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 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.
For obtaining FCRA registration or prior permission, the following conditions for FCRA registration shall be satisfied by the applicant:
Further, the person making the application:
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.
One can apply for FCRA registration online by filing Form FC-3A with the Ministry of Home Affairs.
Following are the FCRA compliances that shall be adhered to:
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.
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.
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:
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.
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.
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