Saving Mantra Blogs

Category: Business Compliances

  • NRI Guide: Evaluating Real Estate Investment in India

    Saving Mantra Blog: Step-by-Step Process for NRI to Evaluate Investment in Real Estate in India

    Investing in Indian real estate can be lucrative for NRIs, but it requires careful evaluation of legal, financial, and tax factors. Proper assessment ensures secure investments, compliance with FEMA and Income Tax regulations, and maximized returns.

    This guide provides a step-by-step process for NRIs to evaluate real estate investments in India.

    ✔ Step 1: Determine Investment Objectives

    • Decide the purpose of investment:
      • Rental income
      • Capital appreciation
      • Vacation/retirement home
    • Define investment horizon and budget

    Tip: Align investment goals with financial plans and risk tolerance.

    ✔ Step 2: Choose the Type of Property

    • Residential property: Apartments, villas, plots
    • Commercial property: Office space, retail shops, warehouses
    • Land or agricultural property: NRIs cannot invest directly in agricultural land without RBI approval

    Check: Ensure property is eligible for NRI ownership under FEMA rules.

    ✔ Step 3: Legal Due Diligence

    • Verify property title and ownership documents
    • Check encumbrance certificate to ensure property is free from legal disputes
    • Ensure RERA registration for residential or commercial projects
    • Confirm approvals from municipal authorities

    Tip: Hire a trusted legal professional in India for verification.

    ✔ Step 4: Financial Evaluation

    • Calculate total investment cost including:
      • Property price
      • Stamp duty & registration
      • Maintenance & renovation costs
    • Estimate rental yield and expected capital appreciation
    • Evaluate financing options:
      • NRI home loans from Indian banks
      • Repayment feasibility and interest rates

    ✔ Step 5: Tax Implications

    • Rental income is taxable in India at NRI slab rates
    • Capital gains tax on property sale:
      • Long-Term Capital Gains (LTCG) for holding >24 months
      • Short-Term Capital Gains (STCG) for holding ≤24 months
    • TDS applies for NRIs when receiving rent or sale proceeds
    • Check for exemptions under Sections 54 & 54EC for LTCG

    ✔ Step 6: FEMA Compliance

    • NRIs can invest only in residential or commercial property
    • Funds must be remitted via NRE/NRO accounts through authorized dealer banks
    • Maintain records of investment and repatriation limits (USD 1 million per FY)

    ✔ Step 7: Assess Location & Market Trends

    • Evaluate location, infrastructure, and connectivity
    • Consider future development plans and urban growth
    • Study historical price trends and rental demand
    • Check builder reputation and past project performance

    ✔ Step 8: Risk Assessment

    • Political and regulatory risks
    • Market volatility and price corrections
    • Tenant default or property vacancy
    • Legal disputes or title issues

    Tip: Diversify investments and consider professional property management services.

    ✔ Step 9: Documentation & Final Purchase

    • Execute sale deed and registration
    • Obtain PAN, Aadhaar (if applicable), and NRE/NRO account details
    • Ensure stamp duty and registration paid correctly
    • Keep copies of all legal, tax, and FEMA compliance documents

    ✔ Step 10: Post-Purchase Management

    • Maintain records of rental income, expenses, and tax payments
    • Plan for future sale, repatriation of funds, or inheritance
    • Hire property management company if required for smooth operations

    FAQs – NRI Investment in Real Estate in India

    Q1: Can NRIs invest in agricultural land in India?
    A: No, direct investment in agricultural or plantation land is generally prohibited without RBI approval.

    Q2: What tax applies on rental income for NRIs?
    A: Rental income is taxable at NRI slab rates, with TDS applicable.

    Q3: How is capital gain taxed on property sale?
    A: LTCG (holding >24 months) taxed at 20% with indexation, STCG (≤24 months) taxed at normal slab rates.

    Q4: Can NRIs repatriate sale proceeds abroad?
    A: Yes, up to USD 1 million per financial year, via NRE/NRO accounts, complying with FEMA.

    Q5: Should NRIs hire a property manager?
    A: Yes, especially if the property is rented out or NRI resides abroad, to handle tenant and maintenance issues.

    Conclusion

    Evaluating real estate investment in India for NRIs requires careful legal, financial, tax, and FEMA compliance checks. Following this step-by-step guide ensures safe investment, optimal returns, and hassle-free property management.

    Disclaimer

    This blog is for informational purposes only and does not constitute legal, tax, or investment advice. Property laws, FEMA regulations, and taxation may change. NRIs should consult qualified professionals before investing in Indian real estate.

  • NRI Guide: Estate Planning via Trust in India

    Saving Mantra Blog: Step-by-Step Process for Estate Planning through Trust for NRI

    Estate planning is crucial for NRIs to safeguard assets in India, ensure smooth inheritance, and minimize tax liabilities. Establishing a trust provides a structured framework to manage and distribute assets according to your wishes while maintaining privacy and legal protection.

    This guide explains the step-by-step process for NRIs to plan estates via trusts in India.

    ✔ Step 1: Understand the Purpose of a Trust

    • Trust is a legal arrangement where a settlor (you) transfers assets to a trustee
    • Trustee manages assets for the benefit of named beneficiaries
    • Benefits:
      • Ensures controlled asset distribution
      • Minimizes disputes among heirs
      • Provides tax planning opportunities
      • Maintains privacy and legal protection

    ✔ Step 2: Choose the Type of Trust

    1. Revocable Trust
      • Settlor can modify or revoke during lifetime
      • Flexibility in asset management
    2. Irrevocable Trust
      • Cannot be changed once created
      • Provides tax efficiency and asset protection
    3. Specific Purpose Trust
      • For charitable donations, education, or property management

    ✔ Step 3: Identify Assets for the Trust

    NRIs can transfer various Indian assets:

    • Immovable property (residential or commercial)
    • Bank accounts and fixed deposits
    • Shares, securities, and mutual funds
    • Business interests or partnership stakes

    Tip: Only assets legally owned in India can be included.

    ✔ Step 4: Draft the Trust Deed

    Trust deed should include:

    • Name and details of settlor, trustee, and beneficiaries
    • Purpose and objectives of the trust
    • Asset list and instructions for distribution
    • Powers and responsibilities of trustee
    • Terms for revocation (if revocable)

    Professional help: Engage an Indian lawyer familiar with trust laws.

    ✔ Step 5: Register the Trust

    • Registration under Indian Trusts Act, 1882 is mandatory for:
      • Trusts managing immovable property
      • Charitable or public trusts
    • Submit:
      • Trust deed
      • ID and address proofs of settlor and trustees
      • Registration fees

    Note: Registration makes the trust legally valid and enforceable.

    ✔ Step 6: Comply with Taxation Rules

    • Trust income may be taxed depending on type:
      • Revocable trusts: Income taxed in the hands of settlor
      • Irrevocable trusts: Income may be taxed at trust level or in the hands of beneficiaries
    • NRIs must report trust-related income in India via ITR-2 or ITR-3
    • Plan for capital gains, rental income, or interest income in India

    ✔ Step 7: Asset Transfer and Accounting

    • Transfer assets to trust via Indian bank accounts (NRE/NRO for NRIs)
    • Maintain accurate records and valuations
    • Ensure compliance with FEMA regulations for foreign investments

    ✔ Step 8: Trustee Management

    • Trustees manage assets per trust deed instructions
    • Duties include:
      • Asset maintenance and record-keeping
      • Filing tax returns
      • Distributing income/assets to beneficiaries

    ✔ Step 9: Review and Update the Trust

    • Periodically review trust structure and assets
    • Amend trust (if revocable) to reflect changes in:
      • Family circumstances
      • Tax laws
      • Asset portfolio

    FAQs – Estate Planning through Trust for NRIs

    Q1: Can NRIs create a trust in India?
    A: Yes. NRIs can establish trusts for assets they own in India, following Indian trust laws.

    Q2: What assets can be included in a trust?
    A: Movable and immovable property, bank deposits, shares, securities, and business interests owned in India.

    Q3: What is the difference between revocable and irrevocable trusts?
    A: Revocable trusts can be modified during the settlor’s lifetime, while irrevocable trusts cannot.

    Q4: Is registration of trust mandatory?
    A: Yes, especially for trusts holding immovable property or for charitable purposes.

    Q5: How is trust income taxed for NRIs?
    A: Income is taxed based on trust type: revocable (settlor taxed), irrevocable (taxed at trust or beneficiary level).

    Conclusion

    Establishing a trust is a powerful tool for NRI estate planning in India. By following this step-by-step guide—drafting a deed, registering the trust, transferring assets, and ensuring tax compliance—NRIs can secure assets, plan inheritance efficiently, and optimize tax liabilities.

    Disclaimer

    This blog is for informational purposes only and does not constitute legal, tax, or investment advice. Trust laws, FEMA regulations, and tax provisions may change. NRIs should consult qualified professionals before creating trusts in India.

  • NRI Guide: Invest in Proprietorship/Partnership in India

    Saving Mantra Blog: Step-by-Step Process for Investment in Proprietorship Business/Partnership Firm in India

    NRIs looking to invest in proprietorship businesses or partnership firms in India must follow legal and regulatory requirements under FEMA, Income Tax, and business laws. Proper planning ensures smooth investment, compliance, and risk management.

    This guide explains the step-by-step process for NRIs to invest in proprietorship or partnership firms in India.

    ✔ Step 1: Determine the Type of Business Investment

    • Proprietorship Business:
      • Single-owner business
      • NRI can invest, but business remains under Indian resident ownership
    • Partnership Firm:
      • Multiple partners share profits and liabilities
      • NRI can invest as a partner, complying with FEMA regulations

    Note: NRIs cannot directly invest in proprietorship under their NRI status; investment is routed via NR account or Indian resident nominee.

    ✔ Step 2: Comply with FEMA Rules

    • Investments by NRIs in partnership firms or proprietorships fall under FEMA (Foreign Exchange Management Act)
    • Conditions:
      • Investment should be in permitted sectors
      • Funds transferred via NRE/NRO accounts through authorized dealer banks
      • Maintain proper documentation for RBI reporting

    ✔ Step 3: Draft Partnership Agreement (For Partnership Firm)

    • Include:
      • Roles, responsibilities, and profit-sharing ratio
      • Capital contribution by NRI and resident partners
      • Exit clauses, dispute resolution, and governance rules
    • Register partnership agreement with Registrar of Firms (optional but recommended)

    ✔ Step 4: Business Registration

    • Proprietorship Business:
      • Obtain GST registration if turnover exceeds threshold
      • Open current bank account in India
      • Obtain PAN and TAN
    • Partnership Firm:
      • Register under Indian Partnership Act, 1932
      • Obtain PAN, TAN, and GST registration
      • Maintain books of accounts

    ✔ Step 5: Tax Compliance

    • NRIs investing in businesses must comply with Income Tax Act:
      • Proprietorship income taxed as per individual slab rates
      • Partnership firm profits taxed at firm level, distributed profits may also attract tax
    • NRIs must report income from business in India in ITR-2 or ITR-3

    ✔ Step 6: Fund Transfer and Accounting

    • Transfer investment via NRE/NRO accounts
    • Maintain proper audit trails and bank statements
    • Ensure capital contribution matches partnership agreement

    ✔ Step 7: Operational Compliance

    • Maintain books of accounts as per Indian law
    • File annual income tax returns
    • Ensure compliance with GST, labor laws, and sector-specific regulations

    ✔ Step 8: Exit Strategy

    • Include buy-back or exit clauses in partnership agreement
    • Repay NRI investment via NRO/NRE accounts following FEMA guidelines
    • Tax implications on withdrawal or sale of share must be computed

    Conclusion

    Investing in proprietorship or partnership firms in India requires careful adherence to FEMA, Income Tax, registration, and operational compliance. Following this step-by-step guide ensures NRIs can invest efficiently while staying legally compliant.

    Disclaimer

    This blog is for informational purposes only and does not constitute legal, tax, or investment advice. FEMA rules, tax laws, and business regulations may change. NRIs should consult qualified professionals before investing in Indian businesses.

  • NRI Guide: Sale of Movable Property in India

    Saving Mantra Blog: Sale Proceeds of Movable Property in India for NRIs

    NRIs selling movable property in India—such as shares, securities, jewelry, or other movable assets—must comply with taxation, TDS, FEMA, and repatriation rules. Proper planning ensures legal compliance and smooth fund transfer abroad.

    This guide provides a step-by-step process for NRIs managing sale proceeds of movable property in India.

    ✔ Step 1: Identify Movable Property

    Movable property includes:

    • Shares, mutual funds, and securities
    • Gold, jewelry, and bullion
    • Vehicles
    • Other tangible movable assets

    Note: Tax treatment varies depending on the type of asset.

    ✔ Step 2: Determine Capital Gains Tax

    Capital gains tax applies when movable property is sold:

    • Short-Term Capital Gains (STCG):
      • Assets held ≤36 months (for most movable property)
      • Taxed at normal slab rates or 15% for equity shares under STT
    • Long-Term Capital Gains (LTCG):
      • Assets held >36 months (e.g., gold, debt mutual funds)
      • Taxed at 20% with indexation
    • Exemptions:
      • Certain bonds, reinvestments, or specific securities (as per Income Tax Act)

    ✔ Step 3: TDS Deduction

    • Buyers or brokers may deduct TDS at source for NRIs:
      • Equity shares or mutual funds: 10% for LTCG exceeding ₹1 lakh
      • Other movable assets: appropriate TDS as per income type
    • NRIs can apply for Lower/No TDS Certificate under Section 197 if tax liability is lower

    ✔ Step 4: Comply with FEMA Rules

    • Sale proceeds of movable property are subject to FEMA regulations
    • Funds must be credited to NRO/NRE accounts for repatriation
    • Repatriation limit: USD 1 million per financial year
    • Ensure property was acquired legally by NRI

    ✔ Step 5: Repatriation of Sale Proceeds

    Steps to transfer funds abroad:

    1. Ensure TDS has been deducted and taxes paid
    2. Submit Form 15CA & 15CB certified by a Chartered Accountant
    3. Transfer proceeds via NRO/NRE accounts
    4. Follow RBI/FEMA guidelines to stay within repatriation limits

    ✔ Step 6: File Income Tax Return

    • NRIs must report sale proceeds in ITR-2 or ITR-3 depending on business/professional income
    • Include:
      • Sale proceeds and capital gains computation
      • TDS deducted
      • Any exemptions claimed
    • Filing ensures TDS credit or refund and compliance with Indian laws

    ✔ Step 7: Maintain Proper Records

    Keep all documents for at least 6 years:

    • Sale deeds, transaction statements, or broker notes
    • TDS certificates (Form 16A/26AS)
    • PAN, passport, and NRI proof
    • Form 15CA/15CB
    • Bank statements showing credited sale proceeds

    FAQs – Sale Proceeds of Movable Property for NRIs

    Q1: Are NRIs taxed on sale of movable property in India?
    A: Yes. Capital gains tax applies based on holding period and type of asset.

    Q2: What TDS applies for movable property sale?
    A: TDS varies:

    • 10% for equity LTCG above ₹1 lakh
    • Higher rates for other movable assets as per tax provisions

    Q3: Can NRIs repatriate full proceeds abroad?
    A: Yes, up to USD 1 million per financial year via authorized banks, subject to FEMA compliance.

    Q4: Are there exemptions for capital gains?
    A: Yes, certain reinvestments in specified bonds, assets, or securities may qualify for exemptions under Indian law.

    Q5: What forms are needed for repatriation?
    A: Form 15CA & Form 15CB are required for repatriation of movable property sale proceeds.

    Conclusion

    Selling movable property in India as an NRI requires careful tax computation, TDS deduction, FEMA compliance, and repatriation planning. Following these steps ensures legal compliance, smooth fund transfer, and optimal tax management.

    Disclaimer

    This blog is for informational purposes only and does not constitute legal, tax, or investment advice. Tax laws, FEMA regulations, and repatriation rules may change. NRIs should consult qualified professionals before selling movable property in India.

  • NRI Guide: Sale of Property & Capital Gains in India

    Saving Mantra Blog: Sale Proceeds of Immovable Property in India for NRIs

    Selling property in India as an NRI involves capital gains taxation, TDS, FEMA compliance, and repatriation rules. Understanding these rules ensures legal compliance, tax optimization, and smooth fund transfer abroad.

    This guide explains the complete process for NRIs to manage sale proceeds of immovable property in India.

    ✔ Step 1: Identify Property Type & Holding Period

    • Long-Term Property: Held for > 24 months → Taxed as Long-Term Capital Gains (LTCG)
    • Short-Term Property: Held for ≤ 24 months → Taxed as Short-Term Capital Gains (STCG)

    Why it matters: Tax rate and applicable exemptions depend on the holding period.

    ✔ Step 2: Compute Capital Gains

    Long-Term Capital Gains (LTCG)

    • Taxed at 20% with indexation
    • Indexation adjusts purchase cost for inflation
    • Exemptions:
      • Section 54 – Reinvestment in residential property
      • Section 54EC – Investment in specified bonds

    Short-Term Capital Gains (STCG)

    • Taxed at normal income tax slab rates for NRIs

    Example:
    Property bought for ₹50 lakhs and sold for ₹1 crore after 5 years → LTCG = Sale price – Indexed cost of acquisition.

    ✔ Step 3: TDS Deduction

    • TDS under Section 195 applies to NRIs selling property in India:
      • 1% for residential property > ₹50 lakhs
      • Higher rates for other property types
    • Buyer deducts TDS before making payment
    • NRIs can apply for Lower/No TDS Certificate if actual tax liability is lower

    ✔ Step 4: FEMA and LRS Compliance

    • Sale proceeds are subject to FEMA rules for NRIs:
      • Repatriation limit: USD 1 million per financial year
      • Funds must be transferred via NRO/NRE accounts
      • Proof of property ownership and legal compliance required

    ✔ Step 5: Repatriation of Sale Proceeds

    Steps to repatriate funds abroad:

    1. Ensure TDS has been deducted and tax compliance completed
    2. Submit Form 15CA & 15CB (certificate from a Chartered Accountant)
    3. Transfer proceeds via NRO/NRE account
    4. Follow RBI/FEMA guidelines to stay within the USD 1 million repatriation limit

    ✔ Step 6: File Income Tax Return

    • File ITR-2 for NRIs if no business income; ITR-3 if there is business/professional income
    • Disclose:
      • Sale proceeds
      • Capital gains calculation
      • TDS deducted
    • Claim TDS credit or refund if applicable

    ✔ Step 7: Maintain Records

    Keep records for 6 years:

    • Sale deed and registration documents
    • Bank statements showing proceeds
    • TDS certificate (Form 16B / Form 26AS)
    • PAN, Aadhaar, passport, and NRI proof
    • Form 15CA/15CB

    These documents are crucial for audit or dispute resolution.

    FAQs – Sale Proceeds of Property for NRIs

    Q1: Are NRIs taxed on property sale in India?
    A: Yes. NRIs pay capital gains tax on property sold in India based on LTCG/STCG rules.

    Q2: What is TDS under Section 195 for NRIs?
    A: Buyers deduct TDS at 1% for residential property > ₹50 lakhs and at higher rates for other property types.

    Q3: Can NRIs repatriate full sale proceeds abroad?
    A: Yes, up to USD 1 million per financial year via authorized banks, subject to FEMA compliance.

    Q4: What exemptions are available for LTCG?
    A: Exemptions under Section 54 (residential property reinvestment) and Section 54EC (capital gains bonds) reduce tax liability.

    Q5: What forms are needed for repatriation?
    A: Form 15CA & Form 15CB are required for repatriating property sale proceeds abroad.

    Conclusion

    NRIs selling immovable property in India must manage capital gains tax, TDS, FEMA compliance, and repatriation carefully. Following this step-by-step process ensures legal compliance, smooth fund transfer, and optimal tax planning.

    Disclaimer

    This blog is for informational purposes only and does not constitute legal, tax, or investment advice. Tax rates, FEMA rules, and repatriation limits may change. NRIs should consult qualified professionals before selling property in India.

  • Step-by-Step Guide to NGO Annual Package in India

    Introduction to NGO Annual Package

    Managing an NGO in India involves continuous legal, tax, accounting, and regulatory compliance throughout the year. An NGO Annual Package is a structured, bundled compliance solution that ensures end-to-end yearly compliance, reduces risks, and allows NGOs to focus on their social mission.

    This Saving Mantra guide explains the step-by-step process and scope of an NGO Annual Package in India, covering accounting, audit, income tax, registrations, reporting, and risk management under applicable laws.

    What Is an NGO Annual Package?

    An NGO Annual Package is a comprehensive yearly compliance and advisory plan designed for:

    • Charitable Trusts
    • Registered Societies
    • Section 8 Companies

    It integrates accounting, audit, income tax, registrations, filings, and advisory into one structured solution.

    Key Laws Covered Under NGO Annual Package

    An annual package typically ensures compliance with:

    • Income Tax Act, 1961
    • Companies Act, 2013 (for Section 8 Companies)
    • CSR Rules & MCA filings (where applicable)
    • Trust / Society state laws
    • Donor, CSR, and funding regulations

    Why NGOs Need an Annual Compliance Package

    • Avoid penalties and cancellation of registrations
    • Maintain 12AB and 80G validity
    • Ensure audit and filing readiness
    • Build donor and CSR credibility
    • Reduce compliance cost and effort
    • Get year-round professional support

    Step-by-Step Process of NGO Annual Package in India

    Step 1: NGO Compliance Health Check

    The process starts with:

    • Review of NGO structure and registrations
    • Status of 12AB, 80G, CSR-1, DARPAN, FCRA (if applicable)
    • Review of past filings and notices
    • Identification of compliance gaps

    Step 2: Annual Accounting & Bookkeeping

    Ongoing accounting support includes:

    • Monthly or quarterly bookkeeping
    • Project-wise and fund-wise accounting
    • Segregation of restricted and unrestricted funds
    • Bank reconciliation and voucher management

    Step 3: Audit & Financial Statements

    Annual package covers:

    • Preparation of Receipts & Payments Account
    • Income & Expenditure Account
    • Balance Sheet
    • Coordination for statutory and tax audit

    Step 4: Income Tax Return Filing

    Timely compliance includes:

    • Preparation and filing of NGO ITR
    • Disclosure of income application and accumulation
    • Filing of audit report (if applicable)

    This ensures continued tax exemption.

    Step 5: 12AB & 80G Compliance Management

    Annual monitoring of:

    • Validity of 12AB and 80G registrations
    • Renewal timelines
    • Compliance with Sections 11–13
    • Documentation and reporting requirements

    Step 6: Donation & Reporting Compliance

    Includes:

    • Filing Form 10BD (donation statement)
    • Issuance of Form 10BE to donors
    • Donor-wise and project-wise reporting

    Step 7: CSR & Funding Compliance (If Applicable)

    For CSR-linked NGOs:

    • CSR-1 compliance monitoring
    • Utilization certificates
    • Project reports and impact documentation
    • Corporate reporting support

    Step 8: Notice Handling & Advisory

    Annual package includes:

    • Handling income tax notices and defect memos
    • Drafting replies and clarifications
    • Advisory on compliance risks and governance

    Step 9: Compliance Calendar & Reviews

    • Annual compliance calendar setup
    • Periodic compliance reviews
    • Pre-audit and pre-filing checks
    • Risk mitigation planning

    What Is Included in a Typical NGO Annual Package?

    • Accounting & bookkeeping
    • Audit coordination
    • Income tax return filing
    • 12AB & 80G compliance
    • Donation reporting (10BD/10BE)
    • CSR & donor reporting
    • Advisory & notice handling

    Common Risks Without an Annual Package

    • Missed deadlines
    • Lapse of tax exemptions
    • Poor accounting and audit issues
    • Penalties and notices
    • Loss of donor and CSR trust

    How Saving Mantra Delivers NGO Annual Packages

    Saving Mantra provides customized NGO Annual Packages, including:

    • Dedicated compliance manager
    • Tech-enabled accounting & dashboards
    • Compliance calendar and reminders
    • End-to-end filing and advisory
    • Integration with CSR, FCRA, and donor needs

    Disclaimer

    This article is for informational purposes only and does not constitute legal, tax, or professional advice. Compliance requirements may vary based on NGO structure, size, and applicable laws. Readers are advised to consult qualified professionals before opting for any compliance package. Saving Mantra shall not be responsible for decisions taken based on this content.

  • Step-by-Step Guide to 12AA Registration in India

    Introduction to 12AA Registration

    12AA Registration was the foundational approval granted to NGOs under the Income Tax Act, 1961 to claim income tax exemption on charitable income. Although 12AA has now been replaced by 12AB, understanding the 12AA registration process remains important for legacy registrations, conversions, and compliance clarity.

    This Saving Mantra guide explains the step-by-step process for 12AA registration in India, its purpose, eligibility, documentation, and how it links with the current 12AB regime.

    What Is 12AA Registration?

    12AA registration:

    • Granted income tax exemption under Sections 11 & 12
    • Recognized NGOs as charitable entities
    • Was issued by the Income Tax Department
    • Required verification of charitable objects and genuineness of activities

    Existing 12AA registrations were later migrated to 12AB as per law amendments.

    Who Was Eligible for 12AA Registration?

    12AA registration applied to:

    • Charitable Trusts
    • Registered Societies
    • Section 8 Companies

    The NGO must have been formed solely for charitable purposes.

    Benefits of 12AA Registration

    • Exemption from income tax on surplus income
    • Eligibility to apply for 80G registration
    • Increased credibility with donors and institutions
    • Recognition as a charitable organization

    Eligibility Conditions for 12AA Registration

    To qualify, an NGO had to:

    • Be legally registered (Trust / Society / Section 8)
    • Have clearly defined charitable objectives
    • Not distribute profits or dividends
    • Maintain proper books of accounts
    • Carry out genuine charitable activities

    Step-by-Step Process for 12AA Registration in India

    Step 1: NGO Legal Registration

    The NGO must be registered under:

    • Indian Trusts Act
    • Societies Registration Act
    • Companies Act, 2013 (Section 8)

    Without legal registration, 12AA approval was not possible.

    Step 2: Prepare Required Documents

    Documents required included:

    • Registration certificate of NGO
    • Trust Deed / MOA & Bye-laws
    • PAN of NGO
    • Details of trustees / directors
    • Address proof of registered office
    • Activity report (if activities commenced)
    • Financial statements (if available)

    Step 3: File Application with Income Tax Department

    • Application was filed in prescribed form
    • Submitted to jurisdictional Income Tax authority
    • Included declaration of charitable intent

    Step 4: Verification & Inquiry

    The Income Tax Department examined:

    • Charitable nature of objectives
    • Genuineness of activities
    • Financial records and governance

    Clarifications or hearings could be conducted.

    Step 5: Grant of 12AA Certificate

    If satisfied:

    • 12AA registration certificate issued
    • Income tax exemption granted
    • NGO became eligible for 80G approval

    Time Required for 12AA Registration

    • Average timeline: 2 to 6 months
    • Depended on documentation and scrutiny

    Transition from 12AA to 12AB

    As per amended provisions:

    • All 12AA registrations were required to migrate to 12AB
    • 12AB introduced time-bound validity and renewal
    • NGOs must now comply with 12AB rules for exemption

    Common Reasons for 12AA Rejection (Earlier)

    • Non-charitable or vague objectives
    • No genuine activities
    • Incomplete documentation
    • Financial inconsistencies
    • Poor governance structure

    How Saving Mantra Helps NGOs

    Saving Mantra provides expert support for:

    • Understanding legacy 12AA compliance
    • Migration from 12AA to 12AB
    • Fresh 12AB registration & renewals
    • Income tax exemption advisory
    • End-to-end NGO compliance management

    Disclaimer

    This article is for informational purposes only and does not constitute legal or tax advice. Provisions under the Income Tax Act have evolved, and 12AA has been replaced by 12AB. Readers are advised to consult qualified professionals for current compliance requirements. Saving Mantra shall not be responsible for decisions taken based on this content.

  • Current Income in India for NRIs: Tax & Compliance Guide

    Saving Mantra Blog: Current Income in India for NRI – Taxability & Compliance

    NRIs earning current income in India—such as salary, business income, or professional fees—must understand tax implications, TDS obligations, and DTAA provisions. Proper compliance avoids penalties and ensures smooth financial management.

    This guide explains taxability, residential status, TDS under Section 195, DTAA, and reporting requirements for NRIs in India.

    ✔ Step 1: Determine Residential Status

    Residential status under Income Tax Act, Section 6 determines tax liability:

    1. Resident: Stay ≥182 days in India (or other criteria) → Global income taxable
    2. Non-Resident (NRI): Stay <182 days → Only income received or accrued in India taxable
    3. Resident but Not Ordinarily Resident (RNOR): Special rules for foreign income

    Why it matters: Only income taxable in India should be reported.

    ✔ Step 2: Identify Current Income in India

    Common types of NRI income in India:

    • Salary from Indian employer
    • Fees for professional services rendered in India
    • Rental income from property
    • Interest from Indian bank accounts and deposits
    • Business or trading profits from Indian operations

    ✔ Step 3: Understand Taxability

    • NRI income received/accrued in India is taxable at normal slab rates or special rates
    • Salaries are taxed under Section 192
    • Fees for professional services are taxable as “Income from Business/Profession”

    Note: Foreign income of NRI is not taxable in India, unless they become a resident.

    ✔ Step 4: TDS Under Section 195

    When NRIs earn payments from Indian sources, TDS under Section 195 applies:

    • Deductor (payer) must withhold tax at applicable rates
    • TDS applies to:
      • Salary, professional fees, rent, interest, royalties
    • NRIs can apply for Lower/No TDS Certificate under Section 197 if tax liability is less than TDS

    Compliance tip: Ensure PAN and proper TDS deduction to avoid future disputes.

    ✔ Step 5: Double Taxation Avoidance Agreement (DTAA)

    • India has DTAA with multiple countries to avoid taxing same income twice
    • NRIs can claim foreign tax credit on tax paid abroad for income also taxable in India
    • Forms required: Form 67 for claiming FTC

    Example: Salary earned in India is taxable in India, but foreign income taxed abroad can claim credit.

    ✔ Step 6: Filing Income Tax Return

    • NRIs must file ITR-2 if no business income, or ITR-3 if business income exists
    • Report:
      • Salary, rent, professional fees, capital gains
      • TDS deducted (Form 26AS)
      • Foreign tax credits if DTAA applicable
    • File before due date to avoid penalty

    ✔ Step 7: Maintain Proper Documentation

    • PAN card and passport
    • Salary slips, rent receipts, bank statements
    • TDS certificates and Form 16/16A
    • DTAA documents and foreign tax paid proofs

    These records help in audit or dispute resolution.

    ✔ Step 8: Penalties for Non-Compliance

    • Non-filing or late filing attracts penalties under Sections 234A/B/C
    • Non-deduction of TDS under Section 195 may lead to interest and penalties
    • Proper filing and compliance ensures smooth financial operations in India

    FAQs – Current Income in India for NRI

    Q1: Are NRIs taxed on income earned outside India?
    A: No, only income received or accrued in India is taxable. Foreign income is exempt unless the NRI becomes a resident.

    Q2: What is Section 195 TDS for NRIs?
    A: Any payment made to NRIs from Indian sources (salary, rent, fees, interest) requires tax deduction at source under Section 195.

    Q3: Can an NRI claim DTAA benefits?
    A: Yes. NRIs can claim foreign tax credit under DTAA to avoid double taxation.

    Q4: Which ITR form should NRIs file for current income?
    A: ITR-2 for income from salary, property, or capital gains; ITR-3 if business/professional income is included.

    Q5: Can an NRI reduce TDS on professional fees in India?
    A: Yes, by applying for a Lower/No TDS Certificate under Section 197 with the Income Tax Department.

    Conclusion

    NRIs earning current income in India must carefully manage taxation, TDS, DTAA benefits, and IT filing. By following this step-by-step guide, NRIs can ensure legal compliance, optimize taxes, and avoid penalties.

    Disclaimer

    This blog is for informational purposes only and does not constitute tax or legal advice. Tax rules, TDS provisions, and DTAA agreements may change. NRIs should consult qualified tax professionals before filing income in India.

  • Step-by-Step Guide to NGO Project Report in India

    Introduction to NGO Project Report

    An NGO Project Report (also called Project Proposal or DPR) is a structured document that explains what problem the NGO will address, how it will be implemented, the budget required, timelines, and expected impact. A well-prepared project report is essential to secure CSR funding, government grants, institutional donations, and international aid.

    This Saving Mantra guide explains the step-by-step process for preparing an NGO Project Report in India, aligned with donor expectations, CSR norms, and compliance requirements.

    Why an NGO Project Report Is Important

    • Mandatory for CSR funding and grants
    • Demonstrates credibility and governance
    • Clarifies project scope, cost, and impact
    • Enables monitoring, audit, and reporting
    • Improves approval chances with corporates and donors

    Who Requires an NGO Project Report?

    An NGO project report is required by:

    • NGOs applying for CSR funding
    • NGOs seeking government or PSU grants
    • NGOs approaching private or institutional donors
    • NGOs submitting proposals to international agencies

    Step-by-Step Process to Prepare NGO Project Report in India

    Step 1: Identify the Social Problem

    Clearly define:

    • The issue to be addressed (education, health, skill development, environment, etc.)
    • Target beneficiaries and geographic area
    • Current gaps and need assessment

    Data-backed problem statements increase credibility.

    Step 2: Align with Legal & CSR Framework

    Ensure alignment with:

    • Schedule VII of the Companies Act, 2013
    • NGO objectives as per Trust Deed / MOA
    • CSR guidelines of funding companies

    Misalignment can lead to rejection.

    Step 3: Define Project Objectives & Outcomes

    Mention:

    • Primary and secondary objectives
    • Short-term and long-term outcomes
    • Measurable indicators (KPIs)

    Objectives should be SMART (Specific, Measurable, Achievable, Relevant, Time-bound).

    Step 4: Describe Project Activities & Methodology

    Detail:

    • Activity-wise implementation plan
    • Delivery model and methodology
    • Role of NGO team and partners
    • Community engagement approach

    This shows execution capability.

    Step 5: Identify Target Beneficiaries

    Include:

    • Number of beneficiaries
    • Age group, gender, and socio-economic profile
    • Selection criteria

    Beneficiary clarity is critical for CSR and audit purposes.

    Step 6: Prepare Project Budget

    Create a detailed budget covering:

    • Program expenses
    • Administrative costs
    • Capital expenditure (if any)
    • Monitoring and evaluation costs

    Budgets must be reasonable, transparent, and justifiable.

    Step 7: Define Project Timeline

    Provide:

    • Start and end date
    • Activity-wise milestones
    • Review and reporting schedule

    Timelines help donors track progress.

    Step 8: Monitoring, Evaluation & Impact

    Explain:

    • Monitoring mechanisms
    • Reporting frequency
    • Impact measurement approach
    • Data collection methods

    This is essential for CSR audit and impact assessment.

    Step 9: NGO Profile & Compliance Section

    Include:

    • NGO background and experience
    • Registration details
    • 12AB, 80G, CSR-1 status (if applicable)
    • Past project experience and achievements

    Compliance readiness boosts trust.

    Step 10: Risk Management & Sustainability

    Mention:

    • Potential project risks
    • Mitigation strategies
    • Sustainability and exit plan

    This reflects long-term thinking.

    Standard NGO Project Report Format

    A typical NGO project report includes:

    1. Executive Summary
    2. About the NGO
    3. Problem Statement
    4. Project Objectives
    5. Project Activities & Methodology
    6. Target Beneficiaries
    7. Budget & Cost Break-up
    8. Project Timeline
    9. Monitoring & Impact Assessment
    10. Risk & Sustainability Plan

    Common Mistakes to Avoid

    • Generic or copied content
    • Unrealistic budgets
    • No impact measurement plan
    • Weak alignment with CSR norms
    • Missing compliance details

    How Saving Mantra Helps

    Saving Mantra provides end-to-end NGO Project Report services, including:

    • Project concept structuring
    • CSR-aligned proposal drafting
    • Budgeting and financial modeling
    • Impact framework design
    • Donor-ready documentation
    • Compliance integration (CSR, Income Tax)

    Disclaimer

    This article is for informational purposes only and does not constitute legal, financial, or professional advice. Project requirements and funding criteria vary by donor and authority. Readers are advised to consult qualified professionals before submission. Saving Mantra shall not be responsible for decisions taken based on this information.

  • NRI Guide: How to Create a Will in India

    Saving Mantra Blog: How to Create a Will for NRI in India

    Creating a will is essential for NRIs to ensure smooth transfer of assets in India to heirs and avoid disputes. A valid will clearly defines who inherits what, minimizes legal complications, and ensures your wishes are honored.

    This guide provides a step-by-step process for NRIs to create a legally valid will in India, covering drafting, registration, and key legal considerations.

    ✔ Step 1: Understand the Importance of a Will

    A will ensures:

    • Clear allocation of assets to heirs
    • Avoids disputes and litigation among family members
    • Reduces probate and succession complications
    • Ensures compliance with Indian succession laws

    Without a will, assets are distributed according to personal law or intestate succession, which may not reflect your wishes.

    ✔ Step 2: Identify Your Assets in India

    List all assets in India:

    • Immovable property: House, apartment, land, commercial property
    • Movable property: Bank accounts, shares, mutual funds, jewelry, vehicles
    • Insurance policies, retirement funds, and investments

    Documenting all assets ensures nothing is omitted in the will.

    ✔ Step 3: Choose Your Beneficiaries

    • Decide who inherits each asset
    • Specify shares if multiple heirs exist
    • Include alternate beneficiaries if primary heirs are unavailable
    • Consider NRIs can leave assets to residents or other NRIs

    ✔ Step 4: Appoint an Executor

    An executor ensures the will is executed as per your wishes:

    • Can be a trusted family member, friend, or legal professional
    • Responsible for:
      • Settling debts
      • Distributing assets
      • Filing probate if required

    ✔ Step 5: Draft the Will

    Key points for drafting:

    • Clearly mention your full name, address, and NRI status
    • Specify details of each asset and beneficiary
    • Include instructions for distribution, guardianship, and debts
    • Avoid ambiguous language to prevent disputes

    NRIs can either draft the will themselves or hire a lawyer in India specializing in succession law.

    ✔ Step 6: Sign the Will Properly

    • Sign the will in the presence of at least two witnesses
    • Witnesses must sign and provide details
    • Witnesses cannot be beneficiaries
    • Keep the will in writing (typed or handwritten) for validity

    ✔ Step 7: Registration of the Will (Optional but Recommended)

    • Register with Sub-Registrar Office in India
    • Registration ensures legal recognition and prevents tampering
    • Submit:
      • Original will
      • ID proofs of testator and witnesses
      • Registration fees

    Note: Registration is optional; a handwritten and signed will is valid if executed properly.

    ✔ Step 8: Store the Will Safely

    • Keep in a safe place known to executor and close family
    • Consider digital copies for reference
    • Avoid keeping the will in a locker or bank vault without accessibility

    ✔ Step 9: Review and Update Regularly

    • Update the will if:
      • New assets are acquired
      • Family circumstances change
      • Laws or regulations change

    Regular review ensures the will reflects current wishes and legal compliance.

    ✔ Step 10: Ensure Compliance with Indian Laws

    • Will should comply with:
      • Indian Succession Act 1925 for non-Muslims
      • Personal laws for Hindus, Muslims, Christians, etc.
    • NRIs with dual jurisdiction should also consider home country laws

    Conclusion

    Creating a will is a crucial step for NRIs to safeguard assets in India and ensure smooth inheritance. Following this step-by-step guide—drafting, execution, registration, and periodic updates—ensures your estate is distributed as per your wishes with minimal legal complications.

    Disclaimer

    This blog is for informational purposes only and does not constitute legal advice. Laws and procedures for wills in India may change. NRIs should consult a qualified lawyer before creating a will.