As you
are aware, the Annual Return under Foreign Contribution Regulation Act (FCRA) is to be compulsorily filed electronically.
It is highly expected that the regulatory authorities, may implement few
electronic checks for FCRA compliance on such e-filed returns.
One of
such apparent check, which may be implemented, is that the expenses for
Administrative purposes should not exceed 50% of the foreign contribution
received.
This is
required as per Section 8 of the Foreign contribution regulation Act 2010.
Since 6 months of current financial year are over, we recommend to exercise
this check with the help of following details. So that corrective measures, if
any, may be implemented before completing the financial year in March 2017.
List of Administrative expenses is given in Rule 5 of the Foreign Contribution Regulation Rules 2011. It is as follows:
(i)
Salaries,
wages, travel expenses or any remuneration realized by the Members of the
Executive Committee or Governing Council of the organization
(ii)
all
the expenses towards hiring of personnel for management of the activities of
the person of the organization along with the salaries, wages or any kind of
remuneration paid, including cost of travel, to such personnel shall come in
the category of administrative expenses.
(iii)
Expenditure
related to consumables like electricity and water charges, telephone charges,
postal charges, repairs to premise(s) from where the organization 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 will be counted as administrative expenses.
(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:
1.
Expenditure
that is 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 shall not be counted towards administrative expenses.
2.
If
an expenditure is incurred in furtherance of the purpose of organization, it
shall not be counted as administrative expense. Such as Salaries to doctor of
hospital, salaries to teacher of school etc.