Formation of an NGO

An NGO can either be a registered or an unregistered
body and, in case it is to be a registered body, then it
can be formed in any of the following three ways:

1)As a Trust
2)As a Society
3)As a Company u/s 25 of the Companies Act, 1956

In case the NGO is looking for external funding then it
would be a good idea to register it as it would give some
comfort to the donors - be they National or International.
Even for Income Tax purposes it would be good idea to
create an instrument and register the same. Similarly
for FC (R) Act. It should be noted that all NGOs
with an Income in excess of Rs 50,000 are required to
get their accounts audited as per the conditions stipulated
by the Tax Department while granting exemption.

As regards collections, once one has an entity one
can open an Bank account and take donations by
cheque. In case one intends not to register then one can
be treated as an Association of Persons (AOP) by the
Bank and it can open a Bank account in the AOP’s
name.

The Recruitment Function

‘HR needs to play a Strategic Role’ or ‘HR should be
a business Driver’ in any company has been a case
of more ‘talk the talk’ than ‘walk the talk’.

All these shortcomings of HR(perceived or otherwise)
need to be delinked from the Recruitment function and
this can be achieved by forming a separate department
for Recruitment which, I am sure, will find immediate
recognition and acceptance from the line managers –
as their own success depends upon finding the right
candidate for the job within their department..

As Human Capital actually becomes the core of every
organisation - and the main differentiator between
competitors which has the potential of creating and
sustaining competitive advantage- the importance of the
Recruitment Function rises manifold. Now the
Recruitment function needs to become part of the various
business processes that the company relies upon to
successfully and consistently deliver quality output,
competitively. Consequently, it has to start taking
responsibility, like any other line function, and stop
playing a supporting role.

Having said that, can we outsource such a Strategic
or ‘Core’ Function ? Outsourcing has increasingly become
Strategic and more and more companies are Outsourcing
different processes today than ever before, however, what
is being outsourced are non-core functions only and nothing
that forms the core activity of the Company.

The benefits of outsourcing I don’t think need to be
repeated here and it need only be said that some part
of the Recruitment process can definitely be outsourced
effectively and advantageously.

I believe that the way forward is in segregating the
sub-functions of ‘Search’ and ‘Selection’ within the Recruitment
process and further segmenting the hiring basket and adopting
a different approach, as well as hiring sources, for backend
or support staff and a different approach and sources for top/
critical/ strategic positions.

Who is liable to pay Service Tax ? and be Penalised for Default ?

The occurrence of a “Taxable event” triggers the imposition of Tax.

It is the act of ‘import’ that triggers the levy of Customs Duty.
It is the act of ‘manufacture’ that triggers the levy of Excise Duty
It is the act of ‘Sale’ that triggers the levy of Sales Tax
It is the act of ‘providing service’ that triggers the levy of Service Tax.

The liability to pay Service Tax is upon the Service Provider, just
like the other Acts mentioned above. Against imports it is the Importer
who has to pay the Customs Duty, it is the Manufacturer who is
liable to pay the Excise Duty and similarly it is the Trader who has
to pay the Sales Tax to the government – whether they include the
said duties/ levies in their price charged to the customer or not.

Thus, in case the Service Provider does not stipulate that the Service
Tax would be charged separately, at the rate applicable, then the
Price charged for the ‘service provided’ will be deemed to be inclusive
of the Service Tax component and the Service provider would be liable
to pay the same proportionately. It has been clarified by the govt that
it is not necessary to show the Service Tax charged separately in the
Invoice. In case of default it would be liable to be penalized as per law.

With the services sector now constituting more than 50% of the GDP
it is but natural that the govt look towards it to raise taxes and not just
rely on the manufacturing, trading and agriculture sectors.