SHGs supplying cooked-food are now stuck as a “Business” !!

We have seen progress in the field of formation and sustenance of Self-Help Groups popularly known as SHGs. The effort started as a means of thrift and small credits for the members of such SHGs which mushroomed into Savings and Credit Groups while some of them turned into micro-Finance Institutions or mFIs also. Banks were never supportive of the spirit of forming a self-Help Group as they termed them groups of the greedy poor. The Non-Government Organisations (NGO) continue to support the logically correct and politically volatile concept of SHGs all over India.

SHGs are now a part of almost all the group-based programmes of any Governments, both at the Centre and of States. These SHGs have been formed around some of the best locally available opportunities for the below-poverty- line families’ - employment, wealth- generation and skill-utilization. Women have been encouraged to form these programme -driven SHGs to supply cooked mid-day meals to the Government Schools, Anganwadis and Hostels running especially for the children of the socio-economically poorer families.

The recent steps to run the business of SHGs as a business are highlighted by two tougher steps of our Government at the Center. I am not saying that the States are lagging behind in discouraging the members of SHGs but am only elaborating on two such decisions adversely affecting the SHGs of the poor.

First decision is to register the SHGs supplying cooked food under the online mechanism of FSSAI Registration regime, on the URL: - http://foodlicensing.fssai.gov.in  . The process appears to be simple but major data is required to obtain such registration. Online feeding of data needs time , money and information for completing it. The details include the facilities available with the SHG, names of members, means of identifications of the post-holders, complete address where food is cooked and Bank account details. It is good that the Government did not asked here in this registration process some further details about Registrations of SHGs as a Society/ NGOs/Trust, their  PAN, TIN, Audit reports and fixed assets, etc .

Second decision has now being taken to issue Income Tax (IT) notices to all such SHGs defined above. As we know IT returns arise out of situations best known to the Department of Income Taxes. The notices given to these SHGs have given them fifteen days to reply in details, to queries related to them regarding  -  PAN, Business account for last three years, PAN of the post-holders ( President and Secretary in particular)  and whether they submitted Income Tax Return (ITR) for the last three years or not?  what kind of incomes do the SHGs have? etc.

This IT notice has been expected by NGOs like us and we had forewarned the SHGs that they will face such problems in future but SHGs had told us that no one either from the State departments who were Funding them for the Mid-day meal supply work nor the Banks with which they had Bank Account told them to prepare the statements being asked by the Department of IT now.

SHGs are now disturbed by the Notice asking them details of their business.  

They do not have the original purchase Bill -Vouchers ( which are mostly with the Teachers / Matr-Sahyogini Samitis/ Anganwadi workers ) , no supply Reports, no audit reports, no PAN cards,no copies of the ITRs of the post holders, no fair judgments of net profits, no TIN Numbers, no Bank Statements to prove that they work on a no-profit, no-loss purpose while supplying cooked meals to the allotted schools and Anganwadis so how will they report this to IT notice ? 

How will they carry out their “Business” now on ?

Tag : -     #SHG,  #BPL,  #ITax ,  #NGO ,  #Bank , #mFI,  #ITR