An Overview OF FCRA

An Overview OF FCRA
10 June 2020

An Overview OF FCRA

The FCRA stands for Foreign Contribution Regulation Act and was enacted with the key purpose of regulating the inflow of foreign contributions and to make sure that the received foreign contributions are not utilized for unlawful purposes. All charitable organizations in India receiving foreign contributions come under the purview of this Act. Over the last few years, the Home Ministry has been examining the flow of foreign funds to all charitable organizations in India and the Ministry has also canceled the licenses of over 8000 charitable organizations due to non-compliance with the reporting requirements stipulated under the Act.

Foreign Contribution and Regulation Act 2010 (FCRA) is enacted with the following objects which are as follows:

  1. To regulate the acceptance and utilization of foreign contribution or foreign hospitality by certain individuals or associations or companies and
  2. To prohibit acceptance and utilization of foreign contribution or foreign hospitality for any activities detrimental to national interest and for matters connected therewith or incidental thereto.

Any Private Company can receive foreign contribution if they desire to do charitable work at some point of time subject to following conditions which are as follows:

  1. It must have a definite economic, cultural, religious, educational, or social program.
  2. It must acquire the FCRA registration or prior permission from the Central Government.
  3. It must not be prohibited under Section 3 of FCRA, 2010.

According to the definition given under Section 3(1) of FCRA, 2010, the following are prohibited to receive foreign contribution which is as follows:

  1. A candidate for election;
  2. Correspondent, columnist, cartoonist, editor, owner, printer or publisher of a registered newspaper;
  3. Judge, government servant or employee of any Corporation or any other body controlled on owned by the Government;
  4. Member of any legislature;
  5. A political party or office bearer thereof;
  6. Organization of a political nature as may be specified under sub-section (1) of Section 5 by the Central Government.
  7. Association or company engaged in the production or broadcast of audio news or audiovisual news or current affairs program through any electronic mode, or any other electronic form as defined in of Section 2(i)(r) of the Information Technology Act, 2000 or any other mode of mass communication; Correspondent or columnist, cartoonist, editor, owner of the association or company referred to the above point.
  8. Individuals or associations who have been prohibited from receiving foreign contributions.
FCRA Registration

Eligibility criteria:

  1. An association should be registered either under the Societies Registration Act, 1860 or the Indian Trusts Act, 1882 or under Section 8 (erstwhile Section 25) of the Companies Act, 2013;
  2. An association generally has been 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 utilized.
  3. An association should have spent at least Rs.10,00,000/- over the last three years on its objects and aims, not including administrative expenditure.
  4. Statements of Income & Expenditure, duly audited by CA, for the last three years are to be submitted to substantiate that it meets the financial parameter.
Prior Permission

Eligibility criteria:

An organization with less than three years of existence is not eligible for registration. Such an organization may apply for a 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 or projects. For this purpose, the association should meet the following criteria which are as follows:

  1. Should be registered either under the Societies Registration Act, 1860 or the Indian Trusts Act, 1882 or under Section 8 (erstwhile Section 25) of the Companies Act, 2013;
  2. 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.

For Indian recipient organizations and foreign donor organizations having common members, FCRA Prior Permission shall be granted to the Indian recipient organizations subject to its satisfying the following:

  1. The Chief Functionary of the recipient Indian organization should not be a part of the don't organization.
  2. At least 51% of the office-bearers/ members of the Governing body of the Indian recipient organization should not be members/employees of the foreign donor organization.
  3. In case of a foreign donor organization being a single person/individual that person should not be the Chief Functionary of the recipient Indian organization.
  4. In the case of a single foreign donor, at least 51% of office bearers/members of the governing body of the recipient organization should not be the family members and close relatives of the donor.
Procedure for Making an Application for Registration or Prior Permission

Application for grant of registration or prior permission is to be submitted online in form FC-3 at the website fcraonline.nic.in.

Documents Required for Registration
  1. Jpg file of signature of the chief functionary
  2. Self-certified copy of registration certificate/Trust deed etc. of the association
  3. Self-certified copy of relevant pages of Memorandum of Association/ Article of Association showing aim and objects of the association.
  4. Activity Report indicating details of activities during the last three years;
  5. Copies of relevant audited statement of accounts for the past three years (Assets and Liabilities, Receipt and Payment, Income and Expenditure) clearly reflecting expenditure incurred on aims and objects of the association and on administrative expenditure;
Documents Required for Prior Permission
  1. Jpg file of signature of the chief functionary
  2. Self-certified copy of registration certificate/Trust deed etc., of the association
  3. Duly signed a Commitment Letter from Donor.
  4. If functioning as editor, owner, printer, or publisher of a publication registered under the Press and Registration of Books Act, 1867, a certificate from the Registrar of Newspapers for India that the publication is not a newspaper in terms of section 1(1) of the said Act.
Fees

2000/- for registration and 1000/- for prior permission (to be paid online)

Validity & Renewal

Registration shall be valid for a period of five years and thereafter application for renewal of registration may be made before six months from the expiry of their existing registration.

Annual Filing 

An association allowed to accept foreign contribution is needed to maintain a separate set of accounts and records exclusively for the foreign contribution received and submit an annual return, duly certified by a CA, giving details of the receipt and purpose-wise utilization of the foreign contribution. Annual returns of the association are needed to be filed in form FC-4 accompanied with scanned copies of income and expenditure statement, balance sheet and statement of receipt and payment, online at fcraonlineservice.nic.in within a period of nine months from the closure of the year i.e. by 31st December each year.

Submission of a ‘NIL’ return, even if there is no utilization or receipt of foreign contribution during the year, is compulsory. However, in such cases, a certificate from a Chartered Accountant, audited statement of accounts is not needed to be uploaded.

An association not filing an annual return on time may face penalties for late submission of return and even cancellation of registration.