Foreign Contribution Regulation Act (FCRA)Contact Expert

FCRA

FCRA Department comes under the Ministry of Home Affairs. FCRA Registration is optional for NGO / Trust / Section 8 Company

In order to regulate the foreign contribution or foreign hospitality received by any individual, association or company the Government has consolidated all the laws and regulations relating to such transactions. For this purpose Foreign Contribution (Regulation) Act, 2010 was enacted. This was done to create a transparent mechanism for individuals and organizations through E-governance of FCRA related activities. This transparent system was created to discourage any detrimental activities which can be against national interest.

Eligibility Criteria for FCRA Registration

As we have discussed for receiving any kind of foreign contribution FCRA Registration is mandatory requirement. Now we will discuss who is eligible to apply for FCRA registration. The applicant must be a non-profit organization registered and operating under any of the following statutes:

• Under Indian Trusts Act, 1882 as registered Trusts or
• Under Societies Registration Act, 1860 as registered Society or
• Under Companies Act, 2013 as a Section 8 Company etc.

Along with the organizational registration following pre-conditions are also required to be satisfied by the applicant to receive foreign contribution:

• The applicant institutions must have been set up with charitable objective of serving the society in any manner like promotion of health, education, art, cultural, religious, sports etc.
• The organization must not have been prohibited as per Section 3 of the Foreign Contribution (Regulation) Act, 2010.
• FCRA Registration is granted after proper assessment of application by the authorities.

FC-2 : Application for Seeking Prior Approval

There are two modes of obtaining permission to accept foreign contribution according to FCRA, 2010:

1. Registration
2. Prior Permission
An organization in formative stage is not eligible for registration. Such organization may apply for grant of prior permission under FCRA, 2010.
Prior permission is granted for receipt of a specific amount from a specific donor for carrying out specific activities/projects. For this purpose, the association should meet following criteria:
3. Be registered under an existing statute like the Societies Registration Act, 1860 or the Indian Trusts Act, 1882 or section 8 of the Companies Act, 2013
4. Submit a specific commitment letter from the donor indicating the amount of foreign contribution and the purpose for which it is proposed to be given; and
5. For Indian recipient organizations and foreign donor organizations having common
6. members, FCRA Prior Permission shall be granted to the Indian recipient organizations subject to its satisfying the following.

FC-3 : Application for FCRA Registration

There are two modes of obtaining permission to accept foreign contribution according to FCRA, 2010:

1. Registration
2. Prior Permission
For grant of registration under FCRA, 2010, the association should:
3. Be registered under an existing statute like the Societies Registration Act, 1860 or the Indian Trusts Act, 1882 or Now Section 8 of Companies Act, 2013) etc.
Normally be in existence for at least three years and has undertaken reasonable activity in its chosen field for the benefit of the society for which the foreign contribution is proposed to be utilised. The applicant NGO/association will be free to choose its
items of expenditure (excluding the administrative expenditure as defined in Rule 5 of FCRR, 2011) to become eligible for the minimum threshold of Rs. 10.00 lac spent during the last three years. It the association wants inclusion of its capital investment
in assets like land, building, other permanent structures, vehicles, equipments etc, then the Chief Functionary shall have to give an undertaking that these assets shall be utilized only for the FCRA activities and they will not be diverted for any other
purpose till FCRA registration of the NGO holds.

FC-4 Annual Return

Every FCRA-NGO has to submit an Annual Return to the Ministry of Home Affairs (MHA), online before 31st December for its foreign fund receipts for the previous financial year. Also if FCRA NGOs don not receives foreign contribution Filing a Nil return is mandatory. Until 2015, this format was called the FC-6; later, with a few modifications, it was called the FC-4 form. These annual returns are available online for anyone to read or download at the website of FCRA, year-wise, since 2006.

Further every organization receiving foreign contributions is required to furnish a certificate from a chartered accountant. The preform of the certificate to be given by the chartered accountant is provided in Form FC-4. Along with this certificate, audited Balance Sheet, Income & Expenditure statement and the statement of receipt and payment account should also be submitted. On the basis of the relevant books and vouchers, the chartered accountant is required to certify the following:

1. The brought forward balance of the foreign contribution at the beginning of the year.
2. The foreign contribution received during the year
3. The unutilized balance of foreign contribution at the end of the year
4. Certify that the association has maintained the account of foreign contribution and records relating thereto in the manner specified in the Foreign Contribution (Regulation) Act, 2010.
5. The information furnished in the certificate and in the enclosed balance sheet, income & expenditure statement and statement of receipt and payment are correct.

Further, the annual returns should be authenticated by the signature of the chief functionary and seal of the association with the following specifications.

Declaration and authentication

The FC-4 form is required to be signed by the Chief Functionary of the organization and a certificate is also required to be given by a Chartered Accountant giving a brief summary of the FCRA funds movement and the opening & closing balances of FCRA Funds.

The Term “Chief Functionary” has not been defined in the FCRA Act or Rules. Normally the head of the organization should be construed as the Chief Functionary. The organization may also designate any office bearer as the Chief Functionary through a General Body/Governing Body resolution, for the purposes of filing the FCRA returns, Forms etc.

Delay in Filing FC-4

S.O. exercise of the powers conferred by sub-section (1) of Section 41 read with section 35 of the Foreign Contribution (Regulation) Act, 2010 (42 of 2010) and rule 17 of the Foreign Contribution (Regulation) Rules, 2011 and in supersession of the notification of the Government of India in the Ministry of Home Affairs number S.O. 1070(E), dated the 26th April, 2013, published in the Gazette of India, Extraordinary, Part-Il, Section 3, Sub- Section (ii), except as respects things done or omitted to be done before such supersession, the Central Government hereby notifies that officer specified in column (4) of the table below, may, before institution of any prosecution under this Act, compound the offences specified in column(2), on payment of the amount specified in column (3), of the said table, namely:—