Date : 21.07.2015
Subject : Part II of the Standard Operating Procedure (SOP) (Part I – 08.07.2015) for making application for claim of tax exemption u/s 11(1)(c) of the Income-tax Act, in respect of remittance of money/relief articles by Indian NGOs/Charitable Organisations for earthquake hit people in Nepal -.
Attached is a Note received from Ministry of External Affairs, Government of India on the routes available for Indian NGOs to work in Nepal as per guidelines of the Government of Nepal alongwith prescribed forms for the same. These are for information and compliance by Indian NGOs desirous of undertaking post-earthquake relief and reconstruction in Nepal. In addition to the requirements conveyed through the earlier SOP (dated 08.07.2015), the Indian NGOs are further requested to furnish copies of ‘letter of support’ as well as copies of approval granted by SWC (Social Welfare Council, Ministry of Women, Children and Social Welfare, Government of Nepal) to the local NGOs of Nepal with whom Indian NGOs desire a tie-up [as envisaged in Para I(i) and I(iii) respectively of the enclosed Note] or copy of the signed MoU with the Ministry concerned of Government of Nepal [as envisaged in Para I(v) of the enclosed Note], as the case may be, while submitting applications before CBDT seeking approval u/s 11(1)(c).
Similarly, copies of all relevant documents would also be required to be submitted for cases covered under Para II of the enclosed Note.
The above is in continuation to the SOP prescribed earlier by CBDT on 08.07.2015.
Cash & Kind Contributions for Post-Earthquake Relief & Reconstruction in Nepal
The Government of Nepal (GoN) has officially announced closure of the relief phase. However, Indian NGOs (INGOs) willing to contribute in cash and kind to quake-affected areas in Nepal can now do it in two ways: (i) tie-up with local NGOs in Nepal; or (ii) direct work by the INGO.
I. Tie-up with Local NGOs
INGOs can tie up with locally registered NGOs in Nepal for distribution of relief or transfer of cash in specified bank accounts of local NGOs for taking up rehabilitation work in quake-affected areas. However, it requires prior approval of Social Welfare Council (SWC), Ministry of Women, Children and Social Welfare, GoN, which is the nodal agency for approving projects run by International NGOs / NGOs in Nepal. The approval entails the following:
(i) The INGO will have to issue a ‘letter of support’ to the local NGO(s), giving details of the relief material / amount to be transferred along with specific purpose and areas against which it is to be utilized. The letter should also mention the details regarding specific bank account(s) in which the amount will be transferred.
(ii) The local NGO will apply to SWC with documents, including project plan with details regarding quantum and areas in which support is envisaged to be extended, the distribution channels, and the letter of support from the INGO, for prior approval of SWC before actual transfer of money or relief material by INGO.
(iii) Once the above approval is received, the INGO can apply for tax exemption under Section 11(1)(c) of the Income Tax Act, subsequent to which, Embassy of India in Kathmandu, on receipt of reference from CBDT, would verify the approvals granted by SWC to the local partner (s) of the INGO.
(iv) Once the distribution is completed, local NGOs are required to submit Utilization Certificate (duly signed by the concerned district authorities) to the SWC. A SWCattested copy of the same could be forwarded to the Embassy of India in Kathmandu for onward transmission to CBDT for closing the loop.
(v) However, there is an alternate provision regarding distribution of relief material (with or without payment of custom duty) received from India or cash support to GoN for rehabilitation purposes, under which the INGO directly or through its associated local NGO can enter into an agreement with the concerned Line Ministry of GoN for supply of relief material or cash support for a particular purpose (detailed requirements and format enclosed as Annexure-A’). In this case, a copy of the signed MoU with the concerned Ministry may be submitted while applying for tax relief in India, and Embassy of India in Kathmandu may verify the genuineness of such signed MoUs.
II. Direct Work by INGO
Alternatively, INGOs that wish to be engaged in rehabilitation projects or charitable activities in Nepal in a long-term and direct manner, can register themselves as International NGOs with the SWC.
This entails a two-stage approval process – (i) signing of a General MoU with the SWC (detailed requirements and format enclosed as Annexure-13′); and, (ii) signing of Project Agreement with SWC (detailed requirements and format enclosed as Annexure- ‘C’).
GoN rules require that an INGO has to invest a minimum amount of USD 1 lakh per year for a minimum of period of 3 years and the whole process takes about 3 months.
1 July 2015
Read Full Guideline with annexures forming part of the above guideline
Part I- Standard Operating Procedure (SOP) for making application for claim of tax exemption u/s 1 1(1)(c) of the Income-tax Act, in respect of remittance of money/relief articles by Indian NGOs/Charitable Organisations for earthquake hit people in Nepal.
Part III of the Standard Operating Procedure (SOP) (Part I – 08.07.2015) for making application for claim of tax exemption u/s 11(1)(c) of the Income-tax Act, in respect of remittance of money/relief articles by Indian NGOs/Charitable Organisations for earthquake hit people in Nepal