making the most impact possible in each local economy for these ground-breaking findings.

Monday, 15 January 2018

More Banks integrated with the PFMS System

Further to our Blogs posts of 26th December 2017 (https://capnewsviews.blogspot.in/2017/12/is-bank-where-you-maintain-your-fcra.html) and 8th January 2018 (https://capnewsviews.blogspot.in/2018/01/banks-gradually-integrating-with-fcra.html) more banks appear to have integrated with the Public Financial Management System (PFMS). Besides Standard Chartered Bank which we reported as now PFMS compliant, three other Banks, namely: Bank of India, Indian Overseas Bank and Kotak Mahindra Bank appear to have joined the PFMS league. Reportedly, Union Bank of India too has become PFMS compliant.

Ministry of Home Affairs has given associations registered under or having prior permission under FCRA 2010 to maintain their FCRA Bank Account (including FCRA Utilization Account/s) only with Banks which are PFMS compliant.

You have only until 21st January 2018 to comply
Ministry of Home Affairs had issued a list of PFMS compliant Banks (https://fcraonline.nic.in/home/PDF_Doc/fc_list_22122017.pdf) and if your association has an FCRA Bank account or an FCRA Utilization Account with a Bank which is not PFMS compliant, you have until 21st January 2018 to change to a Bank which is compliant.

In case your Bank is still not PFMS compliant, but, has assured you that it will get integrated soon, remember that the clock is ticking away. Please do not remain complacent.

Steps to change FCRA Bank Account.
  1. Open a new FCRA bank account with a bank which is PFMS-compliant.
  2. Go to the FCRA online platform and report the new FCRA Bank account in the online Form FC 6
  3. Next, transfer by cheque or NEFT/RTGS the entire amount from your existing FCRA Bank account to this new Bank account.
  4. You may either close the old FCRA Bank account or now treat it as a local/general bank account.

Steps to change FCRA Utilization Bank Account
  1. Transfer the entire amount from the FCRA Utilization Bank Account to your main designated FCRA Bank account which is now with a PFMS compliant bank.
  2. Open a new FCRA Utilization bank account with a bank which is PFMS-compliant.
  3. Go to the FCRA online platform and report the new FCRA Utilization Bank account in the online Form FC 6
  4. Next, transfer by cheque or NEFT/RTGS the appropriate amount to the new FCRA Utilization Bank Account.
  5. You may either close the old FCRA Utilization Bank account or now treat it as a local/general bank account.

Monday, 8 January 2018

Banks gradually integrating with FCRA-PFMS

Ministry of Home Affairs has confirmed that Standard Chartered Bank is now “integrated with FCRA-PFMS in all respects”. Quite a few other banks too are likely to be added to the list of 32 Banks earlier issued by MHA. Readers may recollect that in our Blog Post of 28th December 2017, we had suggested: “Don’t make haste in changing your FCRA Bank Account”.

We have at hand a letter dated: 5th January 2018 signed by Mr. Ravinder Kumar, Director (MU) and addressed to the General Manager of Standard Chartered Bank stating: “As per report received from PFMS (FCRA) integration team at NIC, it has been confirmed that your Bank is integrated with FCRA-PFMS in all respects. Therefore, no FCRA accounts in your bank are now required to be transferred to any other Bank in terms of this Ministry’s Notice No. 2/21022/58(951)/2017/FCRA(MU) dated 21.12.2017 circulated on FCRA web portal dated 21.12.2017."

CAP's Advisory
To reiterate what we have stated earlier on 28th December 2017, if you are satisfied with the services of your current bank which is not currently in the MHA’s list, please talk to them first if they are already in the process of getting PFMS compliant. If not, please move your FCRA account to any of the 32 banks listed by MHA.

Finally, even if your bank assures you that they will join the Public Financial Management System, please don’t be complacent or wait beyond another week. If your Bank fails to provide evidence of having joined the PFM System, please change your bank before 21st January 2018 and notify the change to MHA in Form FC 6.

What is PFMS?
PFMS is a Central Sector Plan Scheme implemented by the Office of the Controller General of Accounts in partnership with National Informatics Centre (NIC). The scheme has established a common transaction-based on-line fund management and payment system and MIS for the Plan Schemes of Government of India. The platform has now been extended to State Governments for effecting payments of plan funds received directly at the State Treasuries.

What PFMS can do?
1. PFMS can track the utilization / transfer of funds up to end user spread across the country.
2. The MIS generated through PFMS can track availability of funds, unspent balances (live balance in account of the implementing Agency.
3. PFMS supports fund management and e-payment through a secure integration with Core Banking Solution (CBS) of banks.
4. The PFMS system has been configured to facilitate all payments either Plan or Non-Plan based on creation of sanctions through PFMS.
5. PFMS establishes a common transaction-based on-line fund management and payment system.
6. PFMS can provide MIS for all the expenditure both Plan and Non-plan Schemes of Government of India.


Wednesday, 3 January 2018

Registration u/s 12A essential for tax exemption

Income Tax Appellate Tribunal (ITAT) in the case of ‘Bulandshahr Development Authority Vs Addl. Commissioner of Income tax’ (Appeal No. 2686/Del/2016) has held in a recent order dated 4th December 2017 that exemption under sections 11 to 13 cannot be claimed by the Assessee in absence of Registration u/s 12AA.
In other words, unless a public charitable trust, a society registered under the Act of 1860 or a company registered u/s 8 (formerly u/s 25) of the Indian companies Act has registration with the Income tax u/s 12A, it cannot claim tax exemption and in the absence of such registration it would be assessed as an Association of Persons (AoP) at the Maximum Marginal Rate (MMR) of tax.

Section 12A of the Income tax Act 1961 deals with registration while section 12AA deals with the procedure for registration. 

Once registration is granted, it would hold good till such time that it may be either suspended or cancelled. In other words Registration u/s 12A does not require periodic renewal.

Procedure for applying for registration
The application for registration should be filed with the jurisdictional commissioner of Income tax (exemptions) as prescribed under Rule 17A of Income Tax Rules 1962, in Form 10A together with documents evidencing creation of trust or the establishment (copy of the trust deed or Memorandum of Association & Rules, registration certificate issued by charity commissioner or registrar of societies or registrar of companies).

Copy of the NGO’s PAN should also be submitted along with the audited financial statements accounts, if any.

Procedure for granting registration
Upon the receipt of application for registration u/s 12A of the Income Tax Act, the income tax commissioner has to be satisfied about the genuineness of the activities of trust and may call for various documents and information as he may consider necessary to satisfy himself about the genuineness of the activities of trust.

After satisfying himself about the objects of the trust or institution, the commissioner may pass an order granting registration u/s 12A. If he is not satisfied, he is required to issue an order in writing refusing to register the trust. Applicant would, however, be given an opportunity to be heard before passing the order of refusal.

Deemed Registration
As per Section 12AA(2), every order granting or refusing registration shall be passed before the expiry of six months from the end of the month in which the application was received.

The Supreme Court on February 16, 2016 held in the case of CIT vs. Society for the Promotion of Education, Adventure Sport & Conservation of Environment that non-disposal of an application for registration before the expiry of six months as provided u/s 12AA (2) results in deemed grant of registration.

CBDT’s Instruction regarding speedy disposal of applications
The Central Board of Direct Taxes (CBDT) too has issued Instruction (No. 16 of 2015 dated 06.11.2015) in which it has taken a stern view of the fact that the time limit of six months specified in section 12AA(2) of the Income-tax Act 1961 for passing an order granting or refusing registration u/s 12AA are not being adhered to by the Commissioners of Income Tax (Exemptions). 

The CBDT has directed the Chief Commissioners to monitor that the Commissioners adhere to the time limit and to take suitable administrative action in case of laxity.

Cancellation of Registration granted u/s 12A
Registration granted u/s 12A can be cancelled under the following circumstances:
  • The activities of such trust or institution are not genuine.
  • The activities are not being carried out in accordance with the objects of the trust or institution.
  • The trust's income does not enure for the benefit of the general public.
  • It is for the benefit of any particular religious community or caste.
  • Any income or property of the trust is applied for the benefit of specified persons like author of trust, trustees etc.
  • Its funds are invested in prohibited modes.

It is however provided that registration will not be cancelled if the trust or institution proves that there was reasonable cause for carrying out activities in said manner.

Amendment under Finance Act 2017
Clause (ab) has be inserted after clause (aa) of sub-section (1) of section 12A vide Finance Act 2017, to the effect that 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, the trust or institution 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.

Tuesday, 2 January 2018


Recently CAP member Viney Kirpal of GREAT Foundation, Pune wrote this essay that won her a National Award in the Senior Citizen category from among 12408 entries submitted by 29 States during the Swachh Bharat Abhiyan celebrations.

The function was inaugurated by the Prime Minister on 2 October 2017 at the Vigyan Bhavan in New Delhi. The award carried a citation, a shield and a cash prize of Rs. 75,000/-. The essay had a word limit of 250. Hope you like it. It is very simple. 

Receiving the award from MOS Hardeep Singh Puri and MOS Shri RC Jaggajigni Onlooking is  MOS SS Ahluwalia

As a child I observed my Mother would never throw down anything on the pavement. Like her, I carry home a banana skin, a used paper napkin if I cannot find a dustbin. Everyone thinks they are the only ones flinging out a tiny piece of uneaten apple out of the car window. But when many hands do that, it becomes a smelly heap.

Cleanliness is about consideration for others. It begins with each hand vowing not to litter. If we could adopt just this one habit and pass it on to our children and grandchildren, we could make a huge contribution to a clean India. 

A beautiful deep blue gorge strikes a note of dissonance when empty coke cans, used paper, plates, dirty rags, chucked into its waters by careless hands, are seen stuck among the romantic boulders. Do those hands even once think of the damage they are doing to the environment? If I want a clean India I must teach my hand a little discipline, a little responsibility. It takes just one hand – my own- to behave mindfully to keep my country clean. If 1.3 billion hands acted with consideration towards our plains, hills, valleys, waterways our Bharat would develop a swachh siddhi.

Cleanliness is next to godliness. There is peace in cleanliness. If the collective hand of India stops littering, garbage mountains wouldn’t rise. The power of the hand is enormous. I would teach my hand some manners to make India clean.