Foreign Contribution Regulation Act 2010 ‘FCRA‘, FCRA is enacted by the parliament, to consolidate the law to regulate the transaction of foreign contribution by the individuals or associations, or companies and also to prohibit acceptance and utilization of foreign contribution for any activities against the national interest. The main purpose of this act is to keep a check on foreign contributions. After the enactment of FCRA 2010, the government will prevent money laundering cases such as hawala, etc. Now all the association that gets foreign Donation need to register under FCRA.
FCRA is extended to the whole of India, and shall also apply to-
a) Indian citizens outside India.
b) Branches or subsidiaries outside India, of companies or associations, incorporated in India.
What is foreign contribution?
According to section 2(1)(h) of FCRA, 2010 foreign contribution is the donation given to the institutes or bodies by foreign sources, and that Donation includes:
- An article, not being a gift to a person for its personal use.
- Any currency Indian or foreign
- Or any securities including shares, stocks, bonds, etc.
Eligibility for foreign contribution
Any associations/ trusts/ NGOs/ section-8 companies/HUF/Individuals, that have a definite cultural, economic, educational, religious, or social program, can apply for FCRA registration if intended to have a foreign contribution.
Prohibited persons to accept foreign contribution
- A political party or the office bearer
- candidate for election;
- correspondent, columnist, cartoonist, editor, owner, printer, or publisher of a registered newspaper;
- public servant, Judge, Government servant, or employee of any corporation or any other body controlled or owned by the Government
- member of any Legislature
Modes For Receiving Foreign Grants
FCRA REGISTRATION
Any association/trust/society, that wants the foreign donation or grants, can apply for FCRA Registration that exists for at least three years and has undertaken reasonable activity in its field for the benefit of the society for which the foreign contribution is proposed to be utilized. Intuition can apply for registration under the Form FC-3A
Pre-request for grant of registration under FCRA, 2010
- Be registered under an existing statute like the Societies Registration Act, 1860 or the Indian Trusts Act, 1882 or section 8 of the Companies Act 2013, etc;
- The applicant NGO/association should have spent INR 15lakh during the last three years. (excluding the administrative expenditure)
- If the association wants inclusion of its capital investment in assets like land, building, other permanent structures, vehicles, equipment, etc, then the Chief Functionary shall have to give an undertaking that these assets shall be utilized only for the FCRA activities and they will not be diverted for any other purpose till FCRA registration of the NGO holds.
- shall have a FCRA account in SBI New Delhi Main Branch (NDMB)
Documents required for registration
(i) Self-certified copy of registration certificate/Trust deed etc., of the association.
(ii) Signature of the chief functionary.
(iii) Self-certified copy of Memorandum of Association(MoA)/ Article of Association(AoA)
(iv) Activity Report indicating details of activities during the last three years.
(v) Copies of relevant audited statements of accounts for the past three years (Assets and Liabilities, Receipt and Payment, Income and Expenditure).
(vi) KYC documents of members.
Any other document required by the department.
Prior-Permission
An organization in the early stage is not eligible for a certificate of 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 specific donors/donors for carrying out specific activities/projects. An institution can apply for prior permission under Form FC-3B
Pre-request for Prior-permission:
- be registered under an existing statute like the Societies Registration Act, 1860 or the Indian Trusts Act, 1882 or section-8 of the Companies Act, 1956etc
- 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:
(i) The Chief Functionary of the recipient Indian organization should not be a part of the donor organization.
(ii) At least 75% of the office-bearers/ members of the Governing body of the Indian recipient organization should not be members/employees of the foreign donor organization.
(iii) In the case of a foreign donor organization being a single person/individual that person should not be the Chief Functionary or office bearer of the recipient Indian organization.
(iv) In the case of a single foreign donor, at least 75% of office bearers/members of the governing body of the recipient organization should not be the family members and close relatives of the donor.
Documents for Prior-Permission
(i) Signature of the chief functionary.
(ii) Self-certified copy of registration certificate/Trust deed etc., of the association
(iii) Duly signed Commitment Letter from Donor.
(iv) 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.
(v) Board meeting resolution.
(vi) KYC documents of the members.
Renewal of FCRA Registration
FCRA registration certificate is valid for five years from the date of issuing. After every five years, one needs to renew their FCRA certificate. According to section-16 of FCRA 2010, every institution that is registered under section-12 of the act needs to apply for registration under the form FC-3C, within six months before the expiry of the registered certificate.
In case of non-renewal the existing registration under FCRA, 2010, will cease from the date of completion of the period of five years from the date of grant of registration and will not be eligible for receipt & utilization of foreign contribution. In such a case, the association has to apply afresh for a grant of registration.
Documents required for renewal
- Darpan id issued by NITI Ayog,
- Signature of Chief Functionary,
- Registration certificate of the association,
- Memorandum of Association/ Trust Deed,
- FCRA Registration Certificate of association issued by the Ministry of Home Affairs
Statistics of FCRA Registration
- Active Associations: Associations that are active and valid till now.
- Cancelled Associations: Association whose, FCRA registration cancelled by the department due to non-compliance or contravention to the FCRA norms
- Deemed Expired: Association’s renewal is pending. According to section 16, the association shall apply for renewal by filing the Form FC-3C within 6 months before the expiry of the registration certificate.
- Annual Return Pending for 2020-2021: Annual filing pending, AR shall be filed every year, even for the Nil accounts.
FCRA Registration Cancellation.
The central government has the power to cancel the registration certificate, after making a required inquiry, the government passes the order for cancelation.
Note “No order of cancellation of a certificate shall be made unless the person concerned has been given a reasonable opportunity of being heard”.
Grounds for Cancellation Registration
*NOTE: Once the registration is cancelled, an association shall need to register a fresh application and shall not be eligible for registration or prior permission for the period of three years from the date of cancellation of such certificates.
Annual Return filling
Annual returns are to be filed online. No hard copy of the returns shall be accepted in the FCRA Wing of the Ministry of Home Affairs.
Return is to be filed for every financial year (1st April to 31st March) within a period of nine months from the closure of the year (i.e. by 31st December every year) under Form FC-4.
Submission of a “NIL” return, even if there is no receipt/utilization of foreign contribution during the year, is also mandatory. However, in such a case, a certificate from Chartered Accountant audited statement of accounts is not required to be uploaded.
Consequences of not filing the annual returns on time.
(1) Imposition of penalty for late submission of return. Penalty up to 100,000 or 5% of the foreign contribution, whichever is higher.
(2) Cancellation of registration,
(3) Prosecution for violation of provisions of FCRA, 2010.
DISCLAIMER: The entire contents of this article have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation. Although care has been taken to ensure the accuracy, completeness, and reliability of the information provided, the author assumes no responsibility therefore. Users of this information agree that the information is not professional advice and is subject to change without notice. The author assumes no responsibility for the consequences of the use of this information. IN NO EVENT THE AUTHOR SHALL BE LIABLE FOR ANY DIRECT, INDIRECT, SPECIAL, OR INCIDENTAL DAMAGE RESULTING FROM OR ARISING OUT OF OR IN CONNECTION WITH THE USE OF THIS INFORMATION
Author Bio
Dear Kanika Ji,
Thank you ever so much for the information provided on the website. I wonder if you could give little bit clarity for my query, as I am in the process to acquire prior permission for Darjeeling Welfare Trust, having bit of difficulty to interpret the points written on the FCRA Charter.
My question is, Can the Foreign national be the chief functionary on ex-Officio capacity?
Extract from FCRA Charter below on having foreign national on the Trust:
“No foreign national other than one of Indian Origin can be an office bearer or a trustee including the Chief Functionary of an organization/NGO. Foreigners can, however, be, allowed to be associated with such associations in ex-officio capacity if they are representing multilateral bodies, foreign contribution from whom is exempted from the purview of the Foreign Contribution (Regulation) Act, 2010, or in a purely honorary capacity depending upon the person’s stature in his / her field of activity.
Relaxation may be considered, on a case to case basis, if any of the following grounds is met:
a) the foreigner is married to an Indian Citizen;
b) the foreigner has been living and working in India for at least five years;
c) the foreigner has made available his / her specialized knowledge, especially in the medical and health related fields on a voluntary basis in India, in the past;
d) the foreigner is a part of the Board of Trustees / Executive Committee in terms of the provisions of an inter-governmental agreement.
e) The foreigner is part of the Board of Trustees / Executive Committee, in an ex-officio capacity representing a multilateral body which is exempted from the definition of foreign source.”
I will be truly grateful for your kind assistance on this.
Thank you.