| Question And Answer | |
|---|---|
| Subject: | Can a NGO sign a JV with Agency for implementing the CSR project and receive funds directly from the donor company to the implementing Agencies Can a NGO sign a JV with Agency for implementing the project and receive funds directly from the donor company to the implementing Agencies ? |
| Category: | Income-Tax |
| Querist: | Jagannath koti |
| Answered by: | Advocate Aditya Ajgonkar |
| Tags: | CSR, CSR project, joint venture |
| Date: | May 16, 2021 |
Can a NGO sign a JV with Agency for implementing the project and receive funds directly from the donor company to the implementing Agencies…..
The General Circular No. 21/2014 of MCA dated June 18, 2014 clarifies that Contribution to Corpus of a Trust/ Society/ Section 8 companies etc. will qualify as CSR expenditure as long as :
(a) the Trust/ Society/ Section 8 company etc. is created exclusively for undertaking CSR activities or
(b) where the corpus is created exclusively for a purpose directly relatable to a subject covered in Schedule VII of the Act
Additionally, on 22nd January 2021, the Ministry of Corporate Affairs came out with a Notification, amending the Companies (Corporate Social Responsibility Policy) Rules, 2014. It states that (1) The Board shall ensure that the CSR activities are undertaken by the company itself or through –
(a) a company established under section 8 of the Act, or a registered public trust or a registered society, registered under section 12A and 80 G of the Income Tax Act, 1961 (43 of 1961), established by the company, either singly or along with any other company, or
(b) a company established under section 8 of the Act or a registered trust or a registered society, established by the Central Government or State Government; or
(c) any entity established under an Act of Parliament or a State legislature; or
(d) a company established under section 8 of the Act, or a registered public trust or a registered society, registered under section 12A and 80G of the Income Tax Act, 1961, and having an established track record of at least three years in undertaking similar activities.
It is mandated that every entity as provided in sub-rule(1) (as preproduced above) shall register itself with the Central Government by filing the form CSR-1 electronically with the Registrar, with effect from the 01st day of April 2021. Therefore, the JV, as long as it adherers to the above conditions may receive money from a company directly for the purposes of CSR activities subject to the provisions of the Companies Act and the MCA Rules / Notifications that are issued from time to time. As this question has been answered for educational purposes, you are requested to obtain proper legal advice based upon the facts and circumstances of your case by a tax professional of your choice.