I am an OCI (Overseas Citizen of India) residing in India with a resident Indian bank account. I do not have NRO / NRE nor overseas bank accounts. My income is entirely India sourced and I submit yearly tax returns. Any income is deposited in my resident Indian bank account. I would like to contribute regularly form my India-taxed income to certain Indian nonprofits. Some of these nonprofits are FCRA compliant and some are not. My queries are the following : 1. Are donations from OCIs considered as “foreign sourced” even if from OCIs like myself who reside in India and donate from their tax paid India sourced income deposited in a resident Indian account ? 2. Can these donations be sent only to the FCRA designated account of FCRA compliant nonprofits or can they also be sent to the nonprofits local Indian account ? 3. If donations are to be sent only to the FCRA designated account, is it possible to send from a resident bank account or does it have to be an NRO / NRE account (which I do not have) ? 4. If donations are allowed, can I receive 80G exemption ?
Answers to your queries:
1) Yes, the donations are still considered as "foreign sourced" for donations from OCIs, whether resident in India or not and whether paid from Indian income or not.
2) Donations have to go to the FCRA designated accounts of FCRA compliant NPOs only.
3) Yes. You can remit from a resident bank account also but only to the FCRA designated accounts only
4) Yes. If the donations are made from Indian income.
Foreign Source Status: Yes, any donation from an Overseas Citizen of India (OCI) is considered a "foreign contribution" under Indian law. This is because the FCRA defines a "foreign source" to include a foreign citizen, and an OCI is a citizen of a foreign country. Your residency status in India or the fact that the income is India-sourced and tax-paid does not change this classification.
Donation to FCRA Non-profits: These donations must be sent only to the specific bank account designated by the non-profit for receiving foreign contributions (the "FCRA account"). You cannot donate to their general local or domestic account. Consequently, you can only contribute to non-profits that are FCRA-compliant.
Sending from a Resident Account: Yes, you can transfer the donation from your resident Indian bank account to the non-profit's designated FCRA account. There is no requirement to use an NRO or NRE account for this purpose.
80G Tax Exemption: Yes, you are eligible to claim a deduction under Section 80G of the Income Tax Act for your donations. Eligibility for this deduction is dependent on the income being taxed in India, which applies in your case. Ensure the recipient non-profit provides you with a valid receipt and is approved for 80G deductions.
