Donations, Grants and CSR Support

Complete reading edition · Vihara Foundation · 25 September 2026

1. Farmer Producer Company Limited ಒಬ್ಬ ವ್ಯಕ್ತಿ ಅಥವಾ ಖಾಸಗಿ ಸಂಸ್ಥೆಯಿಂದ ದೇಣಿಗೆ ಸ್ವೀಕರಿಸಬಹುದೇ?

ಸಾಮಾನ್ಯವಾಗಿ ಸ್ವೀಕರಿಸಬಹುದು. ಆದರೆ ಅದು ನಿಜವಾದ ಸ್ವಯಂಪ್ರೇರಿತ ಕೊಡುಗೆಯಾಗಿರಬೇಕು; ಕಂಪನಿಯ ಉದ್ದೇಶಗಳಿಗೆ ಹೊಂದಿರಬೇಕು. ದಾನಿಯ ವಿವರಗಳು, ಹಣದ ಮೂಲ, ಷರತ್ತುಗಳು, ಮಂಡಳಿಯ ಅನುಮೋದನೆ ಮತ್ತು ತೆರಿಗೆ ಪರಿಶೀಲನೆ ಅಗತ್ಯ.

2. ಅಂತಹ ದೇಣಿಗೆ ಸ್ವಯಂಚಾಲಿತವಾಗಿ ಆದಾಯ ತೆರಿಗೆಯಿಂದ ವಿನಾಯಿತಿ ಪಡೆಯುತ್ತದೆಯೇ?

ಇಲ್ಲ. “ದೇಣಿಗೆ” ಅಥವಾ “CSR” ಎಂದು ಹೆಸರಿಸಿದ ಮಾತ್ರಕ್ಕೆ ತೆರಿಗೆ ವಿನಾಯಿತಿ ಸಿಗುವುದಿಲ್ಲ. ಹಣದ ಸ್ವರೂಪ, ಮೂಲ, ಸಂಬಂಧಿಸಿದ ತೆರಿಗೆ ವರ್ಷ ಮತ್ತು ಅನ್ವಯಿಸುವ ವಿನಾಯಿತಿಗಳನ್ನು ಪರಿಶೀಲಿಸಬೇಕು.

3. Farmer Producer Company Limited ನೇರವಾಗಿ CSR ಅನುಷ್ಠಾನ ಸಂಸ್ಥೆಯಾಗಿ ನೋಂದಾಯಿಸಿಕೊಂಡು CSR ನಿಧಿಯನ್ನು ಸ್ವೀಕರಿಸಬಹುದೇ?

ಸಾಮಾನ್ಯವಾಗಿ, Chapter XXIA ಅಡಿಯಲ್ಲಿ ನೋಂದಾಯಿತ ಉತ್ಪಾದಕ ಕಂಪನಿ ಎಂಬ ಕಾರಣಕ್ಕೆ ಮಾತ್ರ ಅರ್ಹತೆ ಸಿಗುವುದಿಲ್ಲ. CSR Rules ನ Rule 4 ರ ಅರ್ಹತಾ ಷರತ್ತುಗಳು ಅನ್ವಯಿಸುತ್ತವೆ. CSR-1 ಅರ್ಜಿ ಸಲ್ಲಿಸುವುದರಿಂದ ಮಾತ್ರ ಅರ್ಹತೆ ಸೃಷ್ಟಿಯಾಗುವುದಿಲ್ಲ.

4. ರೈತರ ತರಬೇತಿ, ಮೂಲಸೌಕರ್ಯ ಅಥವಾ ಜೀವನೋಪಾಯ ಅಭಿವೃದ್ಧಿ ಯೋಜನೆಗಳ ಫಲಾನುಭವಿಯಾಗಿ Farmer Producer Company Limited CSR ಸಹಾಯವನ್ನು ಪಡೆಯಬಹುದೇ?

ಹೌದು, ಸೂಕ್ತವಾಗಿ ರೂಪಿಸಿದ ಅರ್ಹ ಯೋಜನೆಯಲ್ಲಿ ಸಾಧ್ಯ. ಯೋಜನೆಯನ್ನು CSR ಕಂಪನಿ ನೇರವಾಗಿ ಅಥವಾ ಅರ್ಹ ಅನುಷ್ಠಾನ ಸಂಸ್ಥೆಯ ಮೂಲಕ ನಡೆಸಬೇಕು. ಫಲಾನುಭವಿಗಳು, ವೆಚ್ಚ, ಆಸ್ತಿಯ ಮಾಲೀಕತ್ವ ಮತ್ತು ಬಳಕೆಯ ಷರತ್ತುಗಳನ್ನು ಸ್ಪಷ್ಟವಾಗಿ ದಾಖಲಿಸಬೇಕು.

1. Classify the support before accepting it

The agreement and actual transaction determine the treatment; the bank narration does not.

Six different receipts

A voluntary contribution normally has no reciprocal supply. A grant supports a defined purpose and may carry milestones or repayment conditions. CSR describes the corporate donor’s statutory spending framework, not a tax exemption for the recipient. Share capital purchases lawful ownership rights. A loan creates repayment obligations. A service payment purchases a supply, including one delivered to farmers and paid for by a third party.

Use a written decision

Ask who pays, who benefits, what must be delivered, whether money is repayable, whether shares or profit rights arise, and who owns any assets. A project can contain several components: separate training-service consideration, a restricted equipment grant and member contribution in the agreement, budget and ledgers. The classification sheet records unresolved questions before acceptance.

Stop misleading descriptions

Do not call a repayable deposit a donation, share subscription a grant, or advertising consideration a gift. A restriction on using funds for training does not by itself prove a taxable service; examine the enforceable deliverables and relationship. Conversely, no direct benefit to the funder does not rule out third-party consideration for a supply.

2. Company authority and approvals

A lawful purpose, proper approval and a workable agreement come before expenditure.

Check the objects

Map the proposed work to section 378B and the actual Memorandum of Association. Farmer education, technical services and facilities can fit permitted producer-company activities, but assess the actual beneficiaries and project. A socially useful activity is not automatically within every company’s objects. Obtain lawful amendments and approvals if required before proceeding.

Approve the actual obligations

Put the donor, amount, budget, objectives, conditions, deliverables, tax exposure, asset ownership and refund risk before the Board. Identify matters requiring members’ approval, borrowing approvals, charge filings or other action. Authorise a named signatory within limits. A Board resolution cannot waive tax, FCRA, CSR or donor-scheme conditions.

Control interests and commitments

Record directors’ interests and apply the relevant conflict and related-party approval rules to vendor selection, premises rent and professional fees. Separate project approval from approval to contract with a connected person. Do not promise unrestricted profit distributions, preferential shares or guaranteed procurement rights in a donation acceptance letter.

Companies Act, 2013: Chapter XXIA, section 135 and Schedule VII

3. Domestic voluntary contributions

A genuine domestic contribution may be accepted where lawful and within the company’s objects.

Record the donor and purpose

Obtain the legal name, address, constitution, authorised contact and source declaration proportionate to the transaction. Match bank remitter and donor; investigate third-party payments. Obtain a signed letter specifying amount or assets, purpose, conditions, ownership, reporting, refund triggers and whether any benefit is expected. Preserve evidence; a declaration is not conclusive proof of source.

Receipt and communication

Issue an ordinary numbered acknowledgement stating date, amount, mode, transaction reference and purpose. Do not describe it as an 80G certificate or promise a deduction without valid eligibility and approval. Prefer traceable banking. Evaluate cash-receipt restrictions under the law for the relevant period before accepting cash; splitting payments is not a solution.

Use and segregation

Create a donor/project ledger and reconcile it to the bank. A dedicated account is useful for substantial restricted projects and compulsory where the agreement or law requires it; it is not a universal rule for every domestic gift. Apply an approved beneficiary policy. Directors cannot appropriate support personally, and a donor cannot gain voting rights merely by giving money.

4. Government and institutional grants

A sanction, a disbursement and income recognition are different events.

Read the entire sanction

Check applicant eligibility, component, eligible costs, application and purchase dates, own contribution, disbursement basis, output targets, procurement rules, reporting, inspection and clawback. Do not buy equipment assuming a later sanction will reimburse it. A lender guarantee, interest subsidy and cash grant are different forms of assistance.

Prepare the funding plan

List approved cost, eligible cost, own funds, debt, grant and timing. Record whether taxes, land, salaries, used equipment and contingencies qualify. Disclose other assistance; obtain written permission for convergence. Never submit the same expenditure twice as fully funded by different donors.

Changes require evidence

Seek written approval before changing location, beneficiaries, vendor conditions, project scope or budget beyond permitted flexibility. Keep expenditure incurred before approval in a separate exception log. Recognise receivables or grant income only when the applicable accounting requirements are satisfied; an application or announcement is not income.

5. CSR: implementing agency, beneficiary or supplier?

These roles are legally different and must be clear in the agreement.

Ordinary producer-company status is insufficient

Rule 4 identifies permitted implementing entities, including qualifying section 8 companies, registered public trusts, registered societies, government-established entities and statutory entities in the specified categories. A normal Farmer Producer Company Limited under Chapter XXIA is not eligible merely because it benefits farmers. CSR-1 does not convert an ineligible legal form into an eligible agency.

Check the whole eligibility category

For relevant non-government categories, Rule 4 as amended in 2022 recognises specified section 10(23C) exemptions or the prescribed 12A registration and 80G approval combination; the independent category also has a three-year similar-activity track-record condition. These are references in the Rules: check current corresponding tax approvals, transitional provisions and MCA form requirements. Do not apply every condition indiscriminately to government or statutory categories.

Three practical routes

The CSR company can implement its own qualifying project; an eligible implementing agency can run it; or a Farmer Producer Company Limited can be a beneficiary or genuinely contracted supplier within a properly controlled project. Identify who plans, controls expenditure, supervises delivery and reports utilisation. Calling an ineligible entity a vendor while transferring the entire implementation responsibility does not solve Rule 4.

Donor responsibility continues

The donor must assess eligibility, approve and monitor its project and meet its own statutory reporting and unspent-fund duties. CSR-1 registration is neither funding sanction nor assurance of future funding. A simple transfer to a recipient does not itself establish eligible expenditure.

6. Design a qualifying farmer-development project

Start with measurable farmer outcomes, then identify the Schedule VII connection.

Build a documented case

Describe the problem, village coverage, baseline, transparent beneficiary criteria, intervention, deliverables, budget, timeline and outcome measures. Map the actual project to relevant Schedule VII subjects such as livelihood enhancement, vocational skills, environmental sustainability, women’s empowerment or rural development. A heading on the proposal cannot cure an ordinary commercial transfer.

Distinguish public-purpose outcomes from business subsidy

Farmer training, common facilities and water conservation can potentially fit a qualifying project. An unrestricted transfer to finance ordinary trading, dividends, debt repayment or a few insiders is unlikely to establish the required CSR purpose. Avoid an absolute rule that every salary, input purchase or running cost is prohibited: a necessary and eligible cost within a genuine project must be examined on its facts.

Measure useful results

For training, record curriculum, attendance with proportionate personal information, learning and follow-up adoption. For machinery, record installation, users, volumes, access terms and maintenance. For women’s livelihoods, measure participation and income or market access with a defensible method. Reports should distinguish activities completed from outcomes demonstrated.

Keep marketing separate

The CSR Rules exclude sponsorship activities deriving marketing benefits for the donor’s products or services. Examine logo, exclusivity and promotion obligations before signing. A modest factual acknowledgement and a commercial promotional campaign are not equivalent, but wording alone cannot determine eligibility or GST.

7. CSR-funded assets and common facilities

Agree legal ownership, access and maintenance before placing an order.

Rule 7(4) ownership routes

The capital-asset rule recognises specified charitable entities with CSR registration, beneficiaries in the form of self-help groups, collectives or entities, and public authorities. A Farmer Producer Company Limited may potentially hold an asset as a genuine beneficiary entity under the beneficiary route. That possibility is not a blanket approval for every business asset, and beneficiary status does not itself require it to become a CSR implementing agency.

Document the full asset lifecycle

State the purchaser, invoice addressee, legal owner, installation site, title/lease rights, insurance, serial number, commissioning, approved users, pricing policy, maintenance responsibility and restrictions on sale, pledge, relocation and disposal proceeds. If the asset stands on a director’s property, obtain durable access and enforceable use rights rather than relying on an oral promise.

Usage charges and financing

User charges may be part of a sustainable project, but document permitted use of receipts, maintenance reserve and treatment of any surplus with the donor. Review GST and income tax separately. Do not assume permission to mortgage, sell or distribute the asset. A bank security proposal must be consistent with the grant, title and applicable law.

8. Income tax: no automatic exemption

Review the receipt for the correct period, legal provision and head of income.

Choose the correct law

For periods before 1 April 2026, examine the Income-tax Act, 1961, including section 56(2)(x) where relevant. For Tax Year 2026–27 onwards, use the Income-tax Act, 2025 as amended; receipts without consideration are addressed in section 92(2)(m), with exceptions in section 92(3). Avoid citing an old section as the current provision without explaining the period.

Money without consideration

Where the applicable provision applies, aggregate money received without consideration exceeding ₹50,000 can bring the whole qualifying amount into charge, not only the excess. Test statutory exclusions, other income heads and the transaction first. The relative exception for an individual is not a general exception for a company receiving money from a director’s relatives.

Exceptions are specific

Under the 2025 Act, the registered-non-profit-organisation exception in section 92(3) has its own scope and related-person exclusion. Obtain valid status and relationship evidence. An exclusion from one gift provision does not establish exemption under every other provision or validate the donor’s use of its own funds. Do not arrange a conduit transfer solely on an assumed exemption.

Grants, assets and exemptions

Government assistance, business receipts, asset-cost adjustments and specified gifts have different rules. Do not apply the monetary gift rule mechanically to every donated machine: the statutory property definition matters, and other charging provisions may still apply. A capital-reserve entry, restricted-use clause or CSR label is not a tax exemption. Being a producer-owned company does not exempt all trading or training income as agricultural income.

Before filing

Prepare a receipt-by-receipt memo covering period, nature, source, applicable provision, exception evidence, tax computation, asset cost and book–tax difference. Review advance tax, withholding and return disclosure. Do not promise a universal tax rate or donor deduction; both depend on facts and the relevant law.

9. GST: contribution, sponsorship or service?

Determine the supply and consideration before choosing a document or tax rate.

Genuine contribution

A genuinely gratuitous contribution with no supply in return is generally outside consideration for a supply. But analyse the entire arrangement, including supplies to beneficiaries funded by the donor and any Schedule I issue. Reporting on utilisation does not automatically create a service; an enforceable training-services contract may do so.

Advertising and acknowledgement

Logo display, advertising rights, product promotion, exclusive sales opportunities or naming rights can change the analysis. CBIC Circular 116/35/2019 concerns acknowledgements in specified individual-donor circumstances; it is not a universal exemption for corporate sponsorship. Examine registration, classification, place of supply, rate, exemption and reverse charge for the particular contract.

Government payments and reimbursement

The statutory treatment of Central or State government subsidies does not mean every government contract payment is outside GST. Price-linked subsidies from other sources can affect value. Reimbursement is not automatically excluded; pure-agent treatment has specific conditions. An invoice paid directly by a donor also needs analysis of who received the supply and whether third-party consideration arises.

Invoices and credits

Issue a tax invoice where legally required for a taxable supply, not merely because money arrived. Use an appropriate acknowledgement for a non-supply contribution. Review input-tax-credit eligibility, invoice recipient, business use, exempt activities and blocked credits; the donor’s CSR credit position and the recipient’s credit position are separate. A utilisation statement is not a substitute for a required tax invoice.

10. Accounting and audit trail

The books must reflect rights and obligations, not the preferred tax outcome.

Choose the applicable framework

First establish whether AS or Ind AS applies. AS 12 addresses government grants; do not automatically apply it to every private or CSR-funded grant. For private support, document an appropriate policy under the applicable framework and contractual substance. Grant source, refund conditions, performance obligations and ownership matter.

Recognition and presentation

For government grants within AS 12, recognition requires reasonable assurance regarding conditions and receipt; asset grants may use permitted cost-deduction or deferred-income treatment. Capital-reserve treatment is confined to qualifying circumstances. Conditional refundable advances may initially be liabilities, but not every restricted receipt stays a liability indefinitely. Reassess at reporting dates.

Keep a project subledger

Track sanctioned amount, receipts, receivables if recognised, expenditure, assets, income recognition, advances, unpaid bills, interest and refund exposure. Reconcile the project ledger to the general ledger and bank. A dedicated bank balance is not necessarily the same as unspent eligible funds because advances and payables differ.

Audit and tax reconciliation

Keep approvals, agreements, vendor evidence, invoices, delivery, bank trail and beneficiary records. Provide the accounting-policy memo and a separate tax-treatment memo to the statutory auditor. Include grant controls in internal audit under section 378ZF and the Articles. An auditor’s report does not retroactively authorise an ineligible expenditure.

11. Utilisation, reporting and refunds

Report actual eligible use, outstanding commitments and exceptions separately.

Agree reporting before receipt

Set milestones, evidence, report dates, prescribed format, signatory and whether an independent CA certificate is needed. The management utilisation worksheet in this resource is not a professional certificate. Agree how beneficiary data and photographs may be used; share only necessary personal information securely.

Close each period

Reconcile opening balance, receipts, attributable interest, eligible utilisation, refunds and closing balance. Separate advances, unpaid eligible expenditure and rejected costs. Confirm donor instructions on interest and savings. Do not describe funds as fully utilised just because they moved to another account or supplier advance.

Unspent funds and statutory duties

The recipient must follow its agreement and applicable law. The CSR company’s section 135 and Rules obligations for ongoing and other projects are separate; do not copy the donor’s statutory timelines into the recipient ledger as if they automatically determine its right to retain cash. Notify the donor early and obtain lawful extension, reallocation or refund instructions.

Breach or closure

Freeze disputed expenditure, quantify exposure, inform the approving authority and funder, assess repayment and accounting adjustments, and preserve the actual chronology. Never backdate evidence. Before closing, verify assets, outstanding commitments, refunds, final reporting and records retention under applicable company, tax and funding requirements.

12. Foreign sources and difficult cases

An Indian bank transfer or rupee payment does not by itself establish an Indian source.

Classify the source

Identify the legal donor, citizenship or constitution, ownership where relevant, original source and nature of payment. Foreign-source and foreign-contribution definitions contain specific inclusions and exclusions. Indian citizens living abroad, foreign citizens and foreign-owned Indian entities require their respective statutory tests; do not classify by currency, surname or account location.

Prior compliance

Where the receipt is foreign contribution and FCRA applies, assess eligibility, registration or prior permission and the required banking route before receipt or use. A Board resolution or donor approval is not an FCRA permission. Use the current MHA portal because forms, notices and conditions change.

No pass-through workaround

Section 7 restricts onward transfer of foreign contribution by a registered or permitted recipient. Do not assume a domestic NGO can pass a foreign grant to the company because it has FCRA registration. Genuine procurement of goods or services needs separate analysis; changing a grant’s name to a service fee cannot cure a prohibited transfer.

Unexpected receipt

If an unexplained or potentially foreign contribution arrives, do not spend it or reflexively reroute it. Preserve bank and donor records and obtain prompt FCRA/banking advice on the lawful handling and reporting steps. Genuine commercial receipts may fall under relevant exclusions, but substance and evidence must support that conclusion.

10 worked funding examples

Fictional illustrations. Amounts exclude taxes unless stated; accounting entries assume the specified facts and policy. Tax and legal conclusions require separate review.

1. Individual gives ₹2,00,000 without conditions

Assume an Indian individual gives genuine money without consideration, within the company’s objects, with no repayment or supply. Obtain the donor letter, Board approval and bank evidence. If the applicable money-gift rule applies with no exception, the full ₹2,00,000 can be taxable, not ₹1,50,000. Do not select a tax rate without the company’s facts. Record the receipt under the appropriate income classification; a separate tax memo explains the conclusion.

2. Private institution gives ₹10,00,000 for training

Assume a non-service restricted grant, refundable until eligible delivery, and a documented policy recognising income as conditions are met. On receipt: Dr Bank ₹10,00,000; Cr Refundable project advance ₹10,00,000. After ₹6,00,000 of qualifying paid training costs: Dr Project expense / Cr Bank ₹6,00,000; if the related conditions are satisfied, Dr Project advance / Cr Grant income ₹6,00,000. Remaining advance and bank balance are ₹4,00,000, assuming no other flows. This is a conditional illustration, not automatic AS 12 treatment of private grants; assess tax separately.

3. CSR project provides a ₹12,00,000 grading machine

The donor proposes a common facility for 300 farmers. Determine whether the company is the genuine beneficiary entity under Rule 7(4), who purchases and owns the machine, site rights, access charges and disposal controls. If the donor retains title, do not automatically book the machine as the company’s owned asset. If title transfers, choose the applicable asset/grant policy. ₹12,00,000 is the project price, not proof of a tax exemption.

4. ₹3,00,000 support includes compulsory product promotion

The sponsor requires product banners, promotional videos and exclusive marketing access. Review the real advertising or sponsorship arrangement, GST classification and any reverse charge, and whether the donor’s proposed CSR treatment fails the sponsorship exclusion. Do not issue a simple tax-free donation receipt because the contract uses the word support.

5. Company contracts to deliver ten training sessions

A funder pays ₹50,000 per session for ten sessions: base contractual consideration ₹5,00,000. Farmers attend without paying. Determine supply, registration, exemption and applicable GST before finalising the total invoice. Recognise service revenue as required by the applicable framework; do not treat the full consideration as a donation merely because trainees pay nothing.

6. Government sanctions ₹8,00,000 but pays nothing yet

The sanction requires eligible machinery, inspection and evidence of own contribution. At sanction, assess whether recognition criteria are met; do not automatically debit a receivable. Track conditions and eligible costs. Once reasonable assurance and the applicable criteria are established, use the relevant government-grant policy. Cash-flow planning should still show that receipt timing is uncertain until confirmed.

7. Year-end unspent reconciliation

Opening ₹1,00,000 + receipts ₹5,00,000 + attributable interest ₹10,000 − eligible costs paid ₹3,50,000 − refund ₹50,000 = bank/project cash ₹2,10,000, assuming no other movements. If ₹40,000 of eligible bills are unpaid, an accrual-basis statement differs from the cash statement. Show both bases and commitments; interest is not automatically available for unrestricted use.

8. ₹1,00,000 of spending is disallowed

A ₹5,00,000 grant funded ₹4,00,000 of payments, but ₹1,00,000 is ineligible. Eligible utilisation is ₹3,00,000. With no other flows, ₹1,00,000 cash remains, but potential refundable principal is ₹2,00,000 if the donor requires all unused and ineligible funds back. The company must find another ₹1,00,000; spending cash does not prove eligible utilisation.

9. Supporter asks for repayment or shares

A supporter pays ₹5,00,000 and expects repayment in two years or shares. Separate a proposed loan from an eligible share subscription and assess company-law permissions, membership and documentation. Do not book a donation first and decide the legal character later. A non-producer donor does not obtain membership merely by paying.

10. Overseas organisation remits ₹4,00,000 in rupees

Do not classify it domestic because it reaches an Indian bank account. Verify the source, nature and FCRA position before planned receipt. If it arrives unexpectedly, preserve evidence, do not spend or reroute it casually, and obtain prompt advice on lawful handling. An Indian intermediary is not an automatic solution because onward-transfer restrictions can apply.

Practical question bank

Can an individual or private institution give a donation?

Generally yes, if genuine, lawful and within the company’s objects. Obtain a purpose letter, source evidence, Board approval and an accounting/tax review. Do not offer shares, repayment or services while calling the receipt a donation.