FCRA Registration Process - Eligibility Criteria and Compliances
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 the Foreign Contribution Regulation Act, of 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 FCRA Registration with the Central Government. 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 shall be complied with 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 FCRA 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:
- The integrity and sovereignty of India
- The strategic, security, economic and scientific interests of the state
- Freedom and fairness of election of any Legislature
- Public interest
- Friendly relations with any foreign state
- 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 under FCRA Registration
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 FCRA Registration, prior permission as well as renewal of FCRA registration. One can apply for registration online by filing Form FC-3A with the Ministry of Home Affairs.
Compliances under FCRA Registration
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 inform 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 cases 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
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.
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
FCRA registration process is an online process. You need to file Form FC-3A to obtain FCRA registration.
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.
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.
FCRA stands for Foreign Contribution (Regulation) Act, which is an Indian law that regulates the acceptance and utilization of foreign funds or contributions by individuals, associations, and non-governmental organizations (NGOs) in India.
FCRA registration is the process of obtaining registration or permission under the Foreign Contribution (Regulation) Act. Any organization or individual receiving foreign contributions or planning to receive foreign contributions must obtain FCRA registration or prior permission from the Ministry of Home Affairs, Government of India.
- The Foreign Contribution (Regulation) Act (FCRA), 2010 mandates that NGOs, societies, trusts, associations and entities registered in India,
- Individuals who are Indian citizens or OCI residents registered outside India,
- Companies registered in India with more than 50% foreign shareholding or controlled by foreign entities,
- Any organization or individual receiving foreign funds, contributions or donation directly or indirectly from a foreign source is mandated to obtain FCRA registration or get prior permission for any accepting foreign contributions.
No, foreign individuals or organizations cannot apply for FCRA Registration directly in India. The FCRA is applicable for those entities registered in India and receives foreign contributions. However, if a foreign entity wants to provide donations or funds to an Indian entity, they have to follow set guidelines issued by the Foreign Contribution (Regulation) Act (FCRA), 2010.
The following documents are required to be submitted along with the FCRA application form for registration under the Foreign Contribution (Regulation) Act (FCRA) in India:
- Copy of the registration certificate of the organization, such as the Trust Deed, Memorandum of Association, or Society Registration Certificate.
- Audited financial statements of the organization for the last three years, including the Income and Expenditure Statements, Balance Sheet, and Receipts and Payment Statements.
- Details of the activities carried out by the organization in the last three years, including a report on the nature of the activities, the areas of operation, and the impact of the activities.
- Copy of the PAN (Permanent Account Number) card of the organization.
- Copy of the Board resolution authorizing the submission of the FCRA application.
- Copy of the cancelled cheque of the organization's bank account.
- Details of the foreign sources from which the organization expects to receive contributions, including the name and address of the foreign source, the nature of the contribution, and the purpose for which it is intended.
- Declaration by the Chief Functionary of the organization or the authorized signatory, stating that the organization has not been involved in any activities that are detrimental to the national interest.
Yes, the FCRA registration of an organization or individual can be cancelled or suspended by the Ministry of Home Affairs, Government of India, under certain circumstances.
Non-compliance with the FCRA can result in hefty penalties such as fines, suspension or cancellation of FCRA registration. The amount of penalty usually ranges from 2 to 5 times the foreign contribution received or INR 1 lakh whichever is higher.
Leave a Reply