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