NGO's spending over Rs 20000 in cash will attract intensive government scrutiny
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Tightening the screws on Non Government Organisations (NGOs) and associations, the Home Ministry has said that any association indulging in cash payments in the excess of Rs 20000 will attract "intensive scrutiny" from government.
This follows a detailed inspection lately of records and accounts of associations which have been granted prior permission by the government to receive foreign contributions. "It has been observed that some associations withdraw huge amounts of Foreign Contribution (FC) from their FC designated bank accounts and Utilisation accounts by cash," the Home Ministry said in a circular issued by a Joint Secretary on October 21, which ET has accessed.
The Home Ministry has asked NGOs to incur all expenditure above Rs 20000 by cheque or drafts. "As per the Income Tax Act, any expenditure incurred by certain category of NGOs in respect of which payment is made for a sum exceeding Rs 20000 otherwise than by an account payee cheque ddrawn on a bank or by an account payee bank draft, shall not be allowed as a deduction under the Income Tax Act," the Circular says.
It adds that the issue of fixing an upper limit for incurring expenditure by associations registered/granted permission under Foreign Contribution Regulation Act (FCRA), 2010 by cash from designated bank accounts has been "under consideration" of the government for some time. "The Government, after considering the issue, advises all FCRA associations that items of expenditure/payments amounting to Rs 20000 should be done by cheque or demand drafts," the Ministry says.
It has been further specified that the records and accounts of associations indulging in cash payments of Rs 20000 or more from the designated bank accounts "are likely to require more intensive scrutiny by government" and the circular has been issued with approval of the competent authority. (PTI-Economic Times)
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