Tightening the noose around erring foreign-funded NGOs, the government has ordered that all voluntary organisations henceforth will have to make payments exceeding Rs 20,000 through account payee cheques or drafts.
The order came weeks after the home ministry found that over 10,000 NGOs receiving foreign funds have failed to submit their mandatory annual returns for three consecutive years from 2009.
During the course of inspection of records and accounts of the associations registered or granted prior permission under Foreign Contribution (Regulation) Act, 2010 from time to time, the government has observed that some NGOs withdraw huge amount of foreign contribution from their foreign contribution designated bank accounts and utilisation accounts by cash.
The issue of fixing an upper limit for incurring expenditure by association registered or granted prior permission under the FCRA by cash from foreign contribution designated bank accounts and utilisation 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 20,000 or more should be done by cheque/ demand drafts," a circular issued by joint secretary in the home ministry G K Dwivedi said.
The home ministry has already made it clear that the records and accounts of NGOs indulging in cash payments of Rs 20,000 or more from foreign contribution designated accounts or utilisation accounts are likely to require more intensive scrutiny by government.
Quoting the Income Tax Act, the home ministry said any expenditure incurred by certain categories of NGOs in respect of which payment is made for a sum exceeding Rs 20,000 otherwise than by an account payee cheque drawn on a bank or by an account payee draft, shall not be allowed as a deduction under the Income Tax Act.
Those NGOs which have not filed their return for three consecutive years from 2009 include 1,441 NGOs in Andhra Pradesh, 1,167 in Uttar Pradesh, 1,108 in Tamil Nadu, 990 in Maharashtra, 821 in Karnataka, 748 in West Bengal, 655 in Bihar, 643 in Odisha, 538 in Kerala, 400 in Delhi, 378 in Gujarat, 38 in Jammu and Kashmir and 130 in Assam besides others.
About four months ago, a classified Intelligence Bureau report had reportedly said of "anti-development" activities by several foreign funded non-governmental organisations (NGOs), saying they were "negatively impacting economic development" by agitating against big infrastructure projects.
There are 42,529 NGOs registered under FCRA as on July 16. However, there is no specific data available in respect of NGOs not registered under FCRA.