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Restriction to utilize foreign contribution for administrative purpose [ Section 8 ] - FCRA Ready Reckoner - FEMAExtract Restriction to utilize foreign contribution for administrative purpose. As per Section 8( 1 ) of FCRA Act Every person, who is registered and granted a certificate or given prior permission under this Act and receives any foreign contribution,- ( a ) shall utilise such contribution for the purposes for which the contribution has been received: Any foreign contribution or any income arising out of it shall not be used for speculative business: The Central Governments shall, by rules, specify the activities or business which shall be construed as speculative business for the purpose of this section; Speculative Activity Define in the rule 4 of FC(R) Rules 2011 As per Rule 4(1) of FC(R) Rules 2011 , The following activities shall be treated as speculative activities:- (a) any activity or investment that has an element of risk of appreciation or depreciation of the original investment, linked to market forces, including investment in mutual funds or in shares; (b) participation in any scheme that promises high returns like investment in chits or land or similar assets not directly linked to the declared aims and objectives of the organisation or association. A debt-based secure investment shall not be treated as speculative investment. [ Rule 4(2) of FC(R) Rules 2011] ( b ) shall not defray as far as possible such sum, not exceeding 20% of such contribution , received in a financial year, to meet administrative expenses: Prior approval from Central government for defrayed if administrative expenses exceeding 20%. of such contribution may be defrayed with prior approval of the Central Government. As Per Section 8(2) of FCRA Act 2010, the Central Government has prescribe in the rule 5 of FC(R) Rules 2011 , the elements which shall be included in the administrative expenses and the manner in which the administrative expenses referred to in section 8( 1 ) shall be calculated :- The following shall constitute administrative expenses:- Includes (i) salaries, wages, travel expenses or any remuneration realised by the Members of the Executive Committee or Governing Council of the person; (ii) all expenses towards hiring of personnel for management of the activities of the person and salaries, wages or any kind of remuneration paid, including cost of travel, to such personnel; (iii) all expenses related to consumables like electricity and water charges, telephone charges, postal charges, repairs to premise(s) from where the organisation or Association is functioning, stationery and printing charges, transport and travel charges by the Members of the Executive Committee or Governing Council and expenditure on office equipment; (iv) cost of accounting for and administering funds; (v) expenses towards running and maintenance of vehicles; (vi) cost of writing and filing reports; (vii) legal and professional charges; and (viii) rent of premises, repairs to premises and expenses on other utilities: Excludes (i) The expenditure incurred on salaries or remuneration of personnel engaged in training or for collection or analysis of field data of an association primarily engaged in research or training. (ii) that the expenses incurred directly in furtherance of the stated objectives of the welfare oriented organisation, such as salaries to doctors of hospital, salaries to teachers of school etc.
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