Mandatory wire transfers, GST compliance set for grants

KADAPA, Andhra Pradesh (Indian Catholic News) — The Diocese of Cuddapah, which emphasizes its rural development ministry, has issued strict Foreign Contribution Regulation Act (FCRA) guidelines for beneficiaries managing its self-reliance and anti-poverty project grants.

The diocese operates the Chittoor Multipurpose Social Service Society (CMSSS) as its primary social service arm. Following a July launch of a women’s micro-enterprise empowerment program, officials underscored the organization’s overarching mission to “help the poor to help themselves for their self-reliant and self-supportive life.”

“All those who receive FCRA-funded projects through CMSSS are required to strictly follow the rules and guidelines,” wrote Bishop Paul Prakash Saginala of Cuddapah. The directive was issued to diocesan clergy in the August newsletter.

Under the newly detailed framework, “The applicant must inform both the Bishop and the CMSSS Director beforehand and send a scanned copy of the project proposal to CMSSS”.

Furthermore, “FCRA grants received in the CMSSS account requires a copy of the purpose letter for proper utilization of funds according to the approved budget”. Because donor purpose letters are generally sent directly to the Bishop’s House and the applicant rather than CMSSS, “applicants are obliged to immediately share a copy with CMSSS”.

The directives highlight that “CMSSS cannot spend any amount until the purpose letter from the donor is received,” noting that “This purpose letter must be shown to Auditors and the Income Tax Department during reporting”.

Disbursement rules and financial limits

Regarding fund utilization, the guidelines state that “CMSSS is allowed to release a maximum of 100,000 rupees (about $1,200) at a time to individuals, only after receiving their Aadhaar and PAN card details (scanned copy)”. The requirement ensures compliance with national identification standards by collecting beneficiaries’ Aadhaar—India’s 12-digit biometric ID card—and PAN, the national tax registration number.

Financial transactions face tight controls: “All transactions will be carried out through wire transfers. Cash payments are not permitted”. Additionally, “The entire sanctioned amount cannot be disbursed at once. Funds will be released gradually as per the project budget”.

The notice warns that “Funds must be spent strictly for the sanctioned purpose. Any deviation will be flagged in audits and may cause legal issues under FCRA”.

For construction initiatives, “Payments will be made only to Engineer or authorized Contractors,” while “Payments for materials should be made directly to Vendors, not to engineers or contractors”. The document notes that engineers and contractors must deduct and deposit a 1% or 2% withholding tax with the government for construction and renovation work. “This work will be done by CMSSS,” it stated.

Documentation and timely utilization

For documentation, “All bills must be GST-compliant,” and “GST is compulsory: if materials are purchased, GST must be paid to the vendor; if services are availed, the service provider must pay GST”. The directives mandate full compliance with the Goods and Services Tax, India’s national consumption tax system.

Regarding labor, “Only labour charges may be claimed through vouchers (Single Person). For construction/renovation labour, a payment sheet with signatures of workers is compulsory”. All submitted bills “must be properly dated, genuine, and submitted on time”.

Upon project conclusion, “the applicant must prepare and submit the Completion Report directly to the Donor,” while “A scanned copy of the Completion Report along with 4 photographs must also be submitted to CMSSS for inclusion in the Annual Activity Report”. CMSSS confirmed it “will help to prepare the Completion report” need to submission.

Finally, the directives urge prompt action, stressing that “Funds must be utilized within the stipulated time. If not, the Income Tax authorities have the right to transfer unutilized funds back to the Government treasury”.

The document was issued by Bishop Saginala, CMSSS president, and Father Manohar Gadikota, Executive Director of CMSSS.

Read about CMSSS and the guidelines.