SIDA Accounting Manual

Sida
Accounting Manual
for Sida supported NGOs in India
Development Cooperation Section, Embassy of Sweden New Delhi
Issued: May 1999
Issued: May 1999, Updated: Nov 2001

Reprint: Dec 1999; May 2001; Nov 2001
Foreword
A leading principle in Sidas development cooperation work, be it bilateral cooperation or support to NGOs, is that the activities financed by Sida shall be carried out efficiently and that the funds shall be administered in a secure manner. Sida has to ensure that this is being done. In order to live up to this principle, the Development Cooperation Section, DCS, of the Embassy of Sweden in New Delhi, decided in 1997 to carry out a financial review of some selected NGO-partners. An important purpose of this review was to develop an Accounting Manual to be used by all Sida supported NGOs. This demanding task was given to the Chartered Accountants Sanjay Aditya & Associates, which they have performed in a most conscientious and pedagogical manner. All collaborating NGO-partners have met and discussed the contents of this manual in its draft form and have been able to influence the final product. The Manual deals with basic aspects of accounting such as budgeting, internal control, book-keeping and bank-transactions. It also gives clear directives as to what Sidas requirements are in relation to these aspects. Sida expects every NGO to follow and be guided by this Manual. If this is done accurately, the financial and accounting systems of every NGO will be strengthened, thereby promoting the financial planning and follow-up of the Sida supported activities. New Delhi, May 1999
Owe Andersson Counsellor and Head Development Cooperation Section Embassy of Sweden
Issued: May 1999
Issued: May 1999
Acco unt ing M a nua l

for Sida supported NGOs
1. Introduction.....................................................................................................1 a) Purpose of this manual ....................................................................................1 b) Scope ..............................................................................................................1 c) Authority.........................................................................................................1 (1) Essential Requirements............................................................................1 (2) Recommended Practices ..........................................................................1 (3) Compliance with Indian Law ...................................................................1 d) Modifications to this Manual ...........................................................................1 e) A word about style, colour and care.................................................................2 f) Terminology....................................................................................................2 g) If you need any clarifications .......................................................................2 h) Acknowledgement...........................................................................................2 2. Budgeting........................................................................................................3 a) Budget Structure..............................................................................................3 b) How much.......................................................................................................4 (1) Increments ...............................................................................................5 (2) Accountant ..............................................................................................5 (3) Audit fees ................................................................................................5 (4) Inflation...................................................................................................5 (5) Chief Functionary....................................................................................6 c) Break-up .........................................................................................................6 d) Variances ........................................................................................................6 3. Internal Control ...............................................................................................7 a) Cash Box.........................................................................................................7 b) Responsibility Chart ........................................................................................8 c) Advances.........................................................................................................9 (1) Opening Advance Accounts.....................................................................9 (2) Using rolling imprest .............................................................................10 d) Old Records ..................................................................................................11 4. Book-keeping ................................................................................................13 a) Integrated Cash Book ....................................................................................13 b) Separate Ledger.............................................................................................14 c) Vouchers .......................................................................................................14
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d) Computerised Accounts.................................................................................16 e) Revenue Stamps ............................................................................................16 f) Pencilled totals, alterations, blank lines..........................................................17 g) What about ledgers? ......................................................................................19 5. Other records.................................................................................................21 a) Integrated Salary Register..............................................................................21 (1) Plain register:.........................................................................................21 (2) Analytical Register: ...............................................................................21 b) Minutes Book................................................................................................22 (1) Disclosure of Interest .............................................................................23 (2) Associated Party ....................................................................................23 (3) Register and payments ...........................................................................23 c) Log Book ......................................................................................................23 d) Fixed Assets Register ....................................................................................24 e) Stock Registers..............................................................................................26 f) Usage Registers.............................................................................................27 6. Bank Transactions .........................................................................................29 a) Signatories ....................................................................................................29 (1) Bank Resolution ....................................................................................30 (2) Amending bylaws ..................................................................................30 b) A/c Payee crossing ........................................................................................31 c) Cash withdrawals ..........................................................................................32 d) Cash payments ..............................................................................................32 (1) Expenses and assets ...............................................................................32 (2) Loans.....................................................................................................32 (3) Income Tax Implications .......................................................................33 e) Salary payments ............................................................................................34 f) Bank Reconciliation ......................................................................................34 (1) What is a Bank Reconciliation? .............................................................34 (2) Why a difference?..................................................................................34 (3) Making a Bank Reconciliation ...............................................................35 (4) Follow-up Steps.....................................................................................38 (5) How often..............................................................................................38 g) Field Bank Account.......................................................................................38 7. Income Tax ...................................................................................................39 a) Basic registration and exemption ...................................................................39
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(1) Exemption under section 10...................................................................39 (2) Exemption under section 11...................................................................40 b) Permanent Account Number..........................................................................40 c) Special conditions .........................................................................................40 (1) Large loans or expenses in cash .............................................................41 (2) Investments and bank accounts ..............................................................42 (3) Separate account books for Income Generation......................................42 (4) Transactions with key persons ...............................................................43 d) Filing of Income Tax Return..........................................................................44 (1) Last date and audit .................................................................................45 e) TDS...............................................................................................................45 (1) TDS Registration ...................................................................................46 (2) Deducting Tax at source ........................................................................46 (3) Depositing the TDS ...............................................................................46 (4) Issuing TDS certificates.........................................................................46 (5) Filing TDS returns .................................................................................47 f) Approval for donations..................................................................................47 (1) 50% under section 80G..........................................................................48 (2) 100% under section 35AC .....................................................................48 8. FCRA Compliance ........................................................................................49 a) Overview of FCRA .......................................................................................49 b) Registration or Prior Permission ....................................................................50 c) Scholarship....................................................................................................50 d) Separate Bank Account .................................................................................50 e) Separate Books of Account............................................................................51 f) Maintaining FC-6 ..........................................................................................51 g) Filing FC-3....................................................................................................51 h) Transfers to non-FC organisations .................................................................52 i) Bank Interest .................................................................................................52 9. Reporting to Sida...........................................................................................53 a) Budget & Balance Report ..............................................................................53 (1) Format ...................................................................................................53 (2) How to prepare ......................................................................................57 (3) Variances...............................................................................................57 (4) How often..............................................................................................57 (5) Due dates...............................................................................................57
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(6) Delays ...................................................................................................58 b) Consolidated Accounts ..................................................................................58 c) Copy of FC-3 ................................................................................................58 d) Audit Certificate............................................................................................59 e) Change of Auditors .......................................................................................59 10. Special Issues ............................................................................................61 (1) Accounting and Control.........................................................................61 (2) FCRA requirements ...............................................................................63 (3) Sida requirements: .................................................................................64 b) Transfers to General Fund .............................................................................64 c) Reimbursement of expenses ..........................................................................64 d) Multi-purpose workers ..................................................................................65 e) Salary payments ............................................................................................65 f) Local Contribution ........................................................................................65 g) Sale of Fixed Assets ......................................................................................65 11. Accessories................................................................................................67 (1) Budget & Balance Report ......................................................................67 (2) Audit Certificate ....................................................................................70 (3) Income Tax form 10A............................................................................73 (4) Income Tax form 10G............................................................................74 (5) Income Tax form 16 ..............................................................................77 (6) Income Tax form 16A............................................................................79 (7) Income Tax: Application under 35AC....................................................80 (8) Income Tax form 58A............................................................................83 (9) Income Tax form 60 ..............................................................................84 (10) (11) (12) (13) (14) FCRA form FC-1A ............................................................................85 FCRA form FC-3...............................................................................90 FCRA form FC-5.............................................................................104 FCRA form FC-6.............................................................................106 FCRA form FC-8.............................................................................107 a) Forms ............................................................................................................67 a) Revolving Funds ...........................................................................................61
b) Samples.......................................................................................................112 (1) Program Budget...................................................................................112 (2) Accounting Budget ..............................................................................114
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1. Introduction
a) Purpose of this manual
This manual has been designed to help Sida1 Partners in India streamline or improve their accounting systems and meet Sidas accounting and reporting requirements.
b)
Scope
The manual focuses primarily on financial and accounting aspects of Sida grants. Some of these aspects are connected to other issues, such as FCRA or Income Tax. Therefore, a limited discussion of these matters is also given.
c)
Authority
This is a composite manual to help strengthen accounting systems of our partners in general. The contents of this manual may have varying degrees of authority. This is explained below.
(1) Essential Requirements
These are practices, which Sida considers as a must for all projects supported by it. If these are not followed, it may affect continuation of a funding relationship[SA1]. If a requirement is found to be difficult to implement, you must immediately bring it to Sidas notice in writing. Sida will then attempt to resolve the matter. Essential requirements are highlighted in blue colour.
(2) Recommended Practices
Following these would help you simplify and strengthen your accounting systems. Our monitoring teams may also encourage you to adapt these practices. However, it is up to your judgement whether or not to follow these. These are coloured green.
(3) Compliance with Indian Law
These are requirements prescribed by Indian laws as interpreted by the designers of this manual. The manual is designed so that there is no conflict with the legal requirements. However, please note that it is your responsibility to follow the law and you must obtain independent expert legal advice wherever required. Legal compliance issues are marked with yellow.
d)
Modifications to this Manual
No manual can ever survive the test of time. We expect this one to evolve over a period of time. Your inputs in this process will be welcome. Modifications will be formally notified to all existing Sida partners along with replacement sheets and instructions.
Refers to Development Cooperation Section (DCS) of the Embassy of Sweden
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e)
A word about style, colour and care
We feel that reading an accounting manual from cover to cover needs a lot grit, courage and determination. To ease your journey, we have added graphics and tried to use a light, conversational style of writing. This manual has not been printed on offset presses, as we needed very few copies. The colours were added to help readability but are washable. Only the black ink is permanent. So please be careful about spilling tea or coffee on the manual! Still accidents do happen. If your manual is spoilt by chance, please write for another copy to Sida at New Delhi.
f)
Terminology
Today, there are no terms or words which can meet everyones approval. We have tried to use words which are common. In this context, NGO means Sida partners or organisations which mainly implement programs directly. Often we have used the word you when addressing the NGO. Organisations which mainly raise or provide funds for such programs have been termed as Agency. Accountant means the person who looks after your accounts. Throughout this manual, Sida refers to Development Cooperation Section (DCS) of Embassy of Sweden. We have also tried to keep this manual free from gender-bias. At some places, this means difficult grammar. At other places, where using appropriate terms would debilitate the monitoring process, we have retained gender-bias.
g)
! ! ! !
If you need any clarifications
You can discuss the matter with your auditors / advisers; or You can speak to the concerned Sida program person; or You can contact Sida office at New Delhi; or You can write to Sanjay Aditya & Associates1, with a copy to Sida at Delhi.
h)
Acknowledgement
We would like to acknowledge the support and inputs provided by our partners during development stages of this manual. Part of the material used in the manual has been adapted from AccountAid India circulars, with their consent. Other material has been developed by Sanjay Aditya & Associates, in consultation with Sida.
Sanjay Aditya & Associates, Chartered Accountants, 55-B, Pocket C, Sidharth Extension, New Delhi 110014; Ph:
6346253, 6347253, Fax: 6343852; e-mail: saa@mantraonline.com Color Key
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2. Budgeting
Budget is a very important component of the project document. If it is prepared carefully, it can be integrated with the action plan. A clear budget will also help your accountants book expenditure under proper heads. This will allow you to monitor variances effectively. This can be done only if expenses are booked under proper heads. Sometimes, expenditure is debited to account-heads depending on amount of margin left under the budget head. The nature of the expense is ignored. This results in distortion of the accounting reports. If the partner proposes a reasonable budget, chances are that Sida will not make any cuts while approving the budget. This means that partners can start with realistic budget estimates. There is no need for anticipatory padding. Unspent balances, within reason, can be carried forward and used in the next year. Sida hopes that by following this policy, partners will be able to time and implement activities according to ground realities. There will not be a need to use up all the unspent funds before the end of the grant year. Sida does not have a standard form for preparing budgets. However, we can offer a few suggestions on a useful budget structure.
a)
Budget Structure
There is a view that program persons and accountants have different expectations from a budget document. Program people hope that the budget will tell them how much is budgeted for a particular activity. Accountants want to know where an expense should be booked. Often such information is not clear from the normal budgets. A possible way to solve this problem could be like this. First prepare a budget based on the program. This budget could be structured on a simplified logical framework. This budget could be useful in the following ways:
! ! ! !
It can help you visualise the planned activities; It can help you plan the resources needed for each activity and its components; It will help Sida understand your program and your requirement for funds; It can help your implementing team understand the work-plan and link it up with funds available.
A Program Budget would have the following headings you can add or modify column per your needs and the size of paper used!
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Name of the program or program component
You may have many items or activities under each program. Give the logic or necessity or rationale for each separately.
How many persons / households will benefit directly. Be as specific as possible. This will help you check your calculations.
Give names of villages. If a school will run in the community centre, say so.
Give the number of days / months (under this budget)
Describe the Line item.
Show how the amount was calculated.
Show the amount for each line item here.
Sl Name of Program
Specific Objectives of this program
Logic / reasoning for each activity / item
Number of direct beneficiaries
Village / location where the activity will occur
Duration of activity
Budget Line Item Narration
Budget Line Item Calculation
Amount (Rs.)
A sample Program Budget is given on page 112. After you have finalised this budget, prepare another summary budget. This will help your accountants book expenses under normal accounting heads. The Accounting Budget is simply a reclassified Program Budget. Columns for the Accounting Budget could be as given below:
Item number of the main budget. Will help in referring back Combine these two columns to open ledger accounts. For example: AIDS Salary to Outreach Workers Or Training Material for Camp Will help the Accountant in checking amounts booked in accounts.
For the accountants information
Ref.
Account Head
Program
Duration
Calculation
Amount (Rs.)
A sample Accounting Budget is given on page 114. At first glance, this appears to be additional work. However, single budgets in vogue these days try to be both the program budget and the accounting budget. These end up being neither. Program persons are not able to get enough information from these to help plan expenditure. Accountants also find it frustrating opening accounting heads, which look like program activities and are different for each Agency. Secondly, if you use a spreadsheet program like Lotus 1-2-3, Excel or Quattro Pro, you could set up cross-references between the two budgets. Then if you make changes in the program budget, the accounting budget will get updated automatically.
b)
How much
Budget figures must be based on ground realities. When budgeting salary for a Sida supported project, you may wish to see what are the general salary levels in the region. Also the salary amounts budgeted should not be so high or so low that these would cause conflicts within the organisation. Budgets for materials should be based on how much is likely to be used. Prices used in calculations must be realistic.
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You also need to provide for the following:

(1) Increments
People grow over time in terms of skills and experience. An annual increment is a normal expectation. If your organisation provides annual increments, you should increase the salary budget each year accordingly.
(2) Accountant
Good accountants are difficult to find. It is even more difficult to retain them. One factor sometimes, is the lack of a salary budget for an accountant. Sida requires that its partners will find, employ and retain good, full time accountants. Such persons should have adequate training in accounts, and preferably a commerce degree. They should also have sufficient experience. For this purpose, reasonable amount of salary should be budgeted. For budgeting the salary, you may want to look at what good accountants are paid by local businesses. Where the salary can be shared with other agencies, a proportionate amount should be budgeted in Sida proposal.
(3) Audit fees
Independent audit of your Society or Trust is an essential requirement for public accountability. Sida requires that its partners will retain a good firm of Chartered Accountants for this purpose. If such a firm is available in a nearby place, its services will be more useful. In order to do a proper audit, adequate professional remuneration is essential in most cases. Unfortunately, an audit fees component is often not included in the budget. It is suggested that where audit fees can be shared with other Agencies, a proportionate amount should be provided. You should also provide an additional amount in the Budget for Sida audit certificate. Consult your auditors as to the amount of fees they would expect for the Sida Audit Certificate. Auditors should carefully consider their professional responsibilities and the scope of work involved in the Certificate before indicating their fees.
(4) Inflation
When proposing a budget for the first time, remember that it may take some time before the proposal is approved. In the meanwhile prices will continue to rise. Keep this in mind when estimating budget amounts. If the proposed budget is for more than one year, provide for inflation in the second and subsequent year also.
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(5)
Chief Functionary
If you have a full-time Chief Functionary1, you may need to pay a salary to the person. There is no bar in the Income Tax Act on paying reasonable salary to an office bearer. Under the Societies Act, it is expected that an office bearer such as a Secretary or Treasurer will not be paid for duties of a Secretary or Treasurer. Your auditors can explain the intricacies of this law to you. Sida suggests that reasonable and proportionate amount of remuneration for a full-time Chief Functionary should be budgeted, where required.
c)
Break-up
If you want to make a good budget, it is important to provide break-up of figures that are included. For example, salaries should be broken down by person (with role), rate per month, number of months. Amount for an exposure tour must be broken down into fare, food, lodging, incidental expenses how you arrived at these items should be indicated for example, food for 20 persons @ Rs.75 per day x 4 days. This exercise may appear to be time-consuming at first but will help avoid under-budgeting or over-budgeting. Finally if an item can not be broken down at all, say lump-sum. Sida requires that all budget items will be broken down to the extent practical. Budgeted costs should correspond as closely to the activities as feasible.
d)
Variances
If you make a budget, variances will follow naturally. These variances should not be suppressed. An attempt should be made to book all relevant expenses under proper account heads. Sometimes, expenses are booked under a different head just because the budget under the proper head has been used up. Variances would be calculated and reported, as discussed in the section on Reporting to Sida (page 57). Past variances should also be used to revise budget amounts wherever required.
May be an office bearer
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3. Internal Control
a) Cash Box
In most NGOs almost 90-99% of the payments are made in cash. Often cash payments are made because a cheque payment is impractical. But gradually this becomes a habit. This increases the problems in accounting and keeping track of cash. Wherever possible, try to make payments by cheque. This will reduce the amount of cash you have to handle and keep. It will also reduce the risk that a transaction may be forgotten. Cash is a key control point in any accounting system. This is the reason why most auditors insist on a cash count. How should you keep your cash1? A basic distinction to emphasise here is that we are not talking about your cash we are talking about the Societys cash. It is often difficult to remember this when you do not have a full-fledged accounts dept. including a cashier. As a result, people end up carrying the Societys cash in their pockets. This would be all right if they had made a voucher and debited themselves with the amount of cash they are keeping. But when this is not done, it becomes difficult to keep track of who owes whom. It is normally difficult to make entries in formal cash book immediately. In some cases, the head of account or the name of project may not be clear. In others, the accountant may be part-time. To solve this problem, some NGOs keep a diary or note book in addition to the main cash book. All transactions are noted in this immediately. Accounthead is not noted only the person receiving cash and purpose is noted (and the amount of cash paid or received!). This note-book helps them keep track of their cash in hand. We can look at three type of situations: one, where you may not even have a full time accountant; two, where you have an accountant but not a cashier; and three, where you have both.
Situation No full time accountant Cash handled by Chief functionary or a senior person Suggestions 1. Keep cash separately in locked drawer or almirah in the office. 2. Maintain diary or note book for entering all receipts and payments immediately. 3. If person handling cash takes advance, enter this amount also immediately in the note book. Such advance should be taken with consent of Chief functionary or another senior person. 4. Periodically tally the cash balance as per note book with cash in drawer or safe. 5. Chief functionary can participate in cash tally once in a while (at least 10-12 times a year) and initial the note book.
Amount of cash you need to keep is discussed under Cash withdrawals on page 32.
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Situation Accountant but no cashier
Cash handled by Accountant, Chief functionary or another senior person
Suggestions 1. Keep cash separately in locked drawer or almirah in the office. 2. Maintain diary or note book for entering all receipts and payments immediately. 3. If person handling cash takes advance, enter this amount also immediately in the note book. Such advance should be taken with consent of Chief functionary or another senior person. 4. Periodically tally the cash balance as per note book with cash in drawer or safe. 5. Chief functionary can participate in cash tally once in a while (at least 10-12 times a year) and initial the note book.
Both Full time accountant and a cashier
Cashier; Sometimes 1 extra cash kept with Chief Functionary or senior person
1. Person keeping extra cash should sign a voucher for receiving the cash. 2. Keep normal cash separately in locked drawer or almirah in the office. 3. Maintain diary or note book for entering all receipts and payments immediately. 4. If cashier takes advance, he/she should enter this amount also immediately in the note book. Such advance should be taken with consent of Chief functionary or another senior person. 5. Cashier should periodically tally the cash balance as per note book with cash in drawer or safe. 6. Chief functionary can participate in cash tally once in a while (at least 10-12 times a year) and initial the note book.
2
The above chart shows three different situations. However, a system where cash and account books are handled by two different persons is usually desirable. It is therefore strongly recommended that where feasible, such an allocation of duties should be made.
b)
Responsibility Chart
Where an organisation is small, things are easily controlled without any delegation. But as it grows, it becomes necessary to let different people handle things. In such a situation, people should also know what their responsibilities are. This will help them in their work. To improve clarity on this, many NGOs prepare a simple chart showing who is expected to handle what functions. For example, the responsibilities of the cashier, accountant etc. are clearly specified. The chart also shows who have the authority to approve expenditure. Similarly in a decentralised organisation, the chart would also show who has signing authority for donor agreements, for operating bank accounts etc. While most of the time these responsibilities are known to the people within the organisation, auditors and reviewers sometimes expect to see a written note on this. You may also wish to paste this chart in the accounts office for easy reference. The chart should be updated regularly so that it remains a live document.
1 2
In case of large withdrawal, extra cash may not be kept with cashier. Cash handled by cashier normally
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Sida requires that such a chart would be prepared and easily available for reference.
c)
Advances
Office advances are different from personal advances1. Here we have discussed office advances only. Office advances cover money given to a worker as advance for office expenses. Some NGOs record these transactions in the accounts most do not. The NGOs who do not record advance transactions, may be using IOUs2 or may maintain advance registers. This practice is improper. All cash transactions are meant to be recorded in the cash book. Using IOUs is risky. Maintaining separate advance registers actually increases the work. It is also not a reliable method. As an alternative, you can open advance accounts or use a system of rolling imprest.
(1) Opening Advance Accounts
It would be simpler if you opened separate advance accounts for the staff in your main ledgers3. If a person handles both FCRA projects as also general projects, then you can open two advance accounts, one in each ledger. When you maintain advance accounts, you would debit the persons account whenever money is given to them. Later when they submit vouchers, the amount would be credited to their account. If you dont use a journal, entries in the cash book would look like below:
Receipts Date Particulars Amount Date Payments Particulars Amount
4.4.98
Ms. Ramawati Advance: (FCRA main) Cash given for Balpur mela
5,000
10.4.98
Ms. Ramawati Advance: (FCRA main) Expenses on Balpur mela
4,360
10.4.98
Balpur Mela (SIDA) Expenses incurred by Ms. Ramawati on Balpur mela
4,360
In this system, you dont have to settle the advance account after each transaction. It could be settled once a month or once each quarter. The balance due or recoverable would be paid or recovered in cash.
1 2
For example, advance against salary or a personal loan I owe you; the amount given as advance is written on a slip or a voucher. This is later destroyed when the advance is See chart on page 13.
settled.
3
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If you use a journal also, then the second entry can be made through the journal. Using a journal is better than using the cash book for such entries:
Date
Particular
Debit
Credit
10.4.98
Dr. Balpur Mela Exp. (SIDA) Cr. Ms. Ramawati Advance (FCRA-main) Expenses incurred at Balpur Mela by Ms. Ramawati
4,360 4,360
(2)
Using rolling imprest
Rolling imprest helps reduce accounting work. Under this system, a person is given a permanent advance. When they incur expenses, they are reimbursed whatever is spent. The original imprest gets replenished. For example, a person is given Rs.1,000 as a rolling imprest. This is debited to his imprest account. Now he incurs expenses of Rs.780. He is paid the full amount of Rs.780. Now he can again spend upto Rs.1,000. Entries for this are shown below:
4.4.98
Sri Venkat Imprest: (FCRA - main) Cash given as rolling imprest Sapling purchase (SIDA) Mango saplings purchased by Sri Venkat from rolling imprest
1,000
10.4.98
780
The rolling imprest of Rs.1,000 will be recovered only when the person leaves the organisation or does not need the imprest any more. Rolling imprest is given only to those people who often incur many small expenses for the office. No time limit is normally kept for settling the imprest but if you wish, you could clear the imprest once annually for better discipline.
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d)
Old Records
No time limit is given under FCRA for keeping old records. But under the Income Tax law, you have to keep old accounting records for at least ten years1. For practical purposes also, a period of ten years is sufficient. What do you need to keep? Cash books, ledgers, asset and stock registers, cash log (or rough cash book), vouchers, vehicle log books etc. all form part of accounting record and should be kept. In case your accounts are computerised, you need to keep printed copies of these. Keeping computer files on a floppy or hard-disk is not sufficient. The registers and cash book etc. can simply be labelled and stored. But how would you keep old vouchers etc. for ten years? After the audit is over (or even before that), you can have the vouchers stitched. Simple book-binding (using cardboard and thread) is sufficient. The binder would charge you about Rs.15-20 per file. The voucher files are then labelled and kept in tin boxes. You should keep the boxes safely, in a dry place. Keep some moth-balls in the trunks and air them at least once a year.
The actual requirement is for keeping the records for eight years from the end of the assessment year. For financial
year 88-89 (1.4.88-31.3.89), the assessment year will end on 31.3.90. You have to keep the records till 31.3.98. This effectively translates to 10 years (April 88 till March 98). Color Key
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4. Book-keeping
a) Integrated Cash Book
NGOs receiving FCRA funds are required to keep a separate cash book for FC funds. But should they keep separate cash books for each funding agency / project as well? Many NGOs maintain separate cash books, sometimes as many as fifty each year! This practice apparently started with a misinterpretation. Most agency agreements say that separate accounts will be kept for the funds given by them. This actually means that the NGO should keep separate ledger accounts for their expense heads. This does not mean that they should keep a separate set of account books. At some point of time, the meaning was twisted and separate cash books emerged. This practice increases work-load of Accounts Department. It also weakens cash control. It is because of this that many NGOs keep a separate rough cash book for controlling cash. Is there a simpler alternative? People have experimented with columnar cash books. One column is kept for each agency on the receipts side and another on the payments side. This is feasible only if you are working with 3-4 agencies. Further, you need to get such cash books printed specially. Another alternative (recommended) is to use the standard cash book. Each entry is marked suitably with the name of the agency. This is then posted to the relevant ledger1. The overall accounting system may look as below:
Rough Cash Log
General Cash Book General Ledger CAPART Ledger CRY Ledger FCRA Ledger Sida Ledger Oxfam Ledger Fisheries Ledger Sida Reports Oxfam Reports Fishery Profit & Loss A/c CAPART Reports CRY Reports
Societys Balance Sheet etc.
FCRA Cash Book
FC-3 and FCRA Balance Sheet etc.
IGP Cash Book
Separate ledgers are kept for each agency / project. This is explained under the heading Separate ledgers.
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The next question that arises is how do you make entries (which will be posted to several ledgers) in one cash book. For this, each entry should be marked with the ledger where it would be posted. An example is given below:
4.4.98
Salaries (Diakonia) 8,600 Salary to teachers for March 98 This will be posted to
Sida ledger
4.4.98
Salaries (Sida) 14,200 Salary to Sida project This will be posted to staff per details
Oxfam ledger
6.4.98
Travel (Oxfam) Visit to Ahmedabad by Sri Venkat for meeting Sapling purchase (SIDA) Mango saplings purchased by Sri Venkat from rolling imprest
1,230
10.4.98
780
Over a period of time, we expect that people will gradually switch back to integrated cash books. In the short run, some of the agencies you work with may continue to insist on a separate cash book. However, a separate cash book should not be kept for Sida funds. These should be reflected in the main FCRA cash book itself.
b)
Separate Ledger
While you can keep a common cash book as discussed above, a separate ledger would be needed for each agency (shown in blue colour on the chart). Each ledger will be labelled with the Agency / project name. You can post entries into these ledgers directly from the General Cash Book or the FCRA cash book. There is no need to post these into a Control Account. Such ledgers are called sub-ledgers. These help you keep separate accounts for each agency without loss of control over cash. In the sub-ledgers you can open ledger accounts according to the budget heads of the relevant agency. This will help you prepare financial reports for the agency. Ledger Accounts which are not related to any specific agency are kept in the General Ledger or the FCRA ledger. For Sida expenses and assets, a separate sub-ledger should be maintained.
c)
Vouchers
Some NGOs do not use vouchers whenever a cash memo is available. However, this is not satisfactory. A covering voucher should be used for each entry, including those for which a cash memo is available.
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A covering voucher carries useful information such as why an expense was made, who made the payment and the account-head to which it should be debited. The voucher is also used as an authorisation for the expense. There are many different types of vouchers in use by NGOs. Generally, you can find receipt vouchers, cash vouchers, payment vouchers and journal vouchers. This of course means that you have to print and keep separate stocks of each type. A simpler alternative is to print a voucher that can take care of all these transactions. Such a design is suggested below: Lok Jagran Manch, Machhera, A.P.
Budget / Account Head Project / Agency
Voucher No . Date
Amount (Rs.)
Dr. Dr. Dr.

Total
Use this rubber stamp to mark Sida vouchers and supports.
Cr. Cr.
Description Total
Total Rupees (in words) Amount paid (in words) Rs.

Revenue stamp > 500
Accountant
Project Incharge
Treasurer/ Secretary
Receiver
Whatever the design you use, try to ensure the following while printing the voucher:
!
There should be enough space on the left-hand side for punching and filing. Leave adequate margins around the other sides to allow for curling and tearing during storage. You should use a standard size, keeping in mind the paper sizes available. Odd-sized vouchers result in wastage of paper and are difficult to file. Use a paper that will not tear easily and will last for ten years. Flimsy paper (less than 70 gsm1) is not suitable.
Grams per square meter: standard measurement system for paper weight
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You can save money by using a simple black and white design, over white paper. Each colour you add will increase the printing cost. Ask the printer to glue the vouchers in pads of 50-100 vouchers each. If you plan to punch the vouchers on the left-hand side, ask for the gluing on the left-hand side. Dont use a different colour for FCRA vouchers. Sometimes, you may not know in advance whether an expense relates to FCRA or Indian funds.
You can also get rubber stamps to mark different agency names on the vouchers and supports. In any case, all Sida vouchers and supports must be marked with a rubber stamp as shown above. Current vouchers must be filed1 sequentially and not kept loose or in packets. It is also important that all vouchers should be marked with serial numbers. This number should also be given on the cash book and ledger so that vouchers can be located easily.
d)
Computerised Accounts
If your accounts are computerised, the above concepts remain applicable. However, you may need to consult your auditors or computer consultants for this. Most popular packages allow sub-ledgers or groups. In some cases (e.g. Tally 4.5), you can use cost-centre facility for this purpose. You can also make groups and sub-groups under Tally. Tally now also has a Windows version, which has some additional features. Wings is a good accounting package though not as well known as Tally. It has similar features but a better user-interface. There are different modules depending on your needs, you can pick up the ones you need. Quicken is another interesting package. This package is extremely user-friendly and has very good search, reporting and budget tracking features. However, the terminology is unusual and it does not prepare a Trial Balance. The package uses categories and sub-categories for expenses, registers for accounts and class for cost-centres. When shopping for a package, do not be misled into believing that NGO accounting needs special packages. All accounting works on Debit and Credit. There are things which you should do by hand. For example, we have not yet seen an accounting package which can give you a true Receipts & Payments Account. Try to avoid a custom-made package or a package which promises you everything from voucher printing to Balance Sheet. These packages are usually inflexible, difficult to implement, create power centres within Accounts Dept., and have any number of bugs.
e)
Revenue Stamps
There is a lot of confusion about use of revenue stamp. Essentially, a revenue stamp is required whenever a person acknowledges receipt of money. It is required only on payments exceeding Rs.500. Use of the stamp is required under law2. Other things to keep in mind are:
1 2
You can use a spring file, index file or a lever file. Indian Stamp Act, 1899 and Rules (1925)
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The Act covers both cash and cheque payments. You have a right to demand a stamped receipt1 if you pay more than Rs.500. The person who receives the money should pay for the stamp. The stamp should always be cancelled by drawing a cross or signing across. No stamp is required on receipts issued for donations2 because these are payments without consideration. However, a grant is different from a donation. No revenue stamp is required on imprest transactions with employees. But it is required when loan or salary is given.
If you dont fix a stamp what happens? The penalties are very small in terms of money. However, if a receipt is not stamped properly, it can be confiscated. Also, the person who received the money can not use it in a court case. We suggest that you follow the law in all payments, especially transactions related to Sida funds.
f)
Pencilled totals, alterations, blank lines
When you write a cash book, mistakes are always possible. Accountants therefore often total up the cash book in pencil. But how long should these totals remain in pencil? If you are writing your cash book regularly and also tally your physical cash at least once a month, you should ink up the totals3 each month. Preparing a trial balance regularly is important for checking that the cash book and ledgers are written properly. If you draw up (and tally) a monthly trial balance, then may be the cash book totals should be inked up by 7th of the following month. Suppose you do all these things and still find an error later on. This could be a missing voucher, a totalling mistake, an amount entered wrongly etc. What do you do then?
Mistake Forgot to enter a voucher Solution Enter it on the day you discover it. Mark both the dates (original date and current date) in the date column. Enter the difference (Rs.450) on the date you discover this, on the same side (payment or receipt). Give reference of the original entry. Also go back to the original entry and make a note there: difference entered on page ___
Entered a smaller amount by mistake (50 instead of 500)
1 2 3
Section 30 Exemption b, Article 53 of Schedule I to the Act We mean all the totals, including carry forward figures and brought forward figures. These should be inked up both on
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Mistake Entered a larger amount by mistake (950 instead of 590)
Solution Enter the difference (Rs.360) on the date you discover this on the opposite side of the cash book. Give reference of the original entry. Also go back to the original entry and make a note there: difference entered on page ___ Adjust the cash difference on the date you discover it. Give reference of the original total. Also go back to the original total and make a note there: difference adjusted on page ___ Enter double the amount on the correct side. Give reference of the original entry. Also go back to the original entry and make a note there: counter-balancing entry on page ___
Made a totalling or carry forward mistake
Made an entry on the wrong side (receipt instead of payment or vice versa)
If you follow the above procedure, you wont need to keep eraz-ex in the Accounts Department. There will also be no need for any cuttings or alterations in the cash book. A related problem is leaving blank lines between entries in the cash book. It is normal practise to leave one blank line between each entry in the cash book. This is done so that each entry is separated. There is no objection to this. But can you leave more than one blank line or blank pages in the cash book? The answer is no. If more than one line is left blank in the cash book, entries can be inserted afterwards. Similarly if blank pages are left in the middle of the cash book, the cash book can be altered. A good cash book would therefore look as below:
4.4.98
Balance b/f
5,680
4.4.98
Only one blank line between entries.
Sri Venkat Imprest: (FCRA - main) Cash given as rolling imprest Sapling purchase (SIDA) Mango saplings purchased by Sri Venkat from rolling imprest Total spent Cash in hand c/f Total
Totals have been inked up.
1,000
10.4.98
780
Cross out the blank space like this.
Totals are done where entries end.
Total
5 ,6 8 0
1 ,7 8 0 3 ,9 0 0 5 ,6 8 0
Blank lines can be left under the totals.
Sida requires that:

!
Cash book entries should not be pending for more than seven days at any point of time.
Essential Sida Requirement Recommended Practice Legal Compliance
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Cash book totals must be inked up by the 7th of next month at the latest. Unnecessary blank lines or blank pages should not be left in the cash book.
We also suggest that cuttings and alterations of figures should be avoided.
g)
W hat about ledgers?
Similar reasoning applies to ledgers as well. In this case, it is customary to leave one blank line whenever posting for a new month begins. This line is used for totalling up the entries in pencil. The balance is then normally written in the balance column. This balance should also be inked up once the trial balance has tallied. A good ledger account may look like the one below:
Account of Conveyance Expenses SIDA Date Particulars CBF Debit Credit Dr/Cr Balance
4.4.98 4.4.98 7.4.98 15.4.98 20.4.98
Paid to Ms. Ramawati for March 98 Paid Mr. Venkat for March 98 Local conveyance to Ms. Maya Hire of rickshaw Office to station for guest
Wavy line across blank space
435 246 34 110 38 863 Dr. 863

Running balance inked up Monthly total in pencil
3.5.98 6.5.98 10.5.98
Paid to Ms. Ramawati for April 98 Paid Mr. Venkat for April 98 Local conveyance for stationery
220 285 24 529
Dr.
1,392
Sida therefore requires that:

! !
Unnecessary blank lines will not be left in the ledger. Ledger balances appearing in the Balance column will be inked up.
Sida also suggests that cuttings and alterations in the ledger should be minimised.
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5. Other records
a) Integrated Salary Register
You may wish to have one register for FCRA projects and another for Indian funds. But do you need a separate salary register for each agency or project? Not really. There are two alternatives if you want to use an integrated salary register:
(1) Plain register:
You can use the existing register, dividing it into sections each month so that salary payments for each agency / project can be totalled up. The register would look as below:
Salary Register for the month of April 98 S. No. Sida 1 2 3 4 Ms. Ramawati Mr. Venkat Ms. Maya Mr. Sebastian Total - Sida Diakonia 1 2 3 4 Mr. Venkat Ms. Vanita Ms. Elizabeth Mr. Hussain Total - Diakonia Grand Total He is working partly in Sida project and partly in Diakonia. Part of salary appears in Sida. Animator Health Worker Animator Incharge Macchera Macchera Purnea Purnea 1,000 1,000 980 2,000 4,980 10,980 1,000 1,000 980 2,000 4,980 10,980 Designation is also important. Co-ordinator Sr. Animator Teacher Health Worker Macchera Macchera Tilbatia Tilbatia Name Designation Location Salary Allowa nces Give the location for better control. 3,500 500 1,000 1,000 6,000 This amount will be entered in the cash book as Salary Sida 3,500 500 1,000 1,000 6,000 He signs at both the places. Venkat Venkat Deducti ons Net payment Signatur es
This amount will be entered in the cash book as Salary Diakonia
(2)
Analytical Register:
Analytical register is a little more complicated because additional columns are kept for each agency. If you have spare columns in your register, you can rename these. Otherwise you have to either make the columns in a plain register or get it printed.
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Issued: May 1999 Salary Register for the month of April 98 S. No. 1 2 3 4 5 6 7 Ms. Ramawati Mr. Venkat Ms. Maya Mr. Sebastian Ms. Vanita Ms. Elizabeth Mr. Hussain Grand Total Co-ordinator Sr. Animator Teacher Health Worker Health Worker Animator Incharge Macchera Macchera Tilbatia Tilbatia Macchera Purnea Purnea 6,000 Name Designation Location Salary (Sida) 3,500 500 1,000 1,000 1,000 980 2,000 4,980 1,000 Salary (Diako nia) Salary (Ford) Total payment 3,500 1,500 1,000 1,000 1,000 980 2,000 10,980 This amount will be entered in the cash book as Salary Diakonia. He now signs at one place only. Venkat Signatur es
This amount will be entered in the cash book as Salary Sida
The analytical register is a little more convenient to use but requires more effort in column layout. You can choose either. We suggest that you consider shifting to integrated salary registers (of either design) and avoid having a separate register for each agency / project.
b)
Minutes Book
Every Society or Trust is expected to maintain minutes books. One book should record minutes1 of the governing body meetings. Another should record minutes of the General Body meetings. This is broadly what the law requires there may be some variations in different states. The minutes book should be a bound register where minutes are written by hand. Who should write the minutes? Normally the Secretary is supposed to write the minutes. These are authenticated or signed at the next meeting. Where should you keep the minutes book? Usually all office records should be kept at the office only. You may, however, wish to keep these under lock and key. The minutes books are not a secret document. Normally auditors or reviewers would expect to see the minutes. This will help them know whether various actions were authorised or not. Not maintaining the minutes book properly can have serious legal implications. The registrar can even take over the Society in some states on grounds of mismanagement. What should be entered in the minutes? This would depend on your memorandum and articles. There are some things that you can not do without a resolution. This normally includes opening a bank account, purchasing immovable property etc.
Discussion and decisions taken
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Additionally, you can consider recording the following in you Governing Body minutes for better transparency. Incidentally, this is a standard practice in all companies, whether big or small.
(1) Disclosure of Interest
Governing body members may also be members or office bearers in other Agencies, NGOs, firms, businesses or organisations. Or one of their close relatives may be a member, partner or office bearer in another organisation. Both these are treated as an interest. The members can agree on a policy regarding disclosure of interest. Normally this would be done at least once a year. The concerned person gives a letter with necessary details to the Secretary who records it at the next meeting of the Governing Body. Once the interest is declared, there would not be any need to make another disclosure till next year. Unless of course there is a change in the list of interests. Subsequently, a matter may come up involving one of the parties in which a member has declared interest. It is customary that the interested member will not participate in such discussion or voting.
(2) Associated Party
Then there are NGOs that may have been floated by your organisation for some specific purpose. These may function from the same office or some nearby place. These are called associated parties. Whenever an associated party is set up or registered, the relationship could be recorded in the minutes.
(3) Register and payments
A register should then be kept. This register will include all the names where members have disclosed an interest or which are associated parties. Whenever a payment is to be made to an associated party (or a party in which a member has an interest), it can be minuted. For ongoing payments, one-time approval can be obtained. You can also set a limit (say a total of Rs.10,000 per year) upto which Board approval or discussion would not be required.
c)
Log Book
Most people maintain log books for vehicles. Sometimes this poses a problem. The tachometer wire keeps breaking down! That apart, it is something which most reviewers will ask for. They will be quite unhappy if you cant provide one. Standard log books are available in the market. These have various columns such as date, starting point, closing point, purpose, number of kilometres, purpose etc. You can also add information on the amount of fuel. Each time fuel is filled, the number of litres and cash memo reference is given. This will help your accounts person check the mileage per litre. This helps in controlling fuel consumption.
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d)
Fixed Assets Register
A Fixed Assets Register (FA Register) is a register which shows all the permanent assets owned by an organisation. The register shows the quantity and value of things like chairs, tables, fans, furniture, vehicles, land, buildings etc. It may also show where these assets are kept or used. Sometimes a serial number is also put on the item and noted here. Any assets that are sold are also recorded here.
(a) Is it different from a Stock Register?
This register is sometimes confused with the stock register. However these are two different records. A stock register is maintained to keep record of goods received and issued. It is mainly used for items that are not permanent. A record of medicines or of wheat bags would be kept in a stock register. Normally a stock register does not show value of the items received or issued.
(b) Why do you need such a Register?
An FA Register becomes very useful when the organisation growing. Having this information can help you check whether all these assets are in your possession. The total value of these assets can also be cross-checked with Balance Sheet or ledger. This is why most Agencies insist on this Register.
(c) Where can you get this register?
This type of a register is available in the market. You should ask at a shop, which keeps government forms, and stationery for companies. If you cant purchase this register, you can use the simple format given on page 26. Make about 80-100 photo-copies and have these bound in one register. Have all the pages numbered with a numbering machine. Insert two or three plain sheets in the beginning for an Index.
(d) How do you maintain this register?
Different sheets are opened for different type of items. For example, all tables, chairs, almirahs etc. are written together on one sheet as Furniture. Similarly all cycles, motorcycles, jeeps are written together on one sheet as Vehicles. You will need to open as many heads as the type of Fixed Asset accounts you have. After each type, you should leave a few sheets blank for future additions.
(e) Two Things to Remember...
There are two important things to remember here: Firstly, record is maintained only of those assets, which are owned by you. For example if a community centre or tubewell has been constructed for the villagers, the villagers may be its owners. In such case, this item should not be recorded at all. Secondly, if we receive an item (such as land or furniture etc.) as a gift, it should also be recorded in the register. You may show an estimated value for this or record it at nil value. If you do this, you should also pass an accounting entry.
(f) How can I start a fixed assets register
If this register is started in the early years, it can save a lot of trouble for you later on. But suppose 10-15 years have passed and you have not started this register. Here you may have two choices:
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(i)
Old Vouchers available
If old vouchers are available, you can recreate your register. Proceed year by year. First pick up the earliest (first years) Balance Sheet1. See if any additions to fixed assets are shown. If yes, note down the amounts under various categories on a sheet of paper. Then take out the ledger, cash book and vouchers for that year. Open the ledger account of a particular asset and trace the voucher numbers. From the vouchers, note down the relevant details on another sheet of paper. Tally the total of this sheet with that noted earlier from the Balance Sheet. Proceed this way for each category. After all the details for that year are noted and tallied, enter these in the Fixed Asset Register. Follow the same procedure for next year and subsequent years. Remember that you must follow the sequence for the years.
(ii) Old Vouchers not available
If old vouchers are not available, you may have to divide you register into two sections. First go back to the earliest year for which vouchers are available. See the opening balances of fixed assets (category-wise) at the beginning of this year. Note down these balances as the opening balance for different categories of assets. After this, start recreating the Register from this year in the same manner as given above. You can call this Register as Register B. Next, sit down and try to recall / identify assets which were purchased before this period. Note down whatever details you can remember on a sheet of paper. If the purchase happens to be land or vehicles, you may get additional information from the title deeds or registration papers. Sort out the information according to categories. From these items, cut out the items which may have been sold or transferred later on. Now get another FA Register. Call this Register A. Enter the information in this register in the same manner as a normal FA Register. Some information may not be available leave these columns blank. Total up the value figures for each category (if possible), otherwise leave it untotaled.
(iii) Approval for Register A
After you have filled up Register A to your satisfaction, have it approved and signed by the Secretary / Treasurer. You may want to write one sentence under each category (just above the signatures of the Secretary / Treasurer): Certified that the above details reflect the assets in the Societys possession as on _____ (date) and have been recreated on the basis of information gathered from various documents / persons, in the absence for accounting records for old years.
(g) Physical Verification
Just keeping the register is not enough. You should verify the assets physically once in a while. How often you verify depends on your situation. If you have many field offices, you may want to verify the assets there every year. Assets which are small and can be easily removed should also be verified each year. When verifying the assets, you should get each department or location to prepare lists of assets they have in their custody. Some one from the main office can visit to cross-check these. These lists then should be compared with the FA Register. This is called reconciliation'. All variations should be investigated. Some assets may have to be written off because these have been lost or have become unserviceable.
1
Sometimes the Balance Sheet does not show this information. In such cases, refer to the Receipts & Payments
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(h)
Format
Standard registers in the market are often too complicated for NGO requirements. A simple format is given below:
Asset Category:
Serial No. Accounting Year Description of Item Quantity Bill Date Voucher No. / Date Amount (Rs.) Purchased / Sold Page No. Location / Identificatio n Funded by
You can have this format printed (or even xeroxed) and start your register. Use a good quality paper as the register will be used for 10-20 years. The columns shown here are narrow because of page size. When you get this printed, increase the width according to paper size. A3 paper will be quite suitable for such a register.
e)
Stock Registers
You need to keep a stock register only for some items. These may be items which are valuable (e.g. Rs.50 each) and used frequently. Or these may be items which are not valuable but are used a lot. This increases the total value of the item. You could also set a limit: for example, if the consumption of an item is more than Rs.10,000 per year, then a stock register will be kept. Standard stock registers are available in the market. These have a format mostly like the following: Open a separate
Stock of Bleaching Powder (100 gms packing) Date Particulars Bill / date account for each type of item
Received
Issued
Balance
Initials
1.4.98 4.4.98 7.4.98 15.4.98 3.5.98
Opening Stock Ralia Ram & Sons For Machera office For Tamang office Ralia Ram & sons 325/2.5 200 234/4.4 200 150 50
40 240 90 40 240
We suggest that proper stock registers may be kept for valuable items or items which are consumed in large value during the year.
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f)
Usage Registers
For such items, you may also want to keep distribution or usage registers. A date-wise register is usually sufficient there is no need to open item-wise accounts. The format of such registers will depend on the situation. But these should show at least the date, item used, person who used it or received it, purpose and quantity used. You could also make an entry in this register whenever some items are received from main office for issue.
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6. Bank Transactions
Special issues related to bank transactions are taken up below:
a)
Signatories
The number of signatories is given in the articles or bylaws. Usually there are at least two signatories. Objective is to ensure that more than one person controls the bank transactions. In practice, however, often one of the signatories signs blank cheques in advance. These are later filled up by the accountants and then signed by the chief functionary. Is this a good practice? Most people would agree that it is not. It violates the basic rule of joint control, expects one person to trust another blindly1, and also sometimes causes fraud. It is also a tribute to our societal values that people can do things like this and sleep peacefully. But in a similar situation, a cashier once forged the signatures of the other trustee and encashed a cheque for Rs.20,000. Is there a practical alternative to this? NGO functionaries are often in travel. Then the other signatory may be an honorary member, not attending office every day. Can you go to the other signatory every day and ask them to sign cheques? One possible solution is to have a multi-tier signatory arrangement. This is common in companies and Agencies where hundreds of cheques have to be signed every day. Under this arrangement, you can set a limit below which cheques can be signed by just one person. Above this, cheques have to be signed by both the signatories. An example could be as below:
Cheque amount Authorisation
Upto Rs.10,000 Upto Rs.50,000 Above Rs.50,000
Any one of three: President, Secretary or Treasurer Any two of three: President, Secretary or Treasurer All three: President, Secretary and Treasurer
If you want to keep one person as a must signatory, you can set the limits like this:
Cheque amount Authorisation
Upto Rs.10,000 Upto Rs.50,000
Secretary Secretary and any one of two: President or Treasurer
Above Rs.50,000
All three: President, Secretary and Treasurer
Sometimes this can lead to serious consequences under the law.
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(1)
Bank Resolution
For this, you will need to pass a resolution for the bank, which may look like the one below. Check with your bank for the exact procedure / wording:
Certified True Copy of Resolution passed at Meeting of Board of Trustees / Governing Body of ________________ (name of NGO) on ____________ (date) Resolved that with respect to the Savings Account No. ________ in the name of the Society / Trust being maintained with the _______ Bank, __________ (Address of Bank) and that the said bank be and is hereby authorised to honour all cheques, Bills of Exchange, promissory notes drawn, accepted and all negotiable instruments whatsoever made and signed on behalf of the Society / Trust either by Ms./Mr. __________ (name), _____________ (designation), or by Ms./Mr. __________ (name), _____________ (designation), of the Society / Trust, provided that the value of any such individual instrument does not exceed Rs. ______ (Rupees ________ thousand only). Also resolved that the said bank be and is hereby authorised to honour all cheques, Bills of Exchange, promissory notes drawn, accepted and all negotiable instruments whatsoever made and signed on behalf of the Society / Trust, jointly by Ms./Mr. __________ (name), _____________ (designation), and Ms./Mr. __________ (name), _____________ (designation), of the Society / Trust irrespective of the value of any such individual instrument. Resolved further that the above resolution be communicated to the said Bank and is to remain in force until the same is cancelled or modified by the Board of Trustees / Governing Body by another resolution and extract whereof forwarded to the Bankers by the Chairperson / President / Secretary / Treasurer / Trustee of the Society / Trust. (2) Amending bylaws
In some cases, your bylaws may not permit this kind of bank resolution. Then you will have to amend these. For this, check the Articles or Bylaws of Association. There you may find a clause which says that such and such office-bearers will be authorised to sign the cheques. If you find such a clause, then you can not follow the above procedure right away. You will have to first call a General Meeting and change your bylaws to say the following:
.... bank accounts in the name of the Society may be operated by such persons as are authorised by a resolution of the Board/ Executive Committee, which should have been passed at a meeting attended by not less than 75% of the members of the Board/ Executive Committee....
After passing this resolution, you will have to register the change with the Registrar of Societies in your state. The procedure for this varies from state to state. The bank will ask for a copy of the amended bylaws before registering your new resolution. However, in some states, the registrars may object to this amendment. Your auditors will be able to advise you on this.
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b)
A/c Payee crossing
There was a time when a simple crossing on a cheque was considered enough. And an Account Payee only crossing was absolutely safe. But about three years ago, a massive scam involving Rs.2,000 crores was discovered in Bombay. Investigators found that lacs of cheques with simple A/c Payee only crossing were endorsed by scamsters. Then they got together with a bank manager in Andheri. He credited these cheques to their accounts. The reason is that in India an A/c Payee Only cheque remains negotiable1. Having learnt a lesson from this, companies paying dividend and some banks now cross their pay-orders / drafts differently. They mark these as A/c Payee only; Not Negotiable. The crossing appears as shown in the illustration below.
27 July 19 98 Pay M/s Didwania Brothers, Udaipur -----------X--------------X----------------X or bearer
Rupees Thirty Three thousand four hundred and seventy five only ------X----------X------
---------------X---------------------------------------X--------------------- Rs.33,475/=
Bank of Magadh
South Extn.Pt. I, New Delhi
for Lok J agran Manc h
J aya Pand ey.

Se c r e t a r y
A/c. No. 10040 067153 11006451 835912
T.R.Singhi T r e a su r e r
10
It would be a good idea to start using this kind of crossing whenever you make a payment by cheque. The crossing should always be put in the top left-hand corner. Make sure that you cover some of the coloured pattern on the cheque with the crossing. You can make the crossing by hand (in ink) or use a rubber stamp. There are some other simple precautions you can use to make cheque transactions safer:
!
Put a carbon (black side up) under the cheque when making it. This will leave a black tracing on the reverse of the cheque, making it more difficult to alter. If sending a cheque or draft by mail, send it by registered post. This is also a postal rule. Use a safety pen2 when making the cheque. These pens use special inks which can not be removed with chemicals. You can also get special transparent stickers which can be put over the amount and name to prevent alteration. But please do not use ordinary cello-tape instead this will get stuck in the MICR machines during clearing.
1 2
Till 1994, a/c payee cheques were negotiable under UK laws also. Such as Reynolds 075: Calibre
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c)
Cash withdrawals
How much cash can you withdraw and keep? This depends on many factors. One is how much money do you normally spend each day. The other is how far is your bank. Another factor is availability of signatories. Therefore, if your bank is next door, both signatories attend office every day and your average expenditure is Rs.5,000 per day, then you may want to keep just Rs.10,000. You will of course draw extra cash for salaries and large program expenses, whenever you need to pay for these. In another situation, if the bank is far away, you may want to carry one weeks or a fortnights cash float1. The important point is that cash withdrawals should be linked to requirement and the existing cash in hand. Sida therefore suggests that cash withdrawals from bank should be made keeping in mind the need, amount of cash in hand and the effort required to make a withdrawal.
d)
Cash payments
In the areas where NGOs work, banking facilities are not very developed. Sometimes, cheques are not easily accepted. This has resulted in a situation where many NGOs prefer making payments in cash only. This results in several complications. The amount of cash to be withdrawn and carried increases. The chances of making mistakes increases. There is also a higher risk of defalcation or misuse.
(1) Expenses and assets2
On the other hand, often you can convince regular suppliers to accept payment by cheque. Depending on you location, you can also pay a larger proportion of the staff by cheque. Professionals such as auditors, doctors, consultants always have bank accounts and you can pay by cheque. Same applies to travel agents, printers etc. Remember, a bank payment (through account payee cheque) is always considered more reliable and authentic. Sida suggests that, wherever practical, payments may be made crossed cheques or bank drafts. This applies to payments below Rs.20,000 as well.
(2) Loans3
It sometimes becomes necessary for an NGO to borrow money for a short while. These temporary loans are often taken from officer bearers, friends, relatives or even staff
1 2
Cash which is sufficient to meet one weeks or a fortnights payments Income Tax implications of cash payments discussed under the heading Large Loans or Expenses in Cash in the The word loan includes deposits and advances as well.
section on Income Tax

3
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members. Later when funds become available, these are repaid. How should these loans be transacted1? Properly speaking, all loans (whether large or small) should be taken by crossed account payee cheques. Only exception would be where a clear cut emergency has occurred. In such cases, the nature of the emergency should be noted on the voucher. For all loans taken, a receipt should be issued. The receipt should give the name and address of the person who has given the loan. Under no circumstances, an anonymous loan should be accepted. All loans2 must be repaid by crossed account payee cheques. If a loan is repaid in cash, there should be a very good reason for it, which should be recorded on the voucher. When the loan is repaid, the receiver3 should acknowledge the repayment by signing on the voucher. The name of the receiver should be given on the voucher. Sida requires that the above procedure would be followed whenever a loan is taken or repaid for Sida fund transactions. Sometimes a loan may be taken from General Fund4 for Sida expenses. This means the loan would be paid from General Fund into Sida funds. This is an internal loan and may be a simple cash loan or a bank payment. A related loan from another person may appear as a receipt into General Fund. This loan would be called an external loan. Sida therefore requires that the above procedure would be followed for the external loan as well.
(3) Income Tax Implications
Under Income Tax Act5, loans above Rs.20,000 have to be taken or repaid by crossed account payee cheque or draft. What does the limit of Rs.20,000 mean? Obviously, any loan bigger than Rs.20,000 is covered. But the ban also applies when the amount due to one person adds up to more than Rs.20,000. This is explained more clearly in the section on Income Tax (Large loans or expenses in cash on page 41) Under the Income Tax Act, you should also not make any payment (for expenses or assets6) above Rs.20,000 in cash7. If you do, then 20% of the amount will be added back to your income. There are some exceptions to this8. These include payments to farmers for farm products and to cottage industries. If you make a payment to a person who lives in a place without a bank, then you can make it in cash.
Income Tax implications of cash loans discussed under the heading Large Loans or Expenses in Cash in the section Including an emergency loan which may have been taken in cash The person who gave the loan in the first place There may be adverse FCRA implications. Section 269SS Remember that NGOs get 100% deduction for assets. Section 40A(3) Rule 6DD
on Income Tax
2 3 4 5 6 7 8
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Sometimes, business persons are advised to split up large payments so that each payment is below Rs.20,000. This is not a good idea for NGOs, who are more responsible and accountable socially.
e)
Salary payments
As mentioned earlier, salary payments by account payee cheques (or direct bank transfer) should be encouraged. In some cases, this may not be possible because of various factors. Sida suggests that, wherever practical, salary payments should be made by crossed account payee cheques or by bank transfers.
f)
Bank Reconciliation
As cheque transactions increase, controls over bank account should be strengthened. A simple control is a bank reconciliation. What is a bank reconciliation? A Bank Reconciliation is somewhat like a routine medical checkup. If you do it regularly, you will never feel the need for it . If you dont do it regularly, one day you will wish you had gone to the doctor every month .
(1) What is a Bank Reconciliation?
Do a simple experiment to understand this. Take out one of the pass books which has frequent transactions. Note down the balance in the pass book on any date, say 31st July 1998. Open your cash book or ledger . Check the bank balance on 31.7.98 shown in the cash book or ledger. Note it down in the second line: Pass book balance on 31.7.98 Ledger/ Cash book balance Difference Compare the two balances. Chances are that the two balances will be different .
(2) Why a difference?
A difference may be simply due to some cheque which has not reached your bank for payment. Or it may be due to normal clearing delay for some cheque which you deposited. Sometimes the problem can be more serious. The difference may be due to a dishonoured cheque. Or the bank may not have credited some deposit to your account. In either case, the earlier you know, the better it is. You can then contact the bank and have the problem corrected. Apart from this, small charges like collection charges, bank charges etc. are levied on your account from time to time. Normally the bank does not send you any intimation.
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Also the bank credits interest to your account twice a year. You have to pass entries in your books for these transactions. Sometime the bank makes totalling errors. Also someone may alter a cheque and draw a large sum of money from your account. When a difference appears between your ledger balance and the pass book, you have to prepare a Bank Reconciliation to understand the reasons.
(3) Making a Bank Reconciliation
You need four things to prepare a bank reconciliation. (i) Your Pass Book; (ii) Your Cash Book or Ledger containing the Bank Account; (iii) A colour pencil or pen; (iv) Previous reconciliation, if there was difference in opening balance. After having armed yourselves with these, proceed as follows, with extreme caution:
(a)
!
Ticking Off common items
First decide the period for which you want to reconcile. Lets say you decided on 1.4.98 to 31.7.98. Compare the opening balance (1.4.98) of the Pass book and the Ledger. If there is a difference in the opening balances, locate the previous reconciliation. Your auditors will probably have a copy. Now you have to start ticking off the common items in the pass book and the ledger. For this see the first entry in the ledger on debit side. Locate this entry in the pass book also (in Deposits column). Compare both the entries are the amounts same? If there is a small difference, it may be due to collection charges. Note the difference separately. Tick off both the entries if these match. In this manner, tick off all matching entries on debit side right upto 31.7.98. Now look at the Credit side of the ledger . Compare these entries with those in Withdrawal column of pass book. Match cheque numbers also if possible. Tick off all common entries one by one.
(b) Correcting Our Ledger Balance
! !
! !
! ! !
Now we can prepare the first part of the Reconciliation:

! !
Take a fresh sheet of paper and note down the closing balance as per ledger. From this deduct any bank charges (or collection charges) or cheques that may have been dishonoured.
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This will give you the corrected ledger balance .

(c) Reconciling the Pass Book balance
Finally we reconcile the Pass Book balance:

! !
Note down the balance as per pass book. To this balance add those cheques which have been deposited but not yet cleared. You will find these as unticked items on the Debit side of the ledger. Then deduct the cheques which you have issued but which have not reached your bank. These will appear as unticked items on the Credit side of the ledger. The resulting balance should be the same as the corrected Ledger balance.
If a difference remains, scan the pass book and ledger for unticked items. Check the totalling and the manner in which you have added or deducted items. If the difference still remains, you will have to tick the items again. Use a different colour pen this time. And be more careful!
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Reconciling A Bank Account

Bank Pass Book
Date Particulars Withdrawals Deposits Balance Initial
B/F 12/4/98 29/4 4/5 12/5 15/5 20/5 20/5 25/6 1/7/98 4/7/98 30/7 ch. 470181 To cash: 470182 Clg. 470183 By Deposit Ch. ret. By clg. Coll. Fee To cash S. Das 470186 Cash Cash Total c/o 6,000 1,000 4,500 23,150 23,150 23,150 50 2,000 1,450 5,000 5,000
66,714 sn
Contra items (items that appear on both sides of the same record) are marked with a C like this.
55,214 ds
Collection charges of bank are not entered in our ledger. We should reduce this from our balance.
64,864 s.n 64,864
For the second part of Reconciliation, Balance as per our Ledger start with closing Deduct: Collection fees charged by bank on 20/5 balance as per Pass book.
Bank Reconciliation - 31.7.98
Dr. Dr. Cr.
66,914 -50 66,864 64,864 10,000 -8,000
Corrected Balance as per our Ledger Balance as per Bank Pass Book
Add: Grant cheque deposited but not cleared (28.7.98) Deduct: Cheque issued but not presented (470188 for Rent Deposit: 27.7.98) Corrected Balance as per Bank Pass Book
Cr.
66,864
Bank Account in our ledger
Date
1.4.98 12.4.98 29.4 30.4 12.5 24.6 30.6 4.7 27.7 28.7.98 29.7.98
Particulars
Opening Balance
Folio
Debit Credit
66,714 6,000 1,000 4,500 23,150 2,000 1,450 5,000 8,000 10,000 5,000
This cheque has not been collected yet. When By Ch. 470181: Mr. S. Das it will collected increase the By cash: 470182 balance. By Ch 470183 By Cash drawn - 470184 By Mr. Das - 470186
Dr/ Cr
Balance
Start the first part of Reconciliation by writing down the bank balance as per our ledger.
To Grant received
When this cheque Dr. 66,714 is presented, bank balance will reduce. Therefore, we deduct it from the Pass Book Balance Dr. 78,364
By Cash 470187 By Rent deposit: 470188 To Grant cheque By Cash 470189
Dr.
66,914
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(4)
Follow-up Steps
After reconciling the bank, you must look into the items that appear on the list. Pass entries in the ledger for bank charges, interest etc. Pass entry for dishonoured cheque also. Depending on reasons for dishonour, talk to the concerned party or your bank. If the amount for any cheque which you issued is different from your records, approach the bank immediately. Find out the reason for the difference. If there is a mistake at the bank, have it corrected. If there is an unauthorised alteration, consult your auditors. They will be able to guide you.
(5) How often
This depends on the way you use your bank account. If you have many bank transactions (say more than 50 a month), then you should reconcile your accounts each month. Otherwise, a quarterly bank reconciliation may be sufficient. At a minimum, you must reconcile your bank account each year. Sida suggests that you should reconcile your bank accounts periodically and pass correction entries as necessary.
g)
Field Bank Account
Sida does not require or expect that its funds will be deposited in a special or separate bank account. However, Sida is classified as a foreign source under FCRA. You need to deposit and keep Sida funds in the designated1 FCRA bank account. In some cases, NGOs open additional bank accounts in the field because the main FCRA bank account is too far away. Strictly speaking this is not allowed under the FCRA2 and it is possible that FCRA authorities may object to this. Sida suggests that you consult your legal advisers before taking such a step.
1 2
See the section on FCRA Section 6(1)(b), Rule 8(1)(b)
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7. Income Tax1
Updated, based on Finance Act 2002
Some people believe that NGOs are automatically exempt from income-tax. This is not true. You need to apply for income tax exemption. After that you need to follow certain conditions in order to remain exempt. Additionally, there are other requirements which affect an NGOs working. Broadly there are three types of registration. Basic registration means that the NGO will not have to pay income tax2 on its surplus3. This is the most important registration and every NGO should have it. Next comes registration for TDS4. NGOs have to deduct income tax when they make payments to some people. After deducting tax, this is deposited with the Government. Third is the approval for donors. These approvals mean that your donors can will have to pay less income whenever they donate money to you.
a)
Basic registration and exemption
For NGOs involved in development5 work, basic income tax exemption can be of two types. One is under section 10 and the other is under section 11.
(1) Exemption under section 10
Section 10 has many sub-sections. Each sub-section has several clauses. For NGOs, the relevant clause is 10(23C)(v)6. This exemption is not available very easily. You need to apply to the Director General of Income Tax (Exemptions) at Calcutta through your local Income Tax Commissioner. The application is made in form 56. After an inquiry, your application may be approved. Then a notification will be published. The exemption is granted for a maximum period of three years. After that, you need to apply for a renewal. The exemption can also be cancelled in some cases7. Even if your organisations is exempt under 10(23C), you have to file a return just like other NGOs, if the gross total income of the organisation exceeds Rs.50,000. Further, you should also spend a minimum of 85% of your income each year on objects of the organisation.
Only basic information is provided here. Please consult your advisers or a lawyer before taking important decisions. Subject to certain conditions. 3 When income (including grants) is more than the expenditure, you get a surplus. 4 Tax Deduction at Source 5 Income Tax Act uses the word charitable 6 Pronounced as section ten [pause] twenty three see. If you want to be perfect, add clause five after you say this. If the NGO is of national or regional importance, then you can apply under clause (iv) 7 11th proviso to section 10(23C)
2
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(2)
Exemption under section 11
It is easier to obtain exemption under section 111. For this, you have to apply for registration to your local Income Tax Commissioner. For this you use form 10A. Ideally you should make this application within one year of formation2. If for some reason you have not been able to do this, then the Commissioner may overlook this. For this you should submit a separate application3 asking that the delay may be forgiven. Under the revised procedure, the Commissioner has to decide on your application within six months. For this, you may need to provide more information or attend a personal hearing. The Commissioner now also has the power to refuse registration4.
b)
Permanent Account Number
In recent years, the Income Tax Department has been doing some serious revamping of the Permanent Account Number system. As a result, now almost everyone has to apply for a Permanent Account Number (PAN). Quoting this number will gradually become essential for almost all the important transactions. However, you will still be able to purchase milk at the nearby dairy without providing your PAN! Your NGO also need to apply for a PAN. Form number 49A for this will be available with your auditors or the local Income Tax office just ask for PAN application form. Fill up the form in duplicate and file it with the Income Tax office. One copy will be returned to you. In some areas, separate offices have been designated for this. You will get an acknowledgement, which you should preserve carefully. In due course of time, you will get a laminated card showing your PAN. PAN cards for individuals also carry their photographs. Note this number down in your diary so that you can provide it when asked. In some cases, PAN takes a long time to arrive. Till the time you get the PAN, you can quote your General Index Register Number (GIR number). This number is given on your assessment order. Finally, a person who has neither a PAN nor a GIR number, can make a declaration to this effect in Form 605 and complete their transaction.
c)
Special conditions
Under the Income Tax, there are some special conditions. If you do not follow these, you may have to pay income tax or penalty. In some case, imprisonment is also possible.
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This is sometimes also called 12A registration Creation of Society or Trust 3 Format in section on forms 4 Section 12AA 5 Form 61 for people having agricultural income Color Key
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(1)
Large loans or expenses in cash
Under Income Tax Act1, loans above Rs.20,000 have to be taken or repaid by crossed account payee cheque or draft. What does the limit of Rs.20,000 mean? Obviously, any loan bigger than Rs.20,000 is covered. But the ban also applies when the amount due to one person adds up to more than Rs.20,000. This legal position will be clearer from the examples below:
Account of Sri Ajay Choudhury Date Particulars CBF Debit Credit Dr/Cr Balance No violation of Income Tax Act
4.4.98 15.5.98 29.6.98 14.7.98
Loan taken in cash Loan taken in cash Cash repaid Loan taken 8,000
10,000 7,000
Cr. Cr. Cr.
10,000 17,000 9,000 19,000
10,000
Cr.
Account of Sri Venkat Date Particulars CBF Debit Credit Dr/Cr Balance
5.4.98 10.5.98 25.6.98
Loan taken in cash Loan taken in cash Cash repaid 8,000
10,000 10,000
Cr. Cr. Cr.
10,000 20,000 12,000

Violation of Income Tax Act on 10th May 98
Account of Mrs. Kalyani Devi Date Particulars CBF Debit Credit Dr/Cr Balance
Act violated
4.4.98
Loan taken in cash
20,000
Cr.
20,000
Under the Income Tax Act, you should also not make any payment (for expenses or assets2) above Rs.20,000 in cash3. If you do, then 20% of the amount will be added back to your income. There are some exceptions to this4. These include payments to farmers for farm products and to cottage industries. If you make a payment to a person who lives in a place without a bank, then you can make it in cash. Sometimes, business persons are advised to split up large payments so that each payment is below Rs.20,000. This is not a good idea for NGOs, who are more responsible and accountable socially.
1 2
Section 269SS Remember that NGOs get 100% deduction for assets. 3 Section 40A(3) 4 Rule 6DD Color Key
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(2)
Investments and bank accounts
You are expected to keep the funds of the NGO in bank accounts or in specified investments1. These are listed2 below:
Government Savings Certificates (including Indira Vikas Patra and Kisan Vikas Patra) Post Office Savings Bank Accounts 3 Accounts (whether fixed or savings) with any Scheduled Bank or any co-operative bank Central or State Government Securities Units of Unit Trust of India Shares or Deposit with any Public Sector company Land, buildings or other immovable property 4 Deposits or Bonds of approved Industrial Financing Corporations Deposits or bonds of approved Housing Loan companies Deposits etc. with IDBI other prescribed investments (units of Mutual Funds; deposit to Public Account of India) However, local laws (such as Bombay Public Trust Act in Maharashtra and Gujarat) may specify other investments. You will need to work out a common list of permitted investments for your state before investing. Also this list may change from time to time. Ask your auditors before investing.
(3) Separate account books for Income Generation
Do you have any income generating activities? These may be of two types: one, where you help the villagers take up some economic activity; and two, where you yourself run these. In the first case, the income will not come to you. No entries will be made in your account book. In the second case, you will receive some income. This may be from sale of books, honey, handloom products, medicines or from running training programs. The activity must be regular and structured: selling old books once in a while is not Income Generation activity for Income Tax purpose. But if you print books and sell these regularly for a price, it becomes a business activity. Such activity is allowed under Income Tax act. If the profits from this are ploughed into charitable activities then there is no tax on this. However, you need to keep a separate cash book and ledger for these activities (as given in second case). If you dont do this, you may lose your exemption under section 11.
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Section 11(5) NGOs exempt under section 10(23C) are allowed some additional forms of investment 3 Almost all large banks are scheduled banks. In case of doubt, ask the concerned bank. 4 For section 36(I)(viii) Color Key
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(4)
Transactions with key persons
Income Tax people keep a close eye on payments to people who may be in a position to control the NGO. We need to understand two things: 1. Who may be a key person. 2. What transactions are covered.
(a) Who is a key person
According to the Act, following persons1 are treated as key persons: Author of the Trust: the person who set up the Trust initially; also known as settler 1. Founder(s) of the society: The persons who signed the Memorandum of the Society are normally known as founders. 2. Key Donors: Any person whose cumulative2 contribution to the trust or society exceeds Rs.50,000. 3. Trustees, Managers: This includes Chief Functionary, Executive Director, Director, Secretary, office bearers. 4. Close relatives: Any relative of any of the above three categories. Relative means3:
! ! ! !
Spouse (husband / wife) Brother or sister, their children (nephew / niece) Brother-in-law or sister-in-law, their children Any lineal ascendant (parents, grand-parents) or descendants (children, grand-children) this includes step-children and parents-in-law.
5. Associated Concerns: Any company, business, or firm in which any of the above four categories have a substantial interest. Substantial interest means that they should be holding 20% shares or they should be entitled to 20% profits of the business.
(b) What type of payments are covered
These payments are listed in section 13(2). The section does not prohibit payments as such it comes into play when these payments may be unreasonably high: Type of payment Money or property of NGO is lent to key person Yardstick
!
Whether sufficient security has been taken Whether enough interest is being
1 2
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Type of payment
Yardstick charged
!
Salary or allowances paid to key person by NGO Services of NGO provided to key person
Whether these are reasonable1 or high
Whether charged
enough
remuneration
was
Purchase of property (or shares / investments) from key person Sale of property (or shares / investments) to key person Income or property of NGO diverted to key person
Whether amount paid was too high
Whether amount charged was too low
Does not apply where the total value of property / income is One thousand rupees or less
As you can see from the above, the restrictions under these clauses are very complex and open to dispute. It would be best to avoid such payments, except where clearly necessary or justifiable (such as salary).
(c) Use of assets
Similar restrictions apply on use of NGOs assets by key persons. Following cases are mentioned in section 13(2): Nature of use Yardstick
Land, building or other property of NGO Whether enough rent or compensation was used by key person charged Funds of the NGO are invested in key Upto 5% of capital of key persons concern persons concern (business or company) can be invested2
d)
Filing of Income Tax Return
All3 NGOs have to file Income Tax return annually. This return should be filed in form IIIA. Form IIIA is available in the Income Tax Office or with stationery shops which sell government forms. Your CAs will also have this. The form is also included in any compilation of Income Tax Rules. You can also download it from the internet (http://incometaxdelhi.nic.in). Remember, you can start filing your return even if you have just applied for registration under Income Tax Act. Do not wait for grant of registration just say applied for at the relevant place in form IIIA.
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Reasonable is not defined. Salary in an alternative job can be a bench-mark. But even this may attract disqualification under section 13(1)(d) 3 See next page for more on this. Color Key
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The following information is given for general awareness. It is strongly recommended that you consult your CAs or an Income Tax practitioner for filing the return.
(1) Last date and audit
NGOs filing Income Tax return are divided into two categories: small NGOs and other NGOs. What is a small NGO? This depends on its Gross Total Income. If this is less than Rs.50,000, then the NGO is small. This income should be calculated under the Income Tax Act, without deducting exemptions under section 10, section 11 or section 12! Sounds too complicated? For practical purposes, most NGOs getting grants from Government or any Agency are not likely to fall under income tax definition of small NGO.
(a) Small NGOs
These are not required to file an income tax return. They also do not have to get their accounts audited.
(b) Other NGOs
Last date for filing return in form IIIA is 31st October. This means that for financial year 1-Apr-98 to 31-Mar-99, the last date will be 31-Oct-99. Audit report in form 10B should be attached to the return.
Audit Report (Form 10-B) Balance Sheet Income and Expenditure Account Receipts and Payments Account Resolution for Accumulation Application for Accumulation for five years (Form 10) Application for carryforward to next year Exemption letter under 10(23C) (copy) or Registration Certificate under 12A (copy) Income Tax Return (Form III-A)
The complete return should be filed with the Income Tax Department. They will give you a stamped acknowledgement for this. Before filing the return, check that you have attached the documents shown in the picture on the left. If you have left out any document, make sure that it was not required. It is possible, that the complete Income Tax return may look like the picture on the left.
A complete set of Income Tax Return
e)
TDS
Tax-evasion is a common problem across the world. Most people who should be paying taxes are not known to the Tax authorities. TDS is a mechanism to control this it uses existing taxpayers to catch other potential tax payers. How does this system work? Let us say you are an existing tax-payer running a business or an organisation. You pay your taxes regularly. There are many people who work for your business or organisation. This includes employees, lawyers, accountants, contractors, consultants etc. Some of these may not be registered with Income Tax Department. Even if they are registered, the Income Tax people think they may conceal the income (that they received from you). To prevent this, the Department makes you responsible for collecting tax from. Effectively, you become a small little extension of the Department itself. Once this
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happens, you have to deduct tax at source from certain payments made to such people. After deducting these, you have to deposit the tax these with the Government. But before we make you an Income Tax Officer, you need to get registration for this. Such registration is compulsory, if you make any payments from which tax should be deducted (for example, if you pay fees exceeding Rs.20,000 to a consultant or professional).
(1) TDS Registration
For TDS registration1 apply in form 49B. This application should be made within 30 days of the time you deduct tax at source. Attach a xerox copy of the TDS challan with your application. You should file this application in the Income Tax office check with the PRO2 for correct room number / jurisdiction.
(2)
Deducting Tax at source
Whenever you make a TDSable payment3, you have to deduct and deposit tax. Deduction means that you pay less money to the receiver. For example, if your auditors have sent you a fee bill for Rs.40,000, you should pay them 94.75% of this amount (Rs.37,900). How do we get the figure of 94.75%? The TDS rate for payments under section 194J is 5%. The current surcharge is 5%. Surcharge is calculated on the amount of tax. So the total TDS and surcharge comes to 5.25%. The balance 94.75% only should be paid. The rates of TDS and surcharge keep changing your auditors will be able to guide you on this.
(3) Depositing the TDS
Deposit the balance Rs.2,100 with the Government within seven days4. This is done using a challan (ITNS 271). This has three parts. Take the filled up challan along with the cheque to a local bank which accepts Government payments5. The cheque6 should be made out as Name of the bank7 a/c Govt. Dues Income Tax. Some banks prefer a different way of doing this and you should check with them. When you deposit the challan, the bank will give you a paper token (or a pay-in-slip counterfoil). Two or three days later, you can return to the bank and collect two parts of
Section 203A Public Relations Officer 3 The proper phrase is payment liable to deduction of tax at source 4 The time limit varies from case to case. A seven-day rule is simple and easy to follow. 5 In most cities, SBI will accept such payments. 6 Making the payment by cheque is preferable if you lose the challan by mistake, you can get a bank certificate. 7 Where the cheque is being deposited. For example, if you are depositing this in SBI, you can say SBI a/c Govt. Dues Income Tax
2
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the challan one part is retained by the bank. Your copies of the challan will carry the banks stamp as well. Of the two parts you get, one will eventually be filed with your TDS return and the other will be retained on your own files.
(4) Issuing TDS certificates
Whenever you deduct tax at source, you have to issue a TDS certificate to the employee, contractor, consultant etc. This certificate is used by them to claim a refund or credit of tax. For employees, this certificate is issued in form 16. This can be purchased from the market or typed on plain paper or your letterhead. It is issued once each year, within one month of closing. For example, for financial year ending on 31st March 1999, you will have to issue this certificate by 30th April. For others, the certificate is issued in form 16A. This can be issued separately for each payment, within one month1 of payment. If you are making regular payments to a consultant or contractor, you can issue one consolidated certificate (in form 16A) at the end of the year. This will save you the trouble of issuing certificates again and again. For this, the concerned consultant should simply make a request to you. Time limit for issuing this certificate is one month from the end of the year.
(5) Filing TDS returns
You need to file a separate return at the end of the year for each category of payment. There are different forms for this and different dates. Payment Salary (sec. 192) TDS required if Return Form Last date 31st May 30th June 30th June 30th June
Salary exceeds taxable Form 24 limit after deductions
Payment to contractors The contract value Form 26C (sec. 194C) exceeds Rs.20,000 Rent (sec. 194-I) Rent exceeds Rs.120,000 Form 26J in the financial year (sec. Fees paid during the Form 26K financial year exceed Rs.20,000
Professional 194J)
fees
Rule 31(3). This is a complicated rule. One month interpretation is safest. In case of year-end credits, time-limit is two months. Color Key
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f)
Approval for donations
If you want to raise money from public or friends, people may ask you whether they will get a tax-deduction. If you are not approved under section 80-G or section 35AC, your answer should be no. Remember, registration under section 12 makes you (NGO) exempt from tax it does not give any advantage to the donors. If you want to offer tax advantage to your donors, you should get approval under section 80G or under 35AC
(1) 50% under section 80G
For this approval you have to apply in form 10G to the local1 Income Tax Office. Normally this approval is granted for 2-3 years at a time but can be renewed. This is a general approval and you can raise money for money for any charitable purpose. The donors get a deduction of 50% from their taxable income. Note this carefully: they get a deduction of 50% from their income, not from their income tax. Most people find this confusing so lets look at an example: Ms. Anju gives a donation of Rs.1,000 to Lok Jagran Manch under section 80G. Anjus total taxable income for 98-992 is Rs.100,000. Tax on this comes to Rs.9,000. Because she has given this donation, her income will be reduced to Rs.99,500. The tax on this will be Rs.8,900. So her tax saving is only Rs.100. She will be able to claim this deduction only if you give her a receipt. The receipt should show the 80-G approval number also. Try to get the donation by cheque this will help her prove the donation to her Income Tax officer.
(2) 100% under section 35AC
If you get approval under section 35AC, Anju can save a little more money. The same donation of Rs.1,000 under 35AC will allow her to claim a deduction of Rs.1,000 from her income. Her net income will be Rs.99,000. Tax on this will be Rs.8,800. So she will save Rs.200. Approval under 35AC is centralised at Delhi3. You have to fill up a separate application form (see form on page 80). The approval is given for a specific project and carries a limit on how much funds you can raise. Approval is now available for corpus based projects as well. Remember that the Ministry will not give you any funds only approval to raise tax-deductible donations. The approval is usually for 2-3 years but can be extended. You have to give each donor a certificate in form 58-A without this form, the donor can not claim deduction. You also have to file periodic progress reports with the National Committee.
Confirm jurisdiction with your CAs or tax advisers. Financial year 3 Apply to The Secretary, National Committee for Promotion of Social and Economic Welfare, Department of Revenue, Ministry of Finance, Room No.149, North Block, New Delhi-110 001
2
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8. FCRA Compliance
FCRA stands for Foreign Contribution (Regulation) Act. Passed in 1976 to monitor the flow of foreign funds to India, its provisions are unclear to most people. This makes it mystical and fearsome for most. It is estimated that around 23,000 NGOs1 are registered under FCRA. No all of these receive foreign funds. In 96-97, about 12,000 NGOs reported that they had received about Rs. 2,600 crores. Implementation of the FCRA is with Ministry of Home Affairs. It has only one central office but operates in close co-ordination with State Intelligence Bureau. Its office is located near Khan Market in central Delhi. There are limited visiting hours and you need to make a visitors pass to go in. However, you can do most of your work through correspondence. The postal address is: The Secretary, Govt. of India, Ministry of Home Affairs, (Internal Security Wing FCRA), 9th Floor, Lok Nayak Bhawan, Near Khan Market, New Delhi Phone (Reception): 4697018 When economic liberalisation started, FERA2 provisions were gradually relaxed. This led to an expectation among NGOs that FCRA will also be scrapped or relaxed. This is very unlikely. The reason is that FERA is an economic legislation, whereas FCRA is designed for internal security. This is also the reason why FCRA implementation can not be transferred to Ministry of Finance.
a)
Overview of FCRA
FCRA covers both NGOs as also public servants and political parties. While the provisions of the Act appear to be very simple, these are incredibly tight. There are three key phrases relevant to NGOs: Foreign Source includes all foreigners and organisations which are controlled by foreigners. A company registered in India, but controlled by foreign shareholders3, will be a foreign source. A foreigner who has settled down in India, but does not have an Indian passport, will be a foreign source. Foreign source does not include Indian citizens living or working abroad. It also does not include UNO, its agencies, World Bank and IMF. Apart from this some other organisations have also been notified by the Government as exempt from this definition4.
1 2 3 4
Including branch offices of funding agencies Foreign Exchange Regulation Act, 1973 More than 50% shares are held by foreigners AccountAid Kit nos. 40 and 41 provide a listing of foreign and non-foreign sources.
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Foreign Contribution means any article, funds or shares received from a foreign source. Free contribution of services is not included in the definition. Association means practically any organisation, whether registered or not, whether a society or not, which has an office in India. The definition is wide enough to include companies, business-houses, firms, clubs and even Mahila Mandals. The Act then creates a sub-category of Associations. These are Associations which have a definite cultural, economic, educational, religious or social program. In practical terms, this means that all NGOs are covered. For this sub-category, there is a restriction. They can not receive foreign contribution without registration under FCRA. If they are not registered, they should get priorpermission for each grant of foreign contribution.
b)
Registration or Prior Permission
For getting registration under FCRA, you have to apply in form FC-8 to the FCRA office. Form FC-8 was revised in December 96 and on 5th January 99. It has been revised again on 24th January 2000. Normally, NGOs who have been formed recently are not granted registration for at least three years. If you can not get registration, you can apply for prior permission using form FC-1A. This application is usually processed within 90 or 120 days. Form FC-1A was revised on 5th January 99 and has been revised again on 24th January 2000. The Act prescribes severe penalties, including jail, for violation of FCRA provisions. Some orders of the FCRA office can be appealed in the High Court or sessions court.
c)
Scholarship
If an individual receives more than Rs.36,000 in a year as scholarship or stipend etc. from a foreign source, then they have to give intimation to the FCRA office within 30 days of receipt. Form FC-5 is to be used for this.
d)
Separate Bank Account
Before you apply for FCRA registration, you have to open a separate bank account. For opening the account, you can deposit a small amount from local funds. Do not use this account till you get FCRA registration. Once you are registered, you will have to use this exclusively for foreign contribution. You can not change this bank account unless the FCRA office gives you specific permission for change. If you have receive funds through prior-permission, these should also be deposited in a separate bank account. The number of this account is to be given in form FC-1A when applying for permission.
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e)
Separate Books of Account
If you receive foreign funds, you have to maintain a separate set of books (cash book and ledgers) exclusively for such funds. Many funding agencies ask for separate accounts this usually means separate ledger accounts. This does not mean you can open up separate FCRA cash book for each agency. The FCRA inspectors usually object if you have more than one cash book for FCRA. If your FCRA project involves local contribution element, do not bring the local contribution into FCRA accounts take this to your Indian cash book.
f)
Maintaining FC-6
If you also receive foreign contribution in kind (materials etc.), you will have to maintain a kind of stock register (FC-6) for this. The format for this stock register is given in form FC-6. This register should be maintained in your office and need not be sent to FCRA office. A summary of this register is incorporated each year in the form FC-3. This serves as a report to the FCRA.
g)
Filing FC-3
Once you are registered under FCRA, you have to file an annual return. The return contain information on how much funds and material you received from foreign sources during the period 1st April to 31st March next. This has to reach the FCRA office by 31st July each year. You have to file this form even if you did not receive any foreign contribution in the year. NGOs which receive foreign funds or material under prior permission also have to file this form. They have to keep filing this form till all the funds received have been fully utilised. Along with form FC-3, you have to file audited Balance Sheet and a Receipts & Payments Account. These should relate to FCRA funds only. Do not include Indian funds in this. Income & Expenditure account is not required. Form FC-3 also includes an audit report by your auditors. This part should be filled and signed by them when they complete the audit. Send the completed form along with the audited accounts to the FCRA office by registered post. Attach an A/D1 card so you can get proof of delivery. Send the form well in advance so it will be delivered by 31st July. If you are unable to file the form by 31st July for any reason beyond your control, write a letter to FCRA office explaining the problem. Give the date when you think you will be able to send in the form. While there is no provision for extension of date, usually the Department does not take action against the NGO if there is a genuine reason for delay.
Acknowledgement Due
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h)
Transfers to non-FC organisations

Do not transfer FCRA funds under any circumstances to an NGO which does not have FCRA registration or prior permission. If the FCRA office finds out, you may lose your own FCRA registration and face other penalties.
Remember that it is illegal to use arrangements like legal project holder, cash transfers, shadow-lending, network funding etc. if the receiver does not have FCRA registration or prior permission. Also remember that FCRA investigation is not limited to account books they can go the field and make inquiries. They also have access to information with local intelligence officials.
i)
Bank Interest
Interest which you earn on FCRA bank account is treated as foreign contribution. This should be retained in your FCRA bank account and reported in FC-3. Similar rules apply to any interest earned on short-term deposits or investments created out of FCRA funds. Sida [sa2]requires that any interest earned on Sida funds should form part of Sida project funds and used accordingly.
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9. Reporting to Sida
In this section, we have broadly covered the financial reports usually required by Sida. There are two specific reports: Budget & Balance Report and Utilisation Certificate. Sida also requires copies of two other reports which you prepare in the normal course: consolidated audited accounts and FC-3. In some cases, additional reports may be needed. These would be included in your agreement.
a)
Budget & Balance Report
The Budget & Balance Report compares the actual expenses incurred with the sanctioned budget. It also helps Sida in disbursing the next instalment. This report can be prepared by your accounts person. No audit is required for the Budget & Balance Report.
(1) Format
The Budget & Balance Report is required for all Sida grants. It has three main sections: 1. a budget comparison of expenses; 2. Status of the Revolving fund1; 3. Unutilised Balance. Additionally, there is a memorandum section on fixed assets. The actual format is given on page 67. The structure of the report is explained here.
Give the organizations name and location here. For example: Lok Jagran Manch, Machera.
Budget & Balance Report

Budget & Balance Report by ___________________________________ for Sida Funds For period from _________ to ________ Project Name: _______________________
Reporting period
Agreement Reference & Date ___________ Project Area: _________________

Give date and reference number of Sida agreement.
If you are operating a Revolving Fund
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Expenditure will include purchase of fixed assets. Do not include Loan Revolving fund here.
Give figures of the total budget. If it has been revised or extended, give the revised figures. This budget may be for 2-3 years.
These figures are for the reporting period shown above. This may be six months or one year.
These figures will be from beginning till end of current reporting period.
A: Expenditure (All amounts in Indian Rupees)

Budget Line Item
Look at the original budget. Each figure in the amount column represents one line item. You will need to add more lines: one for each line item.
Total For this reporting period Cumulative Sanctioned Budget Actual Variance Budget Actual Budget Spent Spent
Deduct the Actual Spent from the Budget. If the figure is negative, put a minus (-) sign.
Grand Total
Note: Reasons for variances exceeding 10% of the budgeted items are attached on a separate sheet.
You should fill up this section only if you have a Sida funded Revolving Loan Fund. Otherwise, simply say: Not applicable
This section shows the total Sida Revolving Fund Grant received so far. This is the money available for giving loans.
Give here the total balance of RF grant brought forward. Do not deduct loans given out from this amount.
B. Revolving Fund Status 1. Revolving Fund Available Previous Revolving Fund Grant from Sida Add: Revolving Fund Grant received during this period Less: Adjustments (bad debts etc. please specify) during this period
If your RF is depleted for any reason such as bad debts, show these adjustments here.
Amount
Total Sida Revolving Fund (RF)
Additional RF grant received in this reporting period. This figure will match the figure of transfer in C.1.
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Date (beginning of this reporting period)
These include loans given from recovered money.
If you are not charging anything for the loans, then say not applicable. Debited means what is chargeable.
This figure is the same as closing loan balance of last report.
2. Status of Revolving Fund Utilisation (in case of loans) Opening balance of loans recoverable from beneficiaries / groups as on ________ Add: Loans given out during this period Add: Interest / service charges (if applicable) debited to beneficiaries / groups during this period Sub Total Less: Recoveries made during this period from beneficiaries / groups Towards principal of the loan Towards interest / service charges
Principal means the main loan itself. Every time you recover some principal, the outstanding loan reduces.
Total Recoveries from beneficiaries / groups during this period Less: Adjustments (bad debts etc. please specify) during this period
This shows how much percent of the money is with the beneficiaries. In offseason, this percentage may be lower than normal.
Closing Balance of Beneficiary / group loans (CBL) Percentage of Revolving Fund deployed [(CBL / RF)x100]
If you are reporting on st 31 March, this figure will appear on your FCRA Balance Sheet as asset. You will also need to make this st list for FCRA as on 31 March.
Note: List of loans outstanding from beneficiaries / groups should be given as an Annexure once annually. Please include the following columns in your listing: Beneficiarys name Name of spouse / Village parent Details of the original loan purpose Month, when given year Original amount Balance amount after reducing recovery of principal. Balance outstanding
Brief purpose of the loan: such as goatery unit, shop etc.
Total amount given to a person initially.
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This section shows how much unspent balance remains. The unspent balance does not include Revolving Fund balance.
Show how much has been disbursed against this agreement right from day 1. This will include amounts disbursed against this agreement in earlier years.
This shows how much funds have been sanctioned. If agreement is revised, show the revised amount.
C: Unutilised Balance of Sida Funds (amounts in Rupees) 1. Agreement and Disbursal Total amount sanctioned so far Total amount disbursed so far
This was the balance remaining with you on first day of current reporting period. If this is the first report, say 0.
2. Unutilised balance Opening balance of unutilised Sida funds Add: Total grant received during this period
Show only the amount received from Sida during the current reporting period.
Total funds available

Some of the grant you received in this period may be for a Revolving Loan Fund. If yes, show that amount here.
Less: Amount transferred to Revolving Fund (B.1), if any during this period Less: Amount spent during this period (Grand Total of A)
Show the total spent in current period here. Do not include any amount disbursed as loans from Revolving Loan Fund.
Closing balance of Sida grant Funds
This is just a listing of all assets you have acquired with Sida funds so far. Please include assets acquired from earlier Sida grants also.
d. Fixed Assets acquired with Sida funds

Asset When acquired Location Being used for (purpose) Amount (Rs.)
Description. For example: Sumo Jeep Number DL3C-1975 or Training Centre
Month and year only
Where the asset is being used
This should be brief but specific. Please dont simply say Project purpose. For example, a tractor may be used for farming.
Amount paid originally for the asset.
Date
(Accountant)
(Project Incharge)
(NGO Chief)
Stamp and signatures are needed for authentication.
Note: Please sign and stamp other pages of this report as well.
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(2)
How to prepare
Each report is for a particular period. This is called the current reporting period. This may be a year or less. Most of the information required is for the current reporting period. At some places, information for the entire grant period is requested. Opening balances mean the balance on the first day of the current reporting period. For example, if the current reporting period is from 1st July 1997 to 30th June 1998, then opening balances would mean balances on 1st July 1997. Closing balances would mean balances on 30th June 1998. For preparing the report, you need the earlier periods report as well. Pick up the opening balances from that report. Figures for the current reporting period will be available from the trial balance or the ledger. Some figures may be in your loan registers. Details of fixed assets will be in the Fixed Assets Register. Other sections of the report have been explained in the charts earlier.
(3) Variances
Sida recognises that a budget is a forecast. It can not be accurate. Variances in particular budget heads are, therefore, natural. These variances can help us understand whether there were budgeting errors or ground realities (prices, operations) changed. Variances up to 10% under any head are quite normal. No special reason is needed for these. However, you need to analyse the reasons for variances more than 10% of budgeted amount. Give these reasons as an Annexure to the Budget & Balance Report.
(4) How often
The Budget & Balance Report should be prepared according to the terms of your agreement. If the agreement does not specify this, then prepare the report at least once a year. In case of new projects, the period of one year is calculated from the date of release of first instalment. In some cases, it may be calculated from an earlier date (for example: from the date of agreement). Please consult your Sida representative for more information on this.
(5) Due dates
The Budget & Balance Report should reach Sida within one month of the last date of reporting period. This may sound confusing, so let us see an example:
Suppose, Sida has released the first instalment of a grant to you on 10th November 1997. This means that the starting date of the grant would be 1st December 1998. Also suppose that Sida agreement does not specify reporting dates. In this case, the first Budget & Balance Report will be for the period 1st December 1998 till th th 30 November 1999. This report will be due within one month of 30 November. This st means the report should reach Sida office by 31 December 1999.
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Remember that the above is a general guide. Your reporting period would most likely be specified in the agreement. If not, please speak to your Sida program representative.
(6) Delays
As this is not an audited report, it would be possible in most cases, to send the report within one month. In some cases, there may be unavoidable delays in preparing the report. In such a case, you should write to Sida before the due date and give reason for the delay. Also mention the likely date when the report will reach Sida.
b)
Consolidated Accounts
Each year you get your accounts audited by a Chartered Accountant. They may audit several types of Balance Sheets for you. These normally include:
Type 1. Project-wise Accounts 2. FCRA Accounts 3. Indian Accounts 4. Consolidated Accounts Period Depends on the Agency 1st April 31st March 1 April 31 March 1st April 31st March
st st
Purpose Some Agencies use this instead of the Utilisation Certificate FCRA requirement Internal requirement Income Tax requirement / Societies Act
The fourth item (consolidated accounts) shows all income and expenditure, grants, assets, liabilities of the NGO (both Indian and FCRA). This is an essential requirement under the law. This includes three items: a Balance Sheet, an Income & Expenditure Account, and the Receipts & Payments Account. A fourth item is the audit report on these accounts. These accounts often include schedules. All these four things, along with schedules are called Consolidated Accounts. These accounts are an important link in the chain of accountability. A copy of the consolidated accounts (as discussed above) should be sent to Sida by 15th October of each year or earlier. If this audit is not completed for any reason, please inform Sida and also mention the likely date by which the accounts can reach Sida.
c)
Copy of FC-3
Each year you are also required to file form FC-3 with the Ministry of Home Affairs. This form should reach FCRA Department by 31st July. Along with this you also have to file your FCRA Balance Sheet and FCRA Receipts & Payments Account. Sometimes, some of the information in FC-3 is given as Annexures. This is an important control for foreign contribution. A copy of the FC-3 (along with all Annexures, Balance sheet and Receipts & Payments Account) should be sent to Sida office for information. We expect that this form will reach Sida by 10th August or earlier. If you expect a delay, please inform Sida mentioning the likely date when it will reach Sida.
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d)
Audit Certificate
There are various formats for audit reports and certificates. Some of these also use wordings which are not clear. With these factors in mind, a standard format for Utilisation Certificate is being introduced. This is similar to the Budget and Balance Report in structure. The main difference that this is certified by a CA. Format of the audit certificate is given on page 70. Clarifications given for the Budget & Balance Report apply to this certificate also, so far as filling up the same is concerned. The Audit Certificate should be given on the letterhead of the Chartered Accountant (CA) or firm, who do your Societys normal audit. Phone number of the CA should be given, if it is not mentioned on the letterhead. All the pages of the certificate should be stamped and signed by the CA. The audit certificate should be prepared once annually unless otherwise requested by Sida. It is expected that the certificate will be ready within two months from the end of each reporting period. That means that if the reporting period ends on 30th June, the Audit Certificate will be ready by 31st August. Sida requires that the above audit certificate will be sent to Sida for each reporting period, within two months from end of reporting period. If a delay is expected for some reason, Sida will be informed in writing, along with likely date of despatch.
e)
Change of Auditors
It is customary to provide auditors a secure tenure. This helps them do a better job. However, there may be situations when you have to change your auditors for some reason or other. In some cases, you may simply appoint a different auditor than the retiring one. This is an internal decision for which you will naturally follow the procedure laid down in your by-laws. Auditors occupy an important place in the financial monitoring system. Sida requires its partners to inform Sida of any change in auditors, within fifteen days of the change. If reasons for the change are indicated in the letter, it will help Sida understand the situation more clearly.
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10.Special Issues
a) Revolving Funds
Revolving Fund is a very wide term - it includes funds for purchasing raw material, stocks, running an Income Generation Project as also a credit program. Revolving Funds for running Income Generation Projects are also known as Working Capital. In this section we are concerned mainly with Revolving Funds for credit programs. Running a credit-based Revolving Fund is very similar to managing a Bank. In fact Revolving Funds are created by NGOs mainly to overcome the shortcomings of commercial banks. A commercial bank raises money by selling shares or accepting deposits. An NGO raises money for Revolving Funds through grants from Funding Agencies. The bank gives loans mainly to businesses and industry. However, banks generally avoid giving out small loans because they find management costs of such loans too high. An NGO gives loans to people who can not get loans from banks. These people may be women or men working in small business / trades (micro-enterprise) or they may be small farmers or they may wish to take up goat-herding, piggery, poultry etc. on a small scale. The loans given may range from Rs.250 to Rs.10,000 or more. Quite often the loans are given through a small group of 5-30 persons. This helps group formation and improves recovery rate. Some NGOs have extensive paper-work (application forms, photographs, attendance records, pass-books, collection sheets, receipt books, loan agreements), whereas others may simply be satisfied with a thumbimpression on a voucher or a register. In almost all cases, no security is taken. Sometimes these loans are interest-free in other cases, flat interest (10% of the loan) or annual interest (10-25% per annum) may be charged. The interest helps pay operating costs and protects the Revolving Fund from inflation. This kind of micro-credit programs have proved highly successful, much to the surprise of traditional bankers.
(1) Accounting and Control
Classic accounting wisdom holds that recoverable loans should be treated as an asset. All banks follow this practice (though sometimes one wishes they wouldnt!). It is on this basis that FCRA department is insisting on revision of FC-3 wherever NGOs have written off recoverable loans as Program Expenditure (see FCRA Treatment on page 63). Keep in mind that FCRA Revolving Funds should always be accounted in FCRA Cash Book and Ledgers. When you treat the loans as an asset, the following issues come up:
(a) Individual loans:
You need to keep track of each loan separately. However, you can not open hundreds of loan accounts in the main ledgers. A sub-ledger is normally kept for individual accounts of the beneficiaries. In the main ledger, only total entries for each day may be recorded - the details are
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recorded in each individuals account. The main ledger and the sub-ledger are periodically tallied (reconciled). This system is similar to how your bank maintains your organisations account in a sub-ledger.
(b) Pass Books:
Individual beneficiaries are issued loan pass-books. The loans given and the instalments collected are entered in these pass-books. It is a good idea to have a photograph of the beneficiary pasted on the pass-book. Also if the pass book is printed bi-lingually (English and local language), it will help both your auditors as also the beneficiaries. If possible, try to cross-check the pass-books periodically with your sub-ledger accounts.
(c) Loan Documentation:
You need to have enough details in your office to locate and identify the beneficiaries. This may mean that apart from the address and parents / spouses name, you also keep a photograph of the beneficiary on the files. Getting a photograph may be easier than it sounds - you can use your own camera and photograph1 two persons at a time, standing side-by-side. People are often known by aliases (pet-names) - keep a note of these also. A loan agreement on stamp paper is often useless in development work. However use it if you find it relevant as a psychological tool. In such a case, have the standard agreement reviewed by a lawyer or your auditors. If you dont want to get into the stamp paper routine, try plain paper instead. The agreement remains effective whether it is on stamp-paper or not2. You will need to keep proof of payment. This can be on a voucher or on a plain paper. Use a revenue stamp if the loan amount exceeds Rs.500. If the beneficiary is going to use their thumb, make sure it is the left thumb. Thumb impressions should normally be witnessed by one or two villagers whose names and addresses should be noted on the receipt / voucher. Some NGOs also ask for a guarantor.
(d) Recoveries:
If you want to keep your auditors happy, deposit the recoveries in the bank account first. In the long run, this will strengthen your internal controls and you are less likely to lose money through fraud. Remember that you need to issue individual receipts. These should be pre-numbered the numbering should be done by the printing press. These should also have a carbon copy. The unused receipt books should be kept under lock and key. Avoid using receipts which have a tear-off counterfoil. Bi-lingual receipts are better than English or local language receipts.
(e) Internal Reporting:
You need to generate regular reports to monitor how the credit program is progressing. These reports can show you how the recovery is progressing around different areas and how the funds recovered are being given out again. This will help you identify weaknesses in group-formation as also potential problems. The key to managing a Revolving Fund is keeping the maximum amount of money out on loans at any given point of time. At the same time, you need to ensure that the money rotates from hand-to1 2
You may wish to exercise your discretion, keeping village customs in mind. When you want to file a case, you have to pay additional court fees if stamp paper was not used.
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hand reasonably fast. This will help you spread the benefit of your revolving fund.
(2) FCRA requirements
If your Revolving Fund has been created out of Foreign Contribution, then you should keep the following in mind:
(a)
!
When the loans are given out:
When the loans are given out to the people, these should be shown on the Payment side of the FCRA Receipts & Payments Account. The loans given out should not be shown as an expenditure in the Income & Expenditure Account. Whatever amount is given out as loans during the year should be shown as utilisation in FC-3. The loans given to beneficiaries are recoverable and therefore an asset for your organisations. These should be shown as assets in the FCRA Balance Sheet. In order to tally the Balance Sheet, a Revolving Fund Account should be created on the Liabilities side of the Balance Sheet. This account would show the original amount of grant received for the Revolving Fund.
(b) When the loans are recovered:
! ! !
Deposit these, if desired, in a separate bank account in the name of your organisation. Remember however that according to FCRA rules, this money should be redeposited in the FCRA bank account only. Depositing the recoveries in the bank account helps improve accounting control and makes reconciliation easier. Show these as receipt in the Receipts & Payments Account. Show these as receipt in FC-3. Show the total recovery in the Balance Sheet on the Assets side.
(c) When the loans are given out again:
! ! !
Show these on the Payment side of the FCRA Receipts & Payments Account. Do not show these as an expenditure in the Income & Expenditure Account. Whatever amount is given out again as loans during the year should be shown as utilisation in FC-3. Show these loans on the Assets side of the FCRA Balance Sheet.
On no account should these funds be transferred to Indian section of the Balance Sheet. Any loans that become irrecoverable during the year can be written off by reducing the Revolving Fund in the Balance Sheet as shown below. This Balance Sheet shows only Revolving Fund related transactions. In the actual Balance Sheet, other normal items (fixed assets, cash balances, Trust fund etc.) would also appear:
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Issued: May 1999
Balance Sheet of Lok Jagran Manch as at 31 March 1998 Liabilities Sida Revolving Fund: Opening Balance Add: Interest earned on loans Add: Grant received this year Less: Loans written off Closing Balance 450,000 20,250 50,000 520,250 -4,850 515,400 Interest recoverable on loans Bank Balance Total 515,400 Total Opening Balance Add: Loans given this year Less: Loans recovered Less: Loans written off Assets Beneficiary Loans (Sida): 428,300 260,800 -186,700 -4,850 497,550 5,250 12,600 515,400
st
(3)
Sida requirements:
Sida requires that partners will set up suitable accounting and control mechanism for Revolving Loan Funds provided by Sida. For this purpose, the above discussion may be useful. The Fund itself will be disclosed as Sida Revolving Fund on the liabilities side of the Balance Sheet. The loans given from this fund will be disclosed as shown above on the assets side.
b)
Transfers to General Fund
Situations arise when partners debit an expense head in Sida accounts, in the FCRA books. A credit for these is taken into the General Fund. This may be done through a journal voucher or by using payment and receipt vouchers. This results in transfer of funds from FCRA cash book to Indian. This type of transaction is seen often in case of boarding and lodging expenses for residential training programs, camps, vehicle mileage, purchase of assets etc. Apparently, such a transfer is in violation of FCRA requirements. Partners need to assess the need for such transfers keeping this in mind. If you are advised that this is acceptable under FCRA, please read further. If such a transfer is made1 at all, Sida requires that there will be good quality accounting evidence to back up the transaction. A simple allocation of Sida funds on the basis of an internal debit note may not be sufficient unless there is other evidence to support it. It is also expected that no margins will be added to such recoveries, which would be realistic and based on actual specific facts. As this remains an internal transaction, extra care in documentation is requested.
c)
Reimbursement of expenses
In some situations, Sida provides reimbursement of expenses to partners. This may for a study tour or some other purpose. Reimbursement of expense is an internal accounting
This statement should not be taken to mean that Sida is recommending an FCRA violation.
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Issued: May 1999
mechanism at Sida. Partners should treat these funds as an FCRA grant. This would mean that the reimbursement would be deposited in the FCRA bank account and reported in the FC-3. In the Income & Expenditure Account, partners should disclose this as Reimbursement of expense by Sida on the Income side. Corresponding expenses should be shown separately on the Expenditure side.
d)
Multi-purpose workers
Persons working in more than one project should be identified clearly. This information, including their total salary, should be shared with Sida. Where possible, salaries of such person should be allocated to each project in a fair manner.
e)
Salary payments
Sometimes, salary is booked in the accounts on the basis of budget. The budget is merely a tool for allocating funds. If lower salary is paid, the same must be booked. Actual expense on salary may be lower because some people were on leave and leave salary was deducted. Then again, if a person leaves, their replacement may take place only after a gap. When a project is started, it takes time to add people one by one. In the meanwhile, total salary paid may be lower.
f)
Local Contribution
Local contribution should be budgeted based on ground realities. Only actual contribution, which is marketable1, can be proven and is reasonable2, should be accounted. It would be improper to build up the local contribution figures by using imaginary situations. If false local contribution figures appear on the account books, it would be treated as a serious accounting impropriety. Partners may wish to seriously study the possibility of accounting for local contribution received in kind. Any local contribution, whether cash or in kind, can not be brought into FCRA account books. This should be accounted in the General or Indian books and posted to another sub-ledger maintained for Sida project. Please note that this sub-ledger is different from the FCRA Sida ledger.
g)
Sale of Fixed Assets
Fixed assets acquired from Sida funds should be sold, disposed or transferred with Sidas agreement only. When these are sold, the entire sale proceeds (including any appreciation or profit) will have to be deposited into the FCRA bank account. This will also be disclosed as a receipt in the FC-3. If such assets are transferred to an NGO without any taking any money, then the receiving NGO must either have FCRA registration or prior permission.
1 2
Goods or services which can be sold in the market and have a market price. Rate used for valuing these should be realistic.
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Issued: May 1999
11.Accessories
a) Forms
(1) Budget & Balance Report
1
Budget & Balance Report by ___________________________________ for Sida Funds For period from _________ to ________ Project Name: _______________________ A: Expenditure (All amounts in Indian Rupees)
Budget Line Item 2 Total For this reporting period Cumulative Sanctioned Budget Actual Variance Budget Actual Budget Spent Spent
Agreement Reference & Date ___________ Project Area: _________________
Grand Total
Note: Reasons for variances exceeding 10% of the budgeted items are attached on a separate sheet.
B. Revolving Fund Status
1. Revolving Fund Available Previous Revolving Fund Grant from Sida Add: Revolving Fund Grant received during this period Less: Adjustments (bad debts etc. please specify) during this period Total Sida Revolving Fund (RF)
4
Amount
1 2 3 4
Please see the section on Reporting to Sida for guidelines Please add more lines if required. To be filled only if you are operating a Revolving Loan Fund with Sida grant This amount is transferred from total grant and should tie up with figure in C.1.
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2. Status of Revolving Fund Utilisation (in case of loans) Opening balance of loans recoverable from beneficiaries / groups as on ________ Add: Fresh loan funds given out during this period Add: Interest / service charges (if applicable) debited to beneficiaries / groups during this period Sub Total Less: Recoveries made during this period from beneficiaries / groups Towards principal Towards interest / service charges Total Recoveries from beneficiaries / groups during this period Less: Adjustments (bad debts etc. please specify) during this period Closing Balance of Beneficiary / group loans (CBL) Percentage of Revolving Fund deployed [(CBL / RF)x100]
Note: List of loans outstanding from beneficiaries / groups should be given as an Annexure once annually. Please include the following columns in your listing: Beneficiarys name Name of spouse / Village parent Details of the original loan purpose Month, when given year Original
1
amount outstanding amount
C: Unutilised Balance of Sida Funds (amounts in Rupees) 1. Agreement and Disbursal Total amount sanctioned so far Total amount disbursed so far
2. Unutilised balance Opening balance of unutilised Sida funds Add: Total grant received during this period Total funds available Less: Amount transferred to Revolving Fund (B.1), if any during this period Less: Amount spent during this period (Grand Total of A) Closing balance of Sida grant Funds
Amount of the loan which was given to this person Page 68 of 114
Issued: May 1999
d. Fixed Assets acquired with Sida funds

Asset When acquired Location Being used for (purpose) Amount
Date
(Accountant)
(Project Incharge)
(NGO Chief)
Note: Please sign and stamp other pages of this report as well.
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Issued: May 1999
(2)
Audit Certificate
To, Sida, New Delhi a. We, (name of the Firm) , the Auditors of (name of Society / Trust) have examined the books of Account and other records, including vouchers and supporting documents, of (name of Society / Trust) . We have also carefully examined the agreement / agreement letter containing terms & conditions for support, dated (date of the letter) , signed between Sida and (name of Society / Trust) for the grant of funds covered by this certificate and the budget approved by Sida. We have also studied the essential Sida requirements laid down in the Accounting Manual for Sida supported Projects. We have also obtained such explanations and clarifications from the Secretary/ Chief Functionary as we considered necessary for the purpose of this certificate. b. On the basis of the above examination, we certify that has incurred the following expenditure during the period .
Project Name: _______________________ A: Expenditure (All amounts in Indian Rupees)
Budget Line Item 2 Total For this reporting period Cumulative Sanctioned Budget Actual Variance Budget Actual Budget Spent Spent
(name of Society / Trust) (date) till (date)
Grand Total
B. Revolving Fund Status 1. Revolving Fund Available Previous Revolving Fund Grant from Sida Add: Revolving Fund Grant received during this period Less: Adjustments (bad debts etc. please specify) during this period Total Sida Revolving Fund (RF) 2. Status of Revolving Fund Utilisation (in case of loans) Opening balance of loans recoverable from beneficiaries / groups as on ________ Add: Fresh loan funds given out during this period
3
Amount
1 2 3
See guidelines in the main manual Please add more lines if required. This amount is transferred from total grant and should tie up with figure in C.1. Page 70 of 114
Issued: May 1999
Add: Interest / service charges (if applicable) debited to beneficiaries / groups during this period Sub Total Less: Recoveries made during this period from beneficiaries / groups Towards principal Towards interest / service charges Total Recoveries from beneficiaries / groups during this period Less: Adjustments (bad debts etc. please specify) during this period Closing Balance of Beneficiary / group loans (CBL) Percentage of Revolving Fund deployed [(CBL / RF)x100] C: Unutilised Balance of Sida Funds (amounts in Rupees) 1. Agreement and Disbursal Total amount sanctioned so far Total amount disbursed so far
2. Unutilised balance Opening balance of unutilised Sida funds Add: Total grant received during this period Total funds available Less: Amount transferred to Revolving Fund (B.1), if any during this period Less: Amount spent during this period (Grand Total of A) Closing balance of Sida grant Funds
d. We also certify that the above expenditure has been truly and properly incurred in accordance with the Budget referred to above, except for the following items1: Item Amount (Rs.) Comments
e. We further confirm the following: 1. We have carried out the above examination according to Standard Auditing Practices. 2. We are adequately satisfied about the reliability, authenticity and genuineness of the records and supporting documents produced before us. 3. (name of Society / Trust) has maintained the books of Account properly, in accordance with the law and Generally Accepted Accounting Principles.
Please write Not applicable in the table if there are no such items. Page 71 of 114
Issued: May 1999
4. (name of Society / Trust) has complied with all the essential Sida requirements laid down in the Accounting Manual for Sida supported Projects, except for the following1:
! ! ! !
5. To the best of our knowledge and belief, and according to the examination of accounts carried out by us, (name of Society / Trust) has not received / has received1 other funds for purposes similar to the above grant. Yours faithfully for name of CA Firm Chartered Accountants ( Name of CA ) Membership No. Date: Phone:
Partner / Proprietor
Note: Please put your seal on all pages. Please sign other pages as well.
Please write Not applicable, if all the requirements have been complied with. Page 72 of 114
(3)
Income Tax form 10A
FORM NO. 10 A
[See rule 17A]
Application for registration of charitable or religious trust or institution under section 12A(a) of the Income -tax Act, 1961 To, The Chief Commissioner of Income Tax, ................................. Sir, I, ___________ , on behalf of ___________ hereby apply for the registration of the said trust/institution under section 12A of the Income-tax Act, 1961. The following particulars are furnished herewith: 1. Name of the trust / institution in full [in block letters]: 2. Address: 3. Name(s) and address(es) of author(s)/ founder(s): 4. Date of creation of the trust or establishment of the institution: 5. Name(s) and address(es) of trustee(s) manager(s): I also enclose the following documents: 1. (a) *Original / Certified copy of the instrument under which the trust/institution was created / established, together with a copy thereof. (b) *Original / Certified copy of document evidencing the creation of the trust or the establishment of the institution, together with a copy thereof. (The originals, if enclosed, will be returned). 2. Two copies of the accounts of the *trust / institution for the latest *one / two / three years. I undertake to communicate forthwith any alteration in the terms of the trust, or in the rules governing the institution, made at any time hereafter. Date:........... Signature____________ Designation____________ Address_____________ * Strike out whichever is not applicable.
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(4)
Income Tax form 10G
FORM No. 10G

(See rule 11AA)
Application for grant of approval or continuance thereof to institution or fund under section 80G(5)(vi) of the Income-tax Act, 1961 1. Name of the institution/fund in full (in Block Letters) 2. Address of the registered office of the institution/fund 3. Legal status: [Please specify whether the institution/fund is(i) constituted a public charitable trust; (ii) registered under the Societies Registration Act, 1860 (21 of 1860) or under any law corresponding to that Act in force in any part of India; (iii) registered under section 25 of the Companies Act, 1956 (1 of 1956) (iv) a University established by law; (v) any other educational institution recognised by the Government or by any University established by law or affiliated to any University established by law; (vi) an institution wholly or partly financed by the Government or a local authority; (vii) an institution established with the object of controlling, supervising, regulating or encouraging games or sports and is approved for this purpose under section 10(23), or; (viii) a Regimental Fund or Non-Public Fund established by the armed forces of the Union for the welfare of past or present members of such forces or their dependants.] 4. Objects of the institution/fund and geographical area over which its activities are undertaken:
5. Names and addresses of trustees/office-bearers of the institution or fund:
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6. (i) If registered under section 12A(a) of the Income-tax Act, the registration number and date of registration. (ii) If notified under section 10(23) or under section 10(23c) of the Income-tax Act, the details thereof. (iii) If responses to (i) and (ii) are negative, whether any application for the same has been filed? If yes, enclose a copy of the same. 7. (a) Period of last approval, if any, please enclose a copy of the approval. (b) If any change in the aims and objects and the rules and regulations have been made since the last approval, the details thereof.
8. Assessment Particulars:(a) Ward/Circle where assessed and permanent account number/GIR number (b) Is the income exempt under sections 10(22), 10(22A), 10(23), 10(23AA), 10(23C) or 11? (c) Whether any arrears of taxes are outstanding? If so give reasons. 9. Amount accumulated for the purposes mentioned in item (4) above. 10. ( i) Details of modes in which the funds are invested or deposited, showing the nature, value and income from the investment. (ii) Whether any funds have not been invested in the modes specified in section 11(5)? 11. (i) Is the institution/fund carrying on any business? If yes, give details. (ii) Is the business incidental to the attainment of its objects? 12. Details of nature, quantity and value of contributions (other than cash) and the manner in which such contributions have been utilised.
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13. Details of shares, security or other property purchased by or on behalf of the trust from any interested person as specified in sub-section (3) of section 13.
14. Whether any part of the income or any property of the association was used or applied in a manner which results directly or indirectly in conferring any benefit, amenity or perquisite (whether converted into money or not), on any interested person as specified in sub-section(3) of section 13? If so, details thereof. I certify that the information furnished above is true to the best of my knowledge and belief. I undertake to communicate forthwith any alteration in terms or in the rules governing the institution/fund made at any time hereafter. Place_________ Date__________ Signature_____________ Designation___________ Address______________
Notes: The application form (in triplicate) should be sent to the Commissioner of Income-Tax having jurisdiction over the institution or fund along with the following documents: (i) (ii) (iii) Copy of registration granted under section 12 A or copy of notification issued under section 10(23) or section 10(23C); Notes on activities of institution or fund since its inception or during the last three years, whichever is less; Copies of accounts of the institution or fund since its inception or during the last three years, whichever is less.
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(5)
Income Tax form 16
Form No. 16
[See rule 31(1)(a)]
Certificate under section 203 of the Income Tax Act, 1961 for tax deducted at source from income chargeable under the head Salaries Name and Address of the employer Name and Address of the employee
PAN /GIR No.
TAN
PAN / GIR No. Assessment year 19_____
TDS Circle where annual return Period /statement under section 206 is to be filed From ______to _____
Details Of Salary Paid And Any Other Income And Tax Deducted (Rs.) (Rs.) (Rs.) 1. Gross Salary 2. Less: Allowance to the extent exempt under section 10 3. Balance (1-2) 4. Deductions: (a) Standard deduction (b) Entertainment allowance (c) Tax on employment 5. Aggregate of 4(a) to (c) 6. Income chargeable under the head salaries(35) 7. Add: Any other income reported by the employee 8. Gross total income (6+7) Qualifying Deductible 9. Deductions under Chapter VIA
amount amount
(a) (b) (c) (d) 10. Aggregate of deductible amount under chapter VIA 11. Total income (8-10) 12. Tax on total income 13. Rebate and relief under Chapter VIII I. Under section 88 (please specify)
Gross Amount
(a) (b) (c) (d) (e)
Qualifying Amount
Tax rebate / relief
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(Rs.) (f) Total [(a) to (e)] II. Under section 88A (please specify)
Gross Amount
(Rs.)
(Rs.)
(a) (b) (c) Total [(a) +(b)] III Under section 89 (attach details 14. Aggregate of tax rebates and relief at 13 above [ I (f) + II(c) +III] 15. Tax payable (12-14) and surcharge thereon 16. Less: Tax deducted at source 17. Tax payable /refundable (15-16)
Qualifying Amount
Details Of Tax Deducted And Deposited Into Central Government Account

Amount Date of payment Name of Bank and branch where tax deposited
Certified that a sum of Rs. (in words) ___________ has been deducted at source and paid to the credit of the Central Government. Further certified that the above information is true and correct as per records. ______________________ Signature of the person responsible for deduction of tax Place: ............ Date: ............ Full name ________________ Designation ______________
Note: See sections 15 and 17 and rule 3. Furnish separate details of value of the perquisites and profits in lieu of or in addition to salary or wages.
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(6)
Income Tax form 16A
Form No. 16A

(See rule 31(l)(b))
Certificate of deduction of tax at source under section 203 of the Income- tax Act, 1961
[ For the interest on securities; dividends; interest other than interest on securities; winning from lottery or crossword puzzle; winnings from horse race; payments to contractors and sub- contractors; insurance commission; payments to non-resident sportsmen/sports associations; payments in respect of deposits under National Savings Scheme; payments on account of repurchase of units by Mutual Fund or Unit trust of India; commission, remuneration or prize on sale of lottery tickets; {rent} other sums under section 195; income of foreign companies referred to in section 196A(2); income from units referred to in section 196B; income from foreign currency bonds or shares of an Indian company referred to in section 196C; income of Foreign Institutional Investors from securities referred to in section 196D]
Name and address of the person deducting tax
TDS circle where annual return under section 206 is to be delivered
Name and address of the person to whom payment made or in whose account it is credited
Tax deduction account No. of the deductor
Nature of payment
PAN/GIR No. of the payee
PAN/GIR No. of the deductor
For the period ____ 19___ to 19____
Details of payment, Tax Deduction And Deposit of Tax into Central Government Account
Date of payment/credit Amount paid/ credited (Rs) Amount of income-tax deducted (Rs) Rate at which deducted Date and challan No. of deposit of tax into Central Government Account Name of Bank and branch where tax deposited
Certified that a sum of Rs. (in words) ____________has been deducted at source and paid to the credit of the Central Government as per details given above. _________________________ Signature of person responsible for deduction of tax Place_____ Date __________ Full Name___________ Designation __________
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(7)
Income Tax: Application under 35AC
(To be filled in duplicate for each project in Hindi or English)
Application under Section 35AC of the Income-tax Act, 1961

and Rules 11F to 11O of the Income-tax Rules, 1962 before the National Committee for Promotion of Social and Economic Welfare, Department of Revenue, North Block, New Delhi110 001.
1. Name of the applicant organisation: 2. Address and phone number: 3. Applicant is a: (a) Public Sector Company (b) Company other than (a) above (c) Local Authority (d) Other Institution (e) Association constituted as a i) Registered Society ii) Public Charitable Trust iii) Registered u/s 25 of the Companies Act, 1956 iv) Else please specify what:
() () () () () () ()
4. Is the applicant assessed to Income-tax ? If so, please give particulars of: (a) Permanent Account No./ GIR No. (b) Designation and address of the Assessing Officer (c) Latest year for which a return of tax has been filed 5. (a) Does the applicant maintain regular accounts ? Yes/No (b) Years for which copies of audited accounts have been annexed (three latest years): Year ending Name of the Auditor (i) (ii) (iii) 6. In case the applicant is an Association or Institution: (a) Certified copies of documents like the Trust Deed, Rules and Regulations, Certificates of Registration etc. enclosed with this application (please list) (i) (ii) (iii) (iv) (b) Particulars of approval under Section 10(23) / 80G of the Income-tax Act, 1961, if any: (c) Names, addresses and designation of person(s) managing the organisation: (i) (ii) (iii)
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(iv) (v) (vi) (d) What have been its activities during the past three years / the track record (Attach a brief note, if necessary): (e) What have been the sources of funding of the past activities of the organisation ? (f) The activities are for the benefit of: (i) Any individual (ii) Specific Community (iii) General Public (g) Is there any provision in the constitution, rules, regulations etc. under which the income or corpus of the organisation can be put to use for a non- charitable purpose ? Yes/ No 7. Particulars of the Project or Scheme indicating location (copy of project report to be attached) (a) Title (b) Date of Commencement (c) Duration and likely date of completion (d) Estimated cost: (Break-up of cost and copy of resolution for undertaking the project or scheme to be attached) (e) Persons likely to benefit from it (Please give details of benefit to economically weaker sections) (f) (i) Would project benefit flow to the manager, trustees etc. other than employees of the institution: Yes / No (ii) State the percentage of weaker section of the society amongst the expected beneficiaries (g) Brief particulars of the project or scheme: (h) How is the applicant equipped with the man-power, expertise, infrastructure, etc. to execute the project? 8. In case the applicant is a company: (a) Is it bound to undertake the project or scheme applied for under any law or as a result of any agreement with its employees? Yes/No (b) In case any capital asset is to come into existence under the project or scheme, what arrangements have been made to divest the company of the ownership of such assets? 9. (i) Has the applicant been penalised under the Income-tax Act for concealment of income during the three years immediately preceding the date of application and if yes, the details thereof ?
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(ii) Has any of its present trustees, principal officers etc. been convicted of any offence during the last three financial years and if yes, the details thereof? 10. Please give particulars of earlier projects or schemes of the organisation which have been considered by the National Committee and specify the details of acceptance or rejection. 11. (i) Verified that the particulars contained in this application and its annexures are correct. (ii) The Applicant undertakes that: (a) Separate account will be maintained for each project or scheme, which will be open to inspection by the National Committee; (b) The National Committee for Promotion of Social and Economic Welfare will be informed six monthly of the amount of contributions raised, the total amount spent and the progress / achievement made in respect of the project or scheme approved by it. Date: Place: (Signature)* (Name and Designation of the signatory in Block Letters)
(Seal / Stamp of the organisation)

* Note: The application/ verification/ undertaking has to be signed by the Chief Executive of the applicant organisation, i.e., the Managing Director or the authorised officers of a company or the Administrator of a Local Authority or the Managing Trustees of a Trust or the President or Secretary or the authorised functionary of a Society.
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(8)
Income Tax form 58A
Form No. 58A

[See Rule 11-O(1)] Certificate of expenditure by way of payment in respect of eligible projects or schemes notified under section 35AC ) (P.A. No. ...........................) has paid a sum of Rs. (in figures) (in words) on ............................................. in cash/ by cheque No./ Demand Draft No. .................................... in respect of (name of project or scheme) project or Scheme which has been notified under section 35AC vide notification SO ............................. at an estimated cost of Rs. ...................................... For Assessment Year(s) ................................... . 2. It is further certified that the amount received from the donor is within the amount of the project/ scheme approved by the National Committee under section 35AC of the Income Tax Act as may be seen from the following: Amount in Rs. Amount received till date as donations from others prior to this donation: Amount received from donor named in paragraph 1 Total amount received for the project/ scheme including the amount covered under this certificate Total cost of the project/ scheme approved by the National Committee under section 35AC 3. An annual statement of donations received and the details of the project will be sent to the National Committee and the donor by 30th June following the financial year in which the amounts are received. Name: ..................................... Address: ........................................ Permanent Account No. .................................. of the donee organisation Signature ....................................... Name .............................................. Designation of the person managing the affairs of the donee organisation ............................................................... . 1. Certified that .. (name and address of donor
Date ...................................
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(9)
Income Tax form 60
Form No. 60
[See third proviso to of rule 114B]
Form of declaration to be filled by a person who does not have either a permanent account number or General Index Register No. and who makes payment in cash in respect of transaction specified in clauses (a) to (h) of rule 114B 1. Full name and address of the declarant ___________________________________________ ___________________________________________ ___________________________________________ 2. Particulars of transaction ______________________________________________________ 3. Amount of transaction _________________________________________________________ 4. Are you assessed to tax? !Yes ! No 5. If yes, (I) Details of Ward/Circle/Range where the last return of income was filled? (ii) Reason for not having permanent account number/General Index Register Number? 6. Details of the document being produced in support of address in column (1) ____________________________________________________________________ Verification I, _____________________________________ do hereby declare that what is stated above is true to the best of knowledge and belief. Verified today, the ____________ day of ____________, 19 _____ Date: ____________ Place: _______________ ____________________ Signature of the declarant
Instructions: Documents which can be produced in support of the address are: (a) Ration Card (b) Passport (c) Driving license (e) Identity Card issued by any institution (f) Copy of the electricity bill or telephone bill showing residential address (g) Any document or communication issued by any authority of Central Government, State Government or Local bodies showing residential address (h) Any other documentary evidence in support of his address given in the declaration
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(10)
FCRA form FC-1A
Form FC- 1A
[See Rule 3 (aa)] Form of application for seeking prior permission from the Central Government under the Foreign Contribution (Regulation) Act, 1976 (hereinafter referred to as the Act) for the acceptance of foreign contribution by an Association having a definite cultural, economic, educational, religious or social programme. No.___________________ Date____________________ To, The Secretary to the Government of India, Ministry of Home Affairs, Lok Nayak Bhawan, Khan Market, New Delhi 110 003 Subject: Application for seeking the prior permission of the Central Government under the Foreign Contribution (Regulation) Act, 1976 for acceptance of foreign contribution. Sir, I, .. , on behalf of the Association named hereafter, hereby apply for seeking prior permission of the Central Government for the acceptance of foreign contribution under proviso to sub-section (1) of section 6 or under sub-section (1A) of that section or clause (b) of section 10 of the Act. 1. (i) Name of the Association and its complete postal address: Name: Address:
Town/City: State:
District: Pin Code:
(ii) If the Association is a registered trust or society please indicate its (a) registration number (b) place of registration
(c) date of registration (certified copy of the registration certificate to be attached). (iii) Nature of Association: (a) Religious ! (b) Cultural ! ! ! (c) Economic ! (e) Social ! (d) Educational ! ! ! ! !
Note: If a religious Association, state whether: (a) Hindu (b) Sikh (c) Muslim (d) Christian (e) Buddhist (f) Others
(iv) Please indicate the main aim(s) and object(s) of the Association (enclose a copy of Memorandum of Association and/or the Articles of Association, if applicable).
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(v) Please furnish the names and address of the members of the Executive Committee/Governing Council etc. of the Association, including the Chief Functionary, in the following manner:
S. No. Name Name of Father / Husband Nationality Occupation Office held in the Association, if any. Relation with other officebearers, if any. Address
1 1. 2. 3. 4. 5. 6. 7.
2. Please indicate whether any member of the Executive Committee/Governing Council etc. of the Association, including the Chief Functionary has in the discharge of his/her official functions (a) been convicted by any court of law; (b) a prosecution for any offence pending against him/her; (c) been found guilty of diversion or misutilisation of funds of the Association or any other association in the past. 3. Please indicate whether the applicant Association (a) is a branch/unit/associate of foreign based organisation or another association already registered under the Act. If so, name and address of the parent organisation should be furnished; (b) has been directed by the Central Government in terms of the proviso to sub-section (1) of section 6 (1) of the Act to seek prior permission. If so, the number and date of the relevant order should be furnished; (c) has been directed by the Central Government in terms of section 10 of the Act to seek prior permission. If so, the number and date of the relevant order should be furnished. 4. Please indicate (i) whether the Association ever applied for registration under the Act in the past, if so, (a) the date of submission of application for registration; (b) the number and date of last of reference, if any, received from the Ministry; (c) whether registration was refused; (d) whether the application for registration is still pending.
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(ii) whether the Association has close links with another association, or its unit or branch which has been (a) refused registration under the Act, (b) prohibited from accepting foreign contribution. 5. Please indicate, (i) whether the Association was, (a) granted prior permission to receive foreign contribution under the Act in the past. If so, the number and date of the letter granting prior permission should be furnished; (b) whether the account of the receipt and utilisation of the foreign contribution received above was sent to the Central Government in the prescribed form. If so, the date of submission of the accounts should be furnished: (c) if the prior permission was granted in the current year, details of the foreign contribution received and utilised, purposewise, showing the unspent balance should be annexed. (ii) whether the Association has received foreign contribution without the prior permission of the Central Government, in the past. If so, (a) full particulars of the foreign contribution received, address of the branch of the bank and account number in which deposited should be furnished; (b) whether the said violation has been condoned by the Central Government; (c) whether the Association has been prohibited from accepting foreign contribution under the Act. 6. Please indicate whether the Association is owner/printer/ publisher, editor of a publication which is a registered newspaper under the Press and Registration of Books Act, 1867. 7. Please furnish (i) Details of the activities of the Association during the past three years; (ii) Copies of the audited statement of accounts of the Association for the past three years. 8. (i) Please indicate the (a) nature and value of foreign contribution to be received (a copy of the latest commitment letter from the donor should be furnished); (b) the purpose for which the foreign contribution is proposed to be received and utilised indicating also the geographical area(s) to be covered. (ii) A copy of the proposal/project which has been approved by the foreign source for funding, including projected outlays/budget break-up, should be enclosed. (iii) A copy of the proposal/project which has been approved for funding out of the foreign contribution should be enclosed (This column applies only to subsequent recipients).
Page 87 of 114
9. (i)
Please indicate the name of the bank and address of the branch through which foreign contribution is proposed to be received; the account number in the said branch of the bank.
(ii)
10. Please indicate the particulars of the foreign source or the sources* from which the foreign contribution* is proposed to be received: (a) If an individual, his personal particulars including name, present address, permanent address, nationality, profession; (b) If an Organisation/Institution/Association/Trust/ Trade Union etc., full particulars thereof, including (i) Full name and complete address. (ii) Address of Head Office/Principal Office. (iii) Particulars of Chief Functionary and important office bearers (c) Please indicate whether the foreign source is a government of a foreign country or agency thereof. 10A. Whether a recommendation certificate from the competent authority is attached (Yes/No). 11. Any other information which the Association may like to furnish. Yours faithfully,
Signature of the Applicant [Name of the Chief Functionary or authorised office bearer (with seal of the Association)]
Declaration
I hereby declare that the above particulars furnished by me are true and correct. Place: Date: Signature of the Applicant [Name of the Chief Functionary or authorised office-bearer (with seal of the Association)] * If the foreign contribution, whether currency or article is to be received from any person or association who has received the same as first, second or subsequent recipient, particulars of such person or association should be given against column 10 above. Note:
1. An incomplete application i.e. without necessary documents/details/explanations is likely to be

rejected summarily.
2. In case the space against any column is insufficient, separate annexure should be attached. 3. Please use CAPITAL LETTERS. 4. The application should be signed by the Chief Functionary or authorised office bearer of the
Association
Page 88 of 114
CERTIFICATE
(To be submitted alongwith the application) This is to certify that the . (name of the association) having its registered office at . (address) has been formed for undertaking activities in its chosen (Economic, Educational, Cultural, Religious and Social*) field of activity. The antecedents of the organization have been verified and there is nothing adverse against them. Its proposed project shall be undertaken in the . (District) of . (State). The said project will be beneficial to the people living in the area. The grant of prior permission to the aforementioned association to accept foreign contribution amounting to...... (Currency/ Amount) from .... (Name and address of foreign donor) under the Foreign Contribution (Regulation) Act, 1976 for the said project is recommended. (Recommending Authority)**
(With Seal) * Strike out whichever is not applicable ** Any concerned (1) Collector of District (2) Department of the State Government (3) Ministry or Department of the Government of India
Page 89 of 114
(11)
FCRA form FC-3
Form FC-3
See Rule 4(a)
Account of Foreign Contribution of the year ending on 31 March _______ 1. Associations details
st
(i) Name and address (in capital letters)
(ii) Registration No. & Date [under FC(R) Act 1976]:. (iii) Prior Permission No. and Date, if not registered: ...
(iv) Nature of Association: 1.
Cultural
2.
Economic
3.
Educational (b) Sikh
4.
Religious
5. (c) Muslim (f) Others
Social
(v) Denomination in case of religious Association:
(a) Hindu (d) Christian
(e) Buddhist
1A. (i) Total amount of foreign contribution received during the year:
(ii) Interest earned on the foreign contribution during the year, (a) In the designated bank account: (b) On investments made (Fixed Deposit Receipt etc) during the year or in the preceding years:
Page 90 of 114
2. Purpose(s) for which foreign contribution has been received and utilised: Sl. Purpose Previous Balance Receipt duri No. In cash 1 1. 2 Celebration of national events (Independence / Republic day) / festivals etc. Theatre / Films. Maintenance of places of historical and cultural importance. Preservation of ancient / tribal art forms. Research. Cultural shows. Setting up and running handicraft centre / cottage and Khadi industry / social forestry projects. Animal husbandry projects. 3 In kind (value) 4 As first recipient In cash In kind (value) 5 6
nd
ng the year
Total (5+6+7+8) 9
Utilised In cash 10 In kind (value) 11.
Balance In cash 12. In kind (value) 13
As 2 / subsequent recipient In cash In kind (value) 7 8
2. 3.
4.
5. 6. 7.
8.
Page 91 of 114
Sl. No.
Purpose
Previous Balance In cash In kind (value) 4
Receipt during the year

As first recipient In cash In kind (value) 5 6 As 2 / subsequent recipient In cash In kind (value) 7 8
nd
Total (5+6+7+8) 9
1 9.
2 Income generation projects / schemes.
10. Micro-finance projects, including setting up banking co-operative and self-help groups. 11. Agricultural activity. 12. Rural Development. 13. Construction and maintenance of school / college. 14. Construction and running of hostel for poor students. 15. Grant of stipend / scholarship / assistance in cash and kind to poor / deserving children.
Page 92 of 114
Sl. No.
Purpose

nd
Total (5+6+7+8) 9
16. Purchase and supply of educational material books, notebooks etc. 17. Conducting adult literacy programs. 18. Education / Schools for the mentally challenged. 19. Non-formal education projects / coaching classes. 20. Construction / Repairs / Maintenance of places of worship. 21. Religious schools / education of priests and preachers. 22. Publication and distribution of religious literature. 23. Religious functions.
Page 93 of 114
Sl. No.
Purpose

nd
Total (5+6+7+8) 9
24. Maintenance of priests / preachers / other religious functionaries. 25. Construction / Running of Hospital / dispensary / clinic. 26. Construction of community halls etc. 27. Construction and Management of old age home. 28. Welfare of the aged / widows. 29. Construction and Management of Orphanage. 30. Welfare of the orphans. 31. Construction and Management of dharamshala / shelter.
Page 94 of 114
Sl. No.
Purpose

nd
Total (5+6+7+8) 9
32. Holding of free medical / health / family welfare / immunisation camps. 33. Supply of free medicine, and medical aid, including hearing aids, visual aids, family planning aids etc. 34. Provision of aids such as Tricycles, calipers etc. to the handicapped. 35. Treatment / Rehabilitation of persons suffering from leprosy. 36. Treatment / Rehabilitation of drug addicts.
Page 95 of 114
Sl. No.
Purpose

nd
Total (5+6+7+8) 9
37. Welfare / Empowerment of women. 38. Welfare of children. 39. Provision of free clothing / food to the poor, needy and destitute. 40. Relief / Rehabilitation of victims of natural calamities. 41. Help to the victims of riots/ other disturbances. 42. Digging of bore wells. 43. Sanitation including community toilets etc. 44. Vocational training tailoring, motor repairs, computers etc.
Page 96 of 114
Sl. No.
Purpose

nd
Total (5+6+7+8) 9
45. Awareness Camp / Seminar / Workshop / Meeting / Conference. 46. Providing free legal aid / Running legal aid centre. 47. Holding sports meet. 48. Awareness about Acquired Immune Deficiency Syndrome (AIDS) / Treatment and rehabilitation of persons affected by AIDS. 49. Welfare of the physically and mentally challenged. 50. Welfare of the Scheduled Castes. 51. Welfare of the Scheduled Tribes.
Page 97 of 114
Sl. No.
Purpose

nd
Total (5+6+7+8) 9
52. Welfare of the Other Backward Classes. 53. Environmental programs. 54. Survey for socioeconomic and other welfare programs. 55. Establishment expenses, (i) Asset building: (a) Establishment of Corpus Fund, and (b) Purchase of land; (ii) Construction / Extension / Maintenance of office, administrative and other buildings;
Page 98 of 114
Sl. No.
Purpose

nd
Total (5+6+7+8) 9
2 (iii) Payment of salaries / honorarium; (iv) Publication of newsletter / literature / books etc. (v) Other expenses.
56. Activities other than those mentioned above (Furnish details).
TOTAL
CAUTION: Submission of false information or concealment of material facts shall attract the relevant provisions of the Foreign Contribution (Regulation) Act, 1976 warranting appropriate action.
Page 99 of 114
3. Name & address of the designated branch of the Bank and account number (as specified in the application for registration/ prior permission or permitted by the Central Government)
A/c No. Bank:. .. Branch:. .. Address:.... . ..... PIN
4. Donor-wise Receipts of foreign contribution (in Rupees)
Sl. No.
Institutional / Individual / Other Donors
Name(s) and address(es)
Purpose(s)
Date and month of receipt
Amount
2 (i) Institutional Donors
Page 100 of 114
Sl. No.
Institutional / Individual / Other Donors
Name(s) and address(es)
Purpose(s)
Date and month of receipt
Amount
(ii) Individual Donors above Rs. One lakh
(iii) Individual Donors below Rs. One lakh (only columns 4 & 6 need to be filled)
Total
Page 101 of 114
5. Country-wise Receipts of foreign contribution
(in Rupees) Amount 3
S. No. 1 1. 2. 3. 4. 5.
Name of the country 2
Total: Declaration I hereby declare that the above particulars furnished by me are true and correct. I also affirm that the foreign contribution has been utilised for the purpose(s) for which the Association has been registered/ prior permission obtained. To the best of my knowledge, I have not concealed or suppressed any fact. Place: Date: (Name of the Chief Functionary and seal of the Association) Signature of the Chief Functionary
Page 102 of 114
Certificate To Be Given By Chartered Accountant I/ We have audited the accounts of ............................................................... ............................. ............................... .... ......... ......................... ................. .. ....... ............... ............. ......................... .............................. ............. .......... .... .. . ............. ........................... ............... ...................... ........... ..... ................................................... ................ ...... ........................ (name of Association and its full address including State, District and pin code, if registered society, its registration number and State of registration), for the year ending 31st March, ......... and examined all relevant books and vouchers and certify that according to the audited accounts: (i) (ii) the brought forward foreign contribution at the beginning of the year .. was Rs. ............. foreign contribution of / worth Rs. ....................... was received by the Association during the year ...............
(iii) the balance of unutilised foreign contribution with the Association at the end of the year . .. was Rs ........... (iv) Certified that the Association has maintained the accounts of foreign contribution and records relating thereto in the manner specified in section 13 of the Foreign Contribution (Regulation) Act, 1976 read with sub-rule (1) of rule 8 of the Foreign Contribution (Regulation) Rules, 1976. (v) The information furnished in this certificate and in the enclosed Balance - Sheet and Statement of Receipt and payment is correct as checked by me/us.
Place_______________ Date ________________
Signature of Chartered Accountant with seal, address and Registration number
Page 103 of 114
(12)
FCRA form FC-5
Form FC-5
[See Rule 4(c)]
Intimation to the Central Government of receipt of scholarship, stipend or any payment of a like nature from a foreign source
[Sections 7(1) and 7(2) of the Foreign Contribution (Regulation) Act, 1976]
1. 2. 3. 4.
Name in full (in block letters) Date of birth Name of father Present Address
5.
Permanent Address
6. 7.
Passport particulars Specific details of occupation/ profession
8.
Particulars of the foreign source from whom scholarships, stipend or payment of a like nature was received: (a) If an individual, his personal particulars including name, present address, permanent address, nationality, profession
(b) If an Organisation/ Institution/ Association/ Trust/ Foundation/ Trade Union, etc. full particulars thereof including: (i) Full name and complete address
(ii) Address of Head Office/Principal Office
Page 104 of 114
(iii) Aims and Objects
(iv) Particulars of important officebearers
9. Nature and full details of scholarship, stipend, or any payment of a like nature received from foreign source, indicating (a) total amount and its break-up under various heads like cost of journey, equipment, clothing, maintenance, tuition fees, residence fees, books, etc. and
(b) mode/channel of receipt.
10. Purpose of scholarship, stipend or any payment of a like nature with specific details of courses attended/ to be attended.
11. Duration of stay abroad with dates
12. Any other information of significance, which the applicant may like to furnish.
Declaration I hereby declare that the above particulars furnished by me are true and correct.
Place: _________ Date: _________
_________________ Signature of applicant
Page 105 of 114
[See Rule 8(1)(a)] FOREIGN CONTRIBUTION (ARTICLES) ACCOUNTS DESCRIPTION OF THE ARTICLE: __________________________________
Page 106 of 114
Date
R E
Name & address of the person from whom received
Mode of receipt Purpose of receipt
(13)
4 5 6 7 8 9 10 11 12 13
I P
Quantity received
T
Approx. value of articles received Date of intimation sent to the Central Government Date Name & address of the person to whom issued, sold or otherwise transferred Purpose for which issued or otherwise transferred Utilised by the Organisation Sold
FCRA form FC-6
Form FC-6
U T I L I S A T I O N /
Otherwise transferred
Q U A N T I T Y
DECLARATION: I hereby declare that the above particulars furnished by me are true and correct. Signature
14 15 16
If sold, the amount for which sold
D I S P O S A L
Reference to entry in the Foreign Contribution (Currency) Account
Qty.
Balance in stock
(14)
FCRA form FC-8
Form FC-8
(See Rule 3-A)
Form of application for seeking registration with the Central Government under the Foreign Contribution (Regulation) Act, 1976 (hereinafter referred to as the Act) for the acceptance of foreign contribution by an Association having a definite cultural, economic, educational, religious or social programme. No______ Date____________ To The Secretary to the Government of India, Ministry of Home Affairs, Lok Nayak Bhawan, Khan Market, New Delhi 110 003 Subject: Application for registration under the Foreign Contribution (Regulation) Act, 1976 for the acceptance of foreign contribution Sir, I, . .., on behalf of the Association named hereafter, apply for registration of the Association under clause (a) of sub-section (1) of section 6 of the Act for the acceptance of foreign contribution. 1. (i) Name of the Association and its complete postal address: Name: Address: Town/City: State: District: Pin Code:
(ii) If the Association is a registered trust or Society, please indicate its: (1) Registration Number: (2) Place of Registration: (3) Date of Registration (Certified copy of the Registration Certificate to be attached). (iii) Nature of the Association: (a) Religious ! (b) Cultural (e) Social (b) Sikh (e) Buddhist ! ! ! ! (c) Muslim (f) Others ! ! (c) Economic ! (d) Educational ! (a) Hindu (d) Christian (iv) Please indicate ! !
Note: If a religious Association, state whether:
Page 107 of 114
(a) the main aim(s) and object(s) of the Association (enclose a copy of Memorandum of Association and/or the Articles of Association, if applicable); (b) the main object(s) and definite programme(s) for which the foreign contribution is to be accepted/utilised.
(v) Please furnish the names and addresses of the members of the Executive Committee/Governing Council etc. of the Association, including the Chief functionary in the following manner:
S. No . (1) (2) Name Name of Father / Husband (3) (4) (5) Nationality Occupation Office held in the Association, if any. (6) Relationship with officebearers, if any. (7) (8) Address
2. Please indicate whether any member of the Executive Committee/Governing Council etc. of the Association, including the Chief Functionary has in the discharge of his/her official functions (a) been convicted by any court of law; (b) a prosecution for any offence pending against him/her; (c) been found guilty of diversion or misutilisation of funds of the Association or any other association in the past. 3. Please indicate whether the applicant Association is a branch/ unit/ associate of foreign based organisation or another association already registered under the Act. If so, name and address of the parent organisation.
Page 108 of 114
4. Please indicate, (i) whether the Association was, (a) granted prior permission to receive foreign contribution under the Act in the past. If so, the number and date of the letter granting prior permission should be furnished; (b) whether the account of the receipt and utilisation of the foreign contribution received above was sent to the Central Government in the prescribed form. If so, the date of submission of the accounts should be furnished. (ii) whether the, (a) Association has received foreign contribution without the prior permission under Act in the past. If so, full particulars of the foreign contribution received along with complete address of the bank branch and bank account number in which deposited should be furnished; (b) said violation has been condoned by the Central Government; (c) Association has been prohibited from accepting foreign contribution under the Act. 5. Please indicate whether the Association is functioning as editor, owner, printer or publisher of a publication required to be registered as newspaper under the Press and Registration of Books Act, 1867. If so, the details thereof. 6. Please indicate,
(i) whether the Association ever applied for registration under the Foreign Contribution (Regulation) Act, 1976, if so, (a) the date of submission of application for registration; (b) the number and date of the last communication, if any, received from the Ministry; (c) whether registration was refused; (d) whether application for registration is still pending. (ii) whether the Association has close links with another association, or its unit or branch which has been (a) refused registration under the Act; (b) prohibited from accepting Foreign Contribution. 7. Please furnish, (i) details of the activities of the Association during the past three years. (ii) copies of the audited statements of accounts of the Association for the past three years. (iii) details of the area(s) of operation.
Page 109 of 114
8. Please indicate whether the Association has been specified as an organisation of a political nature, not being a political party, under Section 5 of the Act. If so, the details of the notification should be furnished. 9. Please indicate, (i) the name and address of the branch of the bank through which the foreign contribution shall be received; (ii) please specify the account number in the said branch of the bank. 9A. whether a recommendation certificate from the competent authority is attached (Yes/No). 10. Any other information which the Association may like to furnish Yours faithfully,
(Chief Functionary) for and on behalf of Association (Name of Association)
Declaration and undertaking

The Association named here-in-above affirms that the information furnished above is correct and undertakes: (i) to inform the Central Government (Ministry of Home Affairs) within thirty days if any change takes place in regard to the name of the Association, its address, its registration, its nature, its aims and objects with documentary evidence effecting the change; (ii) to obtain prior permission for change of office-bearer(s), if, at any point of time such change causes replacement of 50% or more of the office-bearers as were mentioned in the application for registration under Foreign Contribution (Regulation) Act, 1976 and undertakes further not to accept any foreign contribution, except with prior permission, till the permission to replace the office-bearer(s) has been granted; (iii) not to change the bank or branch of the bank without prior permission of the Central Government. The reason for change of bank or branch of the bank shall have to relevant the justifiable; and (iv) not to accept any foreign contribution, unless it has obtained either the registration number, as applied for hereinabove, or prior permission of the Central Government under sub-section (1A) of section 6 of the Foreign Contribution (Regulation) Act, 1976. (Chief Functionary) for and on behalf of Association (Name of Association)
Page 110 of 114
Note: (i) The receipt of application for registration is not a commitment for grant of registration by the Central Government; (ii) An incomplete application i.e. without required documents/details/explanations is likely to be rejected summarily; (iii) In case the space against any column is insufficient separate sheets should be attached; and
CERTIFICATE
(To be submitted alongwith the application) This is to certify that the .....(name of the association) having its registered office at .. (address) has been engaged in Economic, Educational, Cultural, Religious and Social* activities in the .. (District) of (State) for the last years. (2) It has undertaken welfare activities in the area and has incurred expenditure (excluding administrative expenditure) amounting to .. (Amount in Rupees) during the last three years on its chosen (Economic, Educational, Cultural, Religious and Social field of activity. (3) The antecedents of the organisation have been verified and there is nothing adverse against them. (4) The grant of registration to the aforesaid association to accept foreign contribution under the Foreign Contribution (Regulation) Act, 1976 is recommended. (Recommending Authority)** (With Seal) * Strike out whatever is not applicable ** Any concerned (1) Collector of District (2) Department of the State Government (3) Ministry/ Department of the Government of India (iv) Please use CAPITAL letters.
Page 111 of 114
Issued: May 1999
b)
Samples
(1) Program Budget
Lok Jagran Manch

Program Budget for Education & Health Program for period 1.4.98 31.3.99
Sl. Name of Program Specific Objectives of this program To run 12 NFE centres for children from tribal groups. To give basic literacy, general knowledge to children As above Logic / reasoning for each activity / item For teaching the children. Each teacher will work for six hours. One teacher for each school. Senior teachers are paid more. Number of direct beneficiaries Village / location Duration where the of activity activity will occur 150 girls; 1. Jasidih 12 months 170 boys 2. Haldia 3. 4. 5. 6. 7. 8. 2 NFE Schools As above 60 girls; 1. 80 boys 2. 3. 4. 3 NFE Schools As above Needed so that can explain more clearly and show pictures etc. Parsidhhia Jajori Terahawi Koldiha Jalalpur Khapatia Chakrata Khekda Jewar Korwani 12 Over 12 Teaching months resource material (Blackboard, charts etc.) 1 day Food etc. for Bal Mela Rs.500 x 12 NFE centres 6,000 12 Salary to 4 months new teachers Rs.850 x 4 tchrs. x 12 mths. 40,800 Budget Line Item Narration Budget Line Item Calculation Amount (Rs.)
1 NFE Schools
Salary to 8 Rs.1000 x 8 Senior teachers x teachers 12 mths.
96,000
210 girls; Above 250 boys villages
4 NFE Schools
Increase
crosscommunity linkages Increase competitive spirit As above
As Bal mela will run from 10 a.m. to 4 p.m., lunch will be provided to children and organisers Transportation for cooking material, etc. Prizes will be given to children
210 girls; At community 250 boys land in Jajori
Rs.20 x 450 children + 12 teachers + 10 others
9,440
5 NFE Schools
210 girls; At above 250 boys
1 day Transport, stage, prizes for Bal Mela Sub-Total
Rs.4,000 lump sum
4,000
NFE 6 Health 1. Provide basic medical support to people PHCs do not exist / work in the region. Private medical treatment is inaccessible / 2. Encourage use of herbs expensive and naturopathy Vaccination of children coming to NFE classes and their brothers / sisters 50 persons x 1. 3 times x 6 2. villages 3. 4. 5. 6. Jasidih Haldia Parsidhhia Jajori Jalalpur Khapatia NFE
156,240 96,000
12 Stipend to 8 Rs.1000 x 8 vaids x 12 months Vaids mths.
7 Health
Prevent spread of diseases such as polio
500 children All 12 villages
Twice Jeep Govt. Doctors
for
Rs.450 x 4 days (3 villages each day) x 2 times
3,600
Page 112 of 114
Issued: May 1999
Sl. Name of Program
8 Health
Village / location Duration where the of activity activity will occur six 12 Health workers 30 women x 6 Above Strengthen villages villages months basic hygiene will inform and motivate women and personal reproductive for hygiene, health health check-up, nutrition and birth control Program co- Proj. Mgr. will be ordination responsible for co-ordination and monitoring of program Accountability Accountant will of funds maintain accounts and provide Agency reports. Will also handle other accounts Program and Required for office co- correspondence ordination and reports Accountability For providing of funds audit report regarding Agency funds N.A. Based at Pilakhua Office. Will cover all 12 villages N.A. Based at Pilakhua office
Specific Objectives of this program
Logic / reasoning for each activity / item
Number of direct beneficiaries
Budget Line Item Narration
Budget Line Item Calculation
Amount (Rs.)
Salary to 3 Rs.500 x 3 Community workers x 12 Health months workers
18,000
Health 9 Administr ation
Sub Total 12 Project months Managers salary Rs.3,000 x 12 months
117,600 36,000
10 Administr ation
12 Salary to months Accountant (shared)
Rs.1,000 x 12 months
12,000
11 Admin.
N.A. At office
Pilakhua
12 Postage & Rs.300 x 12 months Stationery months Once a Auditors year Fees Rs.1,500 x once
3,600
12 Admin.
N.A. At Main office
1,500
Admin Budget Summary NFE Health Administration Total Rs. 156,240 117,600 53,100 326,940 % 48 36 16 100
Sub-Total
53,100
Page 113 of 114
Issued: May 1999
(2)
Accounting Budget
Lok Jagran Manch

Accounting Budget for Education & Health Program for period 1.4.98 31.3.99
Ref Account Head Program NFE NFE Health Health Admin. Admin. Duration 12 months 12 months 12 months 12 months 12 months 12 months Calculation Rs.1000 x 8 teachers Rs.850 x 4 teachers Rs.1000 x 8 vaids Rs.500 x 3 workers Rs.3,000 Rs.1,000 Sub Total NFE NFE Admin. Materials 7 Jeep for Govt. Doctors 5 Bal Mela Transport, stage, prizes Conveyance 12 Audit Fees Fees Summary Salary Materials Conveyance Fees Total Admin. Once Health NFE 2 times Once Over the year Once Over the year Rs.500 x 12 NFE centres Rs.20 x 450 children + 12 teachers + 10 others Rs.300 x 12 months Sub Total Rs.450 x 4 days (3 villages each day) x 2 times Rs.4,000 lump sum Sub Total Rs.1,500 x once Sub Total Amount (Rs.) 96,000 40,800 96,000 18,000 36,000 12,000 298,800 6,000 9,440 3,600 19,040 3,600 4,000 7,600 1,500 1,500 Rs. 298,800 19,040 7,600 1,500 326,940
1 Salary to Senior Teachers 2 Salary to new teachers 6 Stipend to vaids 8 Salary to C.H.Ws 9 Salary to Project Manager 10 Salary to Accountant (shared) Salary 3 Teaching resource material 4 Bal Mela Food 11 Postage & Stationery
Page 114 of 114
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Development Cooperation Section, Embassy of Sweden New Delhi

Issued: May 1999

Issued: May 1999, Updated: Nov 2001

Issued: May 1999

Issued: May 1999

Acco unt ing M a nua l

Issued: May 1999

Issued: May 1999

Issued: May 1999

Issued: May 1999

Modifications to this Manual

Refers to Development Cooperation Section (DCS) of the Embassy of Sweden

Essential Sida Requirement

Issued: May 1999

A word about style, colour and care

If you need any clarifications

6346253, 6347253, Fax: 6343852; e-mail: saa@mantraonline.com Color Key

Essential Sida Requirement

Issued: May 1999

Essential Sida Requirement

Issued: May 1999

Name of the program or program component

Give the number of days / months (under this budget)

Describe the Line item.

Show how the amount was calculated.

Show the amount for each line item here.

Specific Objectives of this program

Logic / reasoning for each activity / item

Number of direct beneficiaries

Village / location where the activity will occur

Budget Line Item Narration

Budget Line Item Calculation

For the accountants information

Essential Sida Requirement

Issued: May 1999

You also need to provide for the following:

Essential Sida Requirement

Issued: May 1999

May be an office bearer

Essential Sida Requirement

Issued: May 1999

Essential Sida Requirement

Issued: May 1999

Situation Accountant but no cashier

Cash handled by Accountant, Chief functionary or another senior person

Both Full time accountant and a cashier

Essential Sida Requirement

Issued: May 1999

Ms. Ramawati Advance: (FCRA main) Expenses on Balpur mela

Balpur Mela (SIDA) Expenses incurred by Ms. Ramawati on Balpur mela

Essential Sida Requirement

Issued: May 1999

Using rolling imprest

Essential Sida Requirement

Issued: May 1999

Essential Sida Requirement

Issued: May 1999

Essential Sida Requirement

Issued: May 1999

Societys Balance Sheet etc.

FCRA Cash Book

FC-3 and FCRA Balance Sheet etc.