Administrative Expenditures

Administrative Expenditure

As per Section 8 (1) (b) of the FCRA, 2010, Administrative expenditure should not exceed 50% of the foreign contribution received during that particular year. The existing limit of 50% is only valid till 29th September 2020. It may also be noted that Rule 5 of FCRA Rules, 2011 excludes salaries of programmee staff and other field level personnel.

The FCRA Amendment Act, 2020 prescribes to revise the ceiling limit of admin expenses to 20% of the total foreign funds utilised in a particular year. In other words, a FC registered organization cannot spend more than 20% of the FC utilised in that particular year on administrative expenses.

However, the option to spend more than 20% on administrative expenses with prior approval of the central government still remains.

Rule 5 of FCRR, 2011 defines that administrative expenses constitute the following-

  • Salaries, wages, travel expenses or any remuneration realized by the Members of the Executive Committee or Governing Council of the person;
  • All expenses towards hiring of personnel for management of the activities of the person and salaries, wages or any kind of remuneration paid, including cost of travel, to such personnel.
  • All expenses related to consumables like electricity and water charges, telephone charges, postal charges, repairs to premise(s) from where the organization or Association is functioning, stationery and printing charges, transport and travel charges by the Members of the Executive Committee or Governing Council and expenditure on office equipment.
  • Cost of accounting for and administering funds
  • Expenses towards running and maintenance of vehicles
  • Cost of writing and filing reports.
  • Legal and professional charges; and
  • Rent of premises, repairs to premises and expenses on other utilities;


Provided that the expenditure incurred on salaries or remuneration of personnel engaged in training or for collection or analysis of field data of an association primarily engaged in research or training shall not be counted towards administrative expenses.

Provided further that the expenses incurred directly in furtherance of the stated objectives of the welfare oriented organization shall be excluded from the administrative expenses such as salaries to doctors of hospital, salaries to teachers of school etc.

Accounting Treatment of of Administrative Expenditure

It is not necessary to maintain separate books of account showing the administrative expenditure as per FCRR 2011. However, the organisation should be in a position to clearly segregate the expenditure, which is administrative in nature, in the books of account. In other words, the organisation may not maintain separate ledger heads based on the FCRR 2011 rules for administrative expenditure but it should have the detail and the supporting accounts to justify the percentage of administrative expenditure for the purposes of audit and reporting, if necessary.

Disclosure Requirements

Under the current scheme of law the administrative expenditure is required to be reported to the FCRA authorities under clause 2(iii) of Form FC 4. It is a statutory compliance which the organisation has to follow. The annual return form FC-4 as discussed require the reporting of administrative expenditure. The Central Government may also call for such information and records with regard to Administrative Expenses

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