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Eligibility Criteria and Compliances under FCRA Registration Process

Eligibility Criteria and Compliances under FCRA Registration Process

Social and environmental causes are gaining the attention of people. People and businesses are now not only focusing on profits but also on serving social and environmental causes. One of the most prevalent methods to serve these purposes is to directly contribute towards these causes, whether in cash or kind. However, are these contributions limited within the national borders?

Obviously No! Foreign contributions usually occur when it comes to serving social and environmental causes. In India, such foreign contributions are regulated by Foreign Contribution Regulation Act, 2010 (herein referred to as FCRA). Let’s understand the FCRA registration process, eligibility, compliances and penalties.

FCRA Registration Vs Prior Permission

FCRA explicitly lays down that no person having a definite economic, cultural, educational social or religious programme shall accept foreign contribution without getting registered with the Central Government under FCRA. However, if a person is not registered with the Central Government, then the foreign contribution can be obtained subject to prior permission from the Central Government. The prior permission shall be valid for the foreign contribution received for the specific purpose and from the specific source from which it was obtained.

Eligibility Criteria for FCRA Registration

For obtaining FCRA registration or prior permission, the following conditions for FCRA registration shall be satisfied by the applicant:

  • The applicant has undertaken reasonable activity in the chosen field for the benefit of the society for which the foreign contribution is proposed to be utilised in case of an application for registration. In case of an application for prior permission, the applicant has prepared a reasonable project for the benefit of society.
  • The applicant has not been convicted under any law for the time being in force. Further, there shouldn’t be any prosecution for any offence pending against him.
  • The acceptance of foreign contribution shall not affect prejudicially:
  1. The integrity and sovereignty of India
  2. The strategic, security, economic and scientific interests of the state
  3. Freedom and fairness of election of any Legislature
  4. Public interest
  5. Friendly relations with any foreign state
  6. Harmony between different groups
  • The acceptance of foreign contribution shall not lead to incitement of an offence or endanger the physical safety or life of any person

Further, the person making the application:

  • Shall not be Benami or fictitious
  • Has not been convicted or prosecuted for getting indulged in the activities aimed at conversion through force or inducement from one religious faith to another either directly or indirectly
  • Has not been convicted or prosecuted for creating communal tensions or disharmony in any part of the country
  • Is not engaged or likely to engage in the propagation of sedition or advocate violent methods to achieve its ends
  • Is not likely to use foreign contribution for personal gains or divert it for undesirable purposes
  • Has not contravened any of the provisions of this act
  • Has not been prohibited from accepting foreign contribution

Further, the Central Government may require the applicant to furnish the Aadhaar number of all the office bearers, directors or other key functionaries (in the case of Indian citizens) or a copy of a passport or Overseas Citizen of India (OCI) card (in case of foreigners). This shall apply to new registration, prior permission as well as renewal of FCRA registration.

FCRA Registration

One can apply for FCRA registration online by filing Form FC-3A with the Ministry of Home Affairs. 

Compliances under FCRA

Following are the FCRA compliances that shall be adhered to:

  • Each person who has been granted a certificate of FCRA registration or prior permission under FCRA shall intimate the Central Government of the amount of foreign contribution received, the source and manner in which it was received and the purpose and manner for which the foreign contribution was utilized. 
  • Such person shall submit a statement of foreign contribution duly certified by an officer of the bank or authorized person in foreign exchange. It shall be furnished along with the intimation to the Central Government. 
  • Every person who receives the foreign contribution shall submit a signed report in Form FC-4 along with scanned copies of the Receipt and Payment Account, Income and Expenditure Account and Balance Sheet for each financial year within 9 months from the close of the financial year. Further, Form FC-4 shall also be accompanied by a copy of the bank statement in which the foreign contribution was received and duly certified by an officer of that bank.
  • The details of the foreign contribution received in the bank account and of the funds transferred to other bank accounts for utilization shall be reflected in Form FC-4.
  • If the foreign contribution relates to articles or foreign securities, the intimation shall be submitted in Form FC-1.
  • Every person who has been granted FCRA registration or prior permission shall maintain separate books of accounts exclusively for the foreign contribution received or utilized.

The reports submitted as above shall be certified by a Chartered Accountant. Further, the accounting statement as referred above shall be preserved by such person for a period of 6 years. In case, no foreign contribution is received during the financial year, then a ‘NIL’ report shall be submitted. In such case where no foreign contribution is received or utilized during the year, then the certificate from the Chartered Accountant, receipt and payment account, income and expenditure account and balance sheet shall not be required.

Penalties Under FCRA

For contraventions of the provisions of the FCRA Registration or any rules made under, penalties have been specified under Section 33-39 of the act. It contains detailed provisions for penalties as well as imprisonment depending upon the nature of the offence. 

FCRA outlines detailed provisions and rules in order to ensure accountability and transparency in dealing with foreign contributions. It is important to comply with the FCRA requirements in order to avoid stringent penal actions. In case of any assistance with FCRA Registration, compliances, or renewal, please feel free to contact the ASC Group.

Also Read - FLA Return - Applicability of Foreign Liabilities and Assets Annual Return

Frequently Asked Questions

Q
Whether FCRA registration is required for earnings generated from foreign clients against the supply of goods or provision of service?
A

No. As this is a transaction of commercial nature, therefore, earnings from foreign clients by a person against the supply of goods or provision of service shall not be deemed as foreign contributions. Therefore, FCRA registration is not required for the same.

Q
What is covered under foreign contribution?
A

Foreign contribution has been defined under Section 2(1)(h) of the Foreign Contribution Regulation Act, 2010 to include donation, delivery or transfer made by any foreign source of any of the following:

  • Any article excluding articles given to any person as a gift for personal use
  • Any Indian or foreign currency
  • Any security, including foreign security
Q
Whether FCRA registration process can be done through physical or offline mode?
A

FCRA registration process is entirely an online process. You need to file Form FC-3A for obtaining FCRA registration. As such, there is no offline process for FCRA registration.

Q
Whether the donations given by Non-Resident Indians (NRIs) be treated as foreign contributions?
A

Contributions that are made by citizens of India that lives in another country (Non-Resident Indians) through normal banking channels shall not be treated as foreign contributions. However, it is advised to get the passport details of such NRIs while accepting foreign contributions from them. However, donations that are made by Indians who have acquired foreign citizenship shall be treated as foreign contributions. This also applies to the Persons of Indian Origin (PIO) cardholders and Overseas Citizens of India (OCI) who have acquired foreign citizenship.

Q
Whether foreign contributions can be received in and utilized from multiple bank accounts?
A

No. Only the foreign contribution can be deposited in the exclusive foreign currency account opened for this purpose as such accounts shall be separately maintained by the associations as mentioned in the order of FCRA registration or prior permission of the Ministry of Home Affairs.  However, more than one account can be opened for the utilization of foreign contributions. However, no funds other than the foreign contribution shall be deposited or received in such accounts. 

 

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