The FCRA was enacted with the primary purpose of regulating the inflow of foreign contributions and ensuring that the received foreign contributions are not utilized for illegal 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 scrutinizing the flow of foreign funds to all charitable organizations in India and the Ministry has also cancelled the licenses of over 8000 charitable organizations due to non-compliance with the reporting requirements stipulated under the Act.

Object of the Act

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

  • To regulate the acceptance and utilization of foreign contribution or foreign hospitality by certain individuals or associations or companies and
  • 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.

Key Definitions

> Foreign Contribution

As defined in Section 2(1)(h) of FCRA, 2010, “foreign contribution” means the donation, delivery or transfer made by any foreign source ─

  • of any article;

Exemption: An article given to a person (includes Individual, HUF, Company, Association) as a gift for his personal use and the market value of such article in India, on the date of such gift is not exceeding Rs. 25,000/-.

  • of any currency, whether Indian or foreign;
  • of any security as defined in Section 2(h) of the Securities Contracts (Regulation) Act, 1956 and includes any foreign security as defined in clause (o) of Section 2 of the Foreign Exchange Management Act, 1999.

Specific inclusion

A donation, delivery or transfer or any article, currency or foreign security by any person who has received it form any foreign source, either directly or through one or more persons, shall also be deemed to be foreign contribution with the meaning of this clause.

The interest accrued on the foreign contribution deposited in any bank or any other income derived from the foreign contribution or interest thereon shall also be deemed to be foreign contribution within the meaning of this clause.

Specific exclusion

Any amount received from any foreign source in India, by way of fee (including fees charged by an educational institution in India from foreign student) or towards cost in lieu of goods or services rendered by such person in the ordinary course of his business, trade or commerce whether within India or outside India or any contribution received from an agent or a foreign source towards such fee or cost shall be excluded from the definition of foreign contribution within the meaning of this clause.

> Who can receive foreign contribution?

  • Individual;
  • HUF;
  • Association like Trust, Society and Section 8 Company;

> Can Private Companies receive foreign contribution?

Yes. Any Private Company can receive foreign contribution if they wish to do charitable work at some point of time subject to following conditions:-

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

> Who cannot receive foreign contribution?

 As defined in Section 3(1) of FCRA, 2010, the following are prohibited to receive foreign contribution:

  • A candidate for election;
  • Correspondent, columnist, cartoonist, editor, owner, printer or publisher of a registered newspaper;
  • Judge, government servant or employee of any Corporation or any other body controlled on owned by the Government;
  • Member of any legislature;
  • Political party or office bearer thereof;
  • Organization of a political nature as may be specified under sub-section (1) of Section 5 by the Central Government.
  • Association or company engaged in the production or broadcast of audio news or audio visual 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 above point.
  • Individuals or associations who have been prohibited from receiving foreign contribution.

FCRA Registration

Eligibility criteria

  • 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;
  • An association normally be in existence for at least 3 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.
  • An association should have spent at least Rs.10,00,000/- over the last 3 years on its aims and objects, excluding administrative expenditure.
  • Statements of Income & Expenditure, duly audited by CA, for last 3 years are to be submitted to substantiate that it meets the financial parameter.

Prior Permission – if an Association is not 3 years old?

Eligibility criteria

An organization with less than 3 years of existence 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:

  • 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;
  • 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:

  • The Chief Functionary of the recipient Indian organization should not be a part of the donor organization.
  • 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.
  • In case of foreign donor organization being a single person/individual that person should not be the Chief Functionary of the recipient Indian organization.
  • In case of a single foreign donor, at least 51% office bearers/members of the governing body of the recipient organization should not be the family members and close relatives of the donor.

General conditions for grant of registration and prior permission

The ‘person’ making an application for registration or grant of prior permission-

  • is not fictitious or benami;
  • has not been prosecuted or convicted for indulging in activities aimed at conversion through inducement or force, either directly or indirectly, from one religious faith to another;
  • has not been prosecuted or convicted for creating communal tension or disharmony in any specified district or any other part of the country;
  • has not been found guilty of diversion or mis-utilisation of its funds;
  • is not engaged or likely to engage in propagation of sedition or advocate violent methods to achieve its ends;
  • is not likely to use the 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;
  • the person being an individual, such individual has neither been convicted under any law for the time being in force nor any prosecution for any offence is pending against him.
  • the person being other than an individual, any of its directors or office bearers has neither been convicted under any law for the time being in force nor any prosecution for any offence is pending against him.

The acceptance of foreign contribution by the association/ person is not likely to affect prejudicially –

  • the sovereignty and integrity of India;
  • the security, strategic, scientific or economic interest of the State;
  • the public interest;
  • freedom or fairness of election to any Legislature;
  • friendly relation with any foreign State;
  • harmony between religious, racial, social, linguistic, regional groups, castes or communities.

The acceptance of foreign contribution shall not lead to incitement of an offence and shall not endanger the life or physical safety of any person.

Separate Bank Account for receiving Foreign Contribution

The foreign contribution should be received only in the exclusive single FC account of a Bank (also called designated FC account), as mentioned in the order for registration or prior permission granted and should be separately maintained by the association. However, one or more accounts (called Utilization Account) in one or more banks may be opened by the association for utilizing the foreign contribution after it has been received in the designated FCRA bank account, provided that no funds other than that foreign contribution shall be received or deposited in such account or accounts and in all such cases, intimation in FC-6 is to be given online within 15 days of opening of such account.

Procedure for making application for registration/prior permission

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

Documents required

For Registration

  • Jpg file of signature of the chief functionary
  • Self-certified copy of registration certificate/Trust deed etc. of the association
  • Self-certified copy of relevant pages of Memorandum of Association/ Article of Association showing aim and objects of the association.
  • Activity Report indicating details of activities during the last three years;
  • 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;

For Prior Permission

  • Jpg file of signature of the chief functionary
  • Self-certified copy of registration certificate/Trust deed etc., of the association
  • Duly signed Commitment Letter from Donor.
  • 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 5 years and thereafter application for renewal of registration may be made before 6 months from the expiry of their existing registration.

Exemption from registration/prior permission

> Donation by NRI

Contributions made by a citizen of India living in another country (Non-Resident Indian), from his personal savings, through the normal banking channels are not treated as foreign contribution.

> Foreign remittances from relative

Foreign remittances from relatives are not treated as foreign contribution. However, any person receiving foreign contribution in excess of Rs. 1 lakh or equivalent thereto in a financial year from any of his relatives shall inform the Central Government in Form FC-1 within 30 days from the date of receipt of such contribution.

> Govt. Department

All bodies constituted or established by or under a Central Act or a State act requiring to have their accounts compulsorily audited by Comptroller & Auditor General of India are exempted from the operations of all the provisions of FCRA, 2010.

Annual Filing

An association permitted to accept foreign contribution is required to maintain 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 association are required 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 9 months from the closure of the year i.e. by 31st December each year.

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

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

Mapping of various e-forms required to be filled under FCRA, 2010

Form Purpose
FC-1
  • Intimation of receipt of foreign contribution by way of gift from relative by an individual;
  • Intimation about Foreign Contribution by way of articles from relative by an individual;
  • Intimation about Foreign Contribution by way of Securities;
  • Intimation of receipt of Foreign Contribution by a candidate for Election;
FC-2 Application for seeking prior permission to accept foreign Hospitality;
FC-3
  • Application for FCRA registration;
  • Application for prior permission;
  • Application for renewal of FCRA registration;
FC-4 Annual Return
FC-5 Application for seeking permission for transfer of foreign contribution to other unregistered person;
FC-6
  • Intimation of change of Name, Address, Bank details, Key members;
  • Intimation of quarterly receipt of foreign contribution;
  • Filing of annual returns of assets and liabilities by association ;

Thank You.

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Author Bio

Qualification: CS
Company: DVG & Associates
Location: Mumbai, Maharashtra, IN
Member Since: 02 Feb 2018 | Total Posts: 44
CS Dhaval Gusani is a founder of DVG & Associates, Company Secretaries and Corporate Law Professionals. He is a Commerce Graduate and an Associate Member of the Institute of Company Secretaries of India (ICSI). He has cumulative experience of more than 3 years with Listed Company, Chartered Acco View Full Profile

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One Comment

  1. uday aggarwal says:

    Hi, very well written article. Can you please answer the following questions.

    1) If an organisation receives gift in kind from foregin, is it required to be shown under form FC-1 or FC-4.

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