Monday, 2 April 2012

Insights from the Income Tax hearing

The one and half hour, Mr Kamalesh and I, spent with the Income Tax officer, Mr C.V. Rama Rao this evening was another crash course in accounting and matters related to income tax and sorts.  Though the end result was that we succeeded in convincing him that ours in not just a religious society but a charitable one too.  However, that turned out to be our pitfall too.  We are now asked to explain how we are eligible for the income tax deduction 11a (- that's the code I believe) while being both, a religious society and a charitable society at the same time.

Anyway, I'm happy I was present for this occasion: the first in the history of St John's Seminary (being called for an income tax hearing), my first time (without even completing the first year of my official term as administrator) and above all for all that I learnt from this whole experience.  Well, here are some of the 'million' things I learnt today...

  • Every foreign contribution received should have a source letter (from the donor containing details about self and explaining the purpose of the contribution). 
  • The contribution is to be accounted straight into the main foreign account (FC). It could later be transferred to the sub-account for which it has been sent.  But it should first and directly be deposited in the main FC account.  
  • Know every bit of your financial transactions (from which account, to which, for what, when...) 
  • Preserve every bit of documentation and accounting information. 
  • Integrity and congruence are not the same thing but in matters such as this, they are the same!

Goes without saying, accounts ought to be PRESENT (available, in the first instance), precise and tallying every and any statement.

Frankly speaking the hearing was more about what we do with the money rather than the technical aspect of documentation and accounting strategy.  I hope we get through this ... 

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