If a foreign company and its subsidiary want to donate in a charitable institution under FCRA, is there a limit till which they can do so as under section 293 Companies Acyt,1956?
CA VINAY BANSAL
(In job with KPMG)
(289 Points)
Replied 15 June 2010
In FCRA there is no limit on donation................
shayonee
(student)
(35 Points)
Replied 15 June 2010
So the 5% of average net profit under Companies Act 1956 is not applicable?
Does any provision of FCRA mandate so?
CA VINAY BANSAL
(In job with KPMG)
(289 Points)
Replied 15 June 2010
Dear,
That provision is for Indian Company.
Foreign companies are not required to follow the same as per my prospective......
So in case any foreign company wanna donate in India, it can without any limit do it.
The receiver in turn should be registered under FCRA and have to get a FCRA bank account opened for such FCRA funds.
CA VINAY BANSAL
(In job with KPMG)
(289 Points)
Replied 15 June 2010
The money that the indian subsi will be transferring will not be FCRA money dear. It will have to comply with the Indian companies Act, the limit of 5% profit.
there is no Foreign contribution in that case and hence NO FCRA applicability arises.
shayonee
(student)
(35 Points)
Replied 15 June 2010
Would that mean a foreign company could donate 100% of their earnings towards a charitable institute?
Ashis Mahapatra
(Consultant-Tax & FEMA/FDI)
(183 Points)
Replied 16 June 2010
| Originally posted by : shayonee | ||
'Foreign Company' means a company registered outside India and governed by their local laws.If their local law allow to donate 100 % to an Indian charity neither FEMA nor FCRA prohibit this payment,with due compliances to RBI/Govt..But I dont think that any law ( Comapnies Act or Exchange Regulation of that country) will allow one company to do so being a going concern
However if that company is a subsidiary of foreign company,registered in India, then its an Indian company only. that case the above 5 % criteria will be applied.If payment in foreign exchange then its limited to USD 5000 (p.a) only irespective of any limit prescribed by other Act.
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