Thursday, 21 September 2017

Final Opportunity to file FCRA returns for FY 2010-11 to 2014-15

Ministry of Home Affairs (MHA) vide notice dated 19th May, 2017 had instructed 18,523 associations to file their returns for Financial year 2010-11 to 2014-15 in Form FC-4 alleging that returns were not filed by them.
Please see our earlier Blog Post of 25th May 2017:

It would seem about 13,681 association complied and their FCRA registration was renewed/restored. Most of these associations had filed hard copies of their returns by post and not filed the return online.

Four months later, MHA vide its notice dated 19th September, 2017 has now directed 4,842 associations to upload their returns for the aforesaid period (Financial year 2010-11 to 2014-15) before 18th October, 2017 along with the requisite penalty for late-filing.

In other MHA has now provided yet another opportunity to associations who have not been able to upload their FCRA Annual returns earlier, albeit now with a penalty.

Click here to see copy of notice dated 19th September, 2017

Click here to see list of the 4,842 associations

Do please check if your association or an association known to you in unfortunately listed.

There is no need for you to scan the entire list. MHA has provided a search option. Click Ctrl and F simultaneously on your keyboard and the search box will appear in the right-hand corner. In this box type either your organization’s name or your FCRA registration number and if your organization is unfortunately on this list it will open on that page with your organization’s name highlighted. You may then find that on MHA’s system you have not filed returns for either one or more years out of the five listed financial years between FY 2010-11 to FY 2014-15. Your immediate next step should be to log in to your FCRA account and file the missing returns online in Form FC 4.

Sunday, 17 September 2017

Maharashtra Shops and Establishments Act, 2017

Maharashtra Shops and Establishments (Regulation of Employment and Conditions of Service) Act, 2017

The Government of Maharashtra, vide notification dated 7th September 2017 has notified the Maharashtra Shops and Establishments (Regulation of Employment and Conditions of Service) Act, 2017.

Key Highlights:

  • Definition of “Establishment”: Under the Act of 2017 “establishment” u/s 2(4) continues to include: “society registered under the Societies Registration Act, 1860, and a charitable or other trust, whether registered or not, which carries on, whether for purposes of gain or not”.
  • Applicability: However, as a welcome change, the regulation of conditions of service and employment under the 2017 Act does not apply to establishments employing less than ten workers. This is in contrast with the 1948 Act which applies to all establishments irrespective of the number of workers employed. Thus, this amendment comes as a significant compliance relief to smaller entities.
  • Online Application: To register an establishment, the employer shall now submit an online application within sixty days from commencement of the 2017 Act or commencement of business. Upon acceptance of the application and verification, a ‘Labour Identification Number’ (LIN) will be issued by the Facilitator. The 1948 Act does not provide for an online system of registration. Also, 1948 Act mandates registration within thirty days from commencement of business.
  • Facilitators’: The 2017 Act provides for appointment of ‘Facilitators’, instead of ‘Inspectors’ to enforce the provisions of the 2017 Act. In addition to the duties of the Inspectors, the Facilitators shall also advice the employers and workers for complying with the provisions of the 2017 Act. In addition to powers of search and seizure, ‘facilitators’ will also be responsible for advising workers and employers for better compliance.
  • Validity: The validity of registration certificate granted by the Facilitator under 2017 Act shall be for a period requested by the applicant, for a maximum of ten years. Further, the time period for submitting an online application for renewal of the certificate is not less than thirty days. Validity period of the certificate under the 1948 Act is between one to three years, with a prescribed period of fifteen days for making an application for renewal.
  • Cancellation: A new provision providing for cancellation of registration has been introduced. Registration obtained through misrepresentation or suppression of material facts or by submitting false or forged documents or false declaration or by fraud, gives ground to the Facilitator to cancel registration of the establishment. The employer shall notify the Facilitator within thirty days of closure of business, as opposed to ten days prescribed under 1948 Act.
  • Opening & Closing Hours: The 2017 Act provides that opening and closing hours of different classes of establishments, different premises, shopping complex or malls, will be prescribed by the State Government by notifying separate rules. This is opposed to the 1948 Act, which provides a uniform opening time, unless prescribed otherwise, for all establishments. Taking cue from market demand, the Government is expected to come up with separate opening and closing hours for different classes of establishments such as malls and shopping complexes. Though a specific prohibition on discrimination with women workers has been introduced, an option has been provided to extend their working hours with their consent. This reflects a great degree of flexibility being introduced in the functioning of shops and establishments in the State of Maharashtra. Accordingly, a new provision prohibiting discrimination against women workers, and separately regulating their conditions of work has been introduced. The provision prohibits discrimination of women in matters of recruitment, training, transfers or promotion or wages. Further, it provides that woman workers shall not be allowed to work except between 7:00 am and 9:30 pm. However, women workers may be allowed to work beyond these hours, if they consent and the employer ensures adequate facilities to provide them with adequate security. The 1948 Act only provides that women shall not be allowed to work beyond 9:30 pm, though certain industry exceptions were made by the Government in the Schedule to the 1948 Act.
  • Leave: The provisions on leave have been streamlined by providing casual leaves and earned leaves to workers. Further, the welfare provisions have also been widened, with a specific duty created on the employer to provide adequate health and safety measures. The 2017 Act has thus incorporated provisions to improve the conditions of service for the workers. Accordingly, a new provision has been introduced, which entitles every worker to eight days of casual leave in a year. The workers can accumulate earned leave up to a maximum of forty-five days. Further, every worker who has worked for a period of two hundred and forty days or more shall be allowed paid leave for a number of days calculated at the rate of one day for every twenty days of work performed during the previous year.
  • Electronic records: Registers can now be maintained electronically as well, by the employers.
  • Health & Safety: The 2017 Act creates a specific obligation on every employer to take measures relating to the health and safety of the workers, including prevention of accidents. As opposed to the 1948 Act, these measures have been broadened further, and include cleanliness, lighting, ventilation and prevention of fire, first aid, canteen, creche facilities, etc.
  • Penalties: The 2017 Act provides for enhanced penalties for violation to a maximum fine of INR 100,000 and in the case of a continuing contravention, with an additional fine which may extend to INR 2,000 every day. This is in stark contrast to the 1948 Act, which provides for a minimum fine of INR 1,000 and a maximum fine of INR 5,000 for violations.

Friday, 15 September 2017

MHA asks defaulting associations to validate their FCRA designated bank account

MHA asks defaulting associations to validate their FCRA designated bank account

Government puts 1,200 NGOs on notice” screams a headline in ‘The Hindu’.

The report states: “The Home Ministry has sent notices to over 1,200 NGOs, asking them to validate the designated bank accounts in which they receive foreign contribution, failure of which will invite punitive action”.

To read the full article, please go to:

The Times of India has carried a similar report with the headline stating: “Government asks 1,222 NGOs to validate bank accounts”.

To read the full article, please go to:

At CAP we have been receiving a number of queries from anxious NGOs already registered under FCRA 2010, wanting to know if they need to do anything or stay vigilant about.

In our opinion the Circular dated 8th September 2017 issued by the Ministry of Home Affairs (MHA) is quite clear and self-explanatory.

To read MHA’s circular please click on the following link:

CAP’s Advisory

It is important to understand that all that MHA has asked defaulting NGOs to do is validate their designated FCRA Bank account details.

There are several instances of NGOs who receive funds from foreign source/s directly into their FCRA Utilization Accounts instead of the main designated FCRA Bank Account. In several other cases NGOs have failed to provide MHA with details of their FCRA Utilization Accounts. All this and more should be checked, verified and updated (if required) by every registered organization using online Form FC 6.

Use this simple three step check list

 1.      Do you have only one designated FCRA Bank account?

If yes, please ensure that the name of the bank, branch and account number is the same as on your FCRA registration certificate.

Also, go to FCRA online and click on Form FC6 to check if the bank and other details therein match and are up to date.

2.      If you have a designated FCRA Bank account do you also have Utilization Bank Accounts? 

If yes, please ensure that all foreign contributions are first received in your main designated FCRA account and only after that amounts are moved to your "FCRA linked Utilization bank account/s"

Also, once again, go to FCRA online and click on Form FC6 to check if all the utilization bank account/s and other details are up to date.

3.      Finally, please check whether your FCRA Bank account is with a Scheduled Bank having core banking facilities?

Most Nationalized Banks and Private Banks qualify under both.

What is FCRA linked Utilization Account?

Generally, FCRA Utilization account or accounts may be opened under two circumstances.

Situation 1. Let us assume the NGO is registered in Mumbai and has its main FCRA Bank account with the State Bank of India, Fort Branch in Mumbai.

Now let us also assume that this NGO runs projects and programs in Nashik and Sholapur and these projects are funded by foreign contributions. There are project staff and regular activities at both these places. Payments also need to be regularly made at both these places.

Under the circumstances, the NGO may open an FCRA linked Project Utilization Bank Account in Nashik and Sholapur. This should preferably be with the same Bank (in this case, State Bank) and with clear instructions to the main Bank as also the banks in Nashik and Sholapur that this is an FCRA linked Utilization Account. 

No local money should be deposited in these utilization accounts and when the utilization accounts are closed all the funds from these accounts should be transferred to the main designated FCRA Bank account. 

Situation 2. Now, let us assume that a foreign donor / grant maker (let's assume XYZ Foundation USA) insists that the entire donation / grant should be maintained by NGO ABC in a separate Bank account. This is now quite a common request from funders.

Once again funds from XYZ Foundation must be first credited to the designated FCRA Bank account and then moved to a Utilization Account, once again preferably with the same bank marked "NGO ABC - XYZ Foundation - FCRA Utilization Account".

Wednesday, 6 September 2017

CBDT extends due date for filing tax returns

As per Explanation 2(a) to Section 139(1) of Income Tax Act 1961 charitable trusts and institutions are required to file their Income Tax Return in ITR 7 and Audit Report in Form 10B by 30th September. 

However the Central Board of Direct Taxes (CBDT) vide notice dated 31st August, 2017 has extended the due date for filing of Income Tax Returns and Audit Report for the financial year 2016-17  to 31st October, 2017.