Foreign Contribution under Foreign Contribution Regulation Act (FCRA), 2010

In India, Trust and NGO’s (Associations) are playing prominent role in carrying out various social activities for the benefit of the society at large. Such Associations seek more donation from the donors in order to reach out the large number of people. The foreign contribution can aid such Association to expand their activities. The Associations which are desirous of getting foreign contribution has to be recognized under FCRA,2010.

1. Component of Foreign Contribution

The foreign contribution includes the following which are received from the foreign source;

• Donation of article
• Any currency, whether Indian or foreign
• Any securities (i.e shares, debentures, bonds etc) as defined under Securities Contract (Regulation) Act, 1956 and includes any foreign security as defined under Foreign Exchange Management Act, 1999.

It pertinent to note that foreign source includes contributions from foreign government, foreign company, foreign citizen etc.

2. Eligibility and prohibition relating to receipt of contribution under FCRA

Eligibility

The FCRA, 2010, has permitted the following persons to receive the foreign contribution;

• an individual
• a Hindu undivided family
• an association
• a company registered under section 25 of Companies Act, 1956 (now section 8 of Companies Act, 2013)

Prohibition

The following are persons are prohibited from receipt of foreign contribution:

• Candidate for election
• Correspondent, columnist, cartoonist, editor, owner, printer or publisher of registered news paper
• Judge, Government servant or employee of any corporation or any other body owned or controlled by the Government
• Member of any legislature
• Political party or office bearer thereof

3. Permission under FCRA,2010

There are two modes of permission to accept foreign contribution under FCRA,2010, which are as under:

• Registration
• Prior Permission

i. Registration

This is applicable for those Associations which are already registered under the existing statute like Societies Registration Act, 1860, Indian Trust Act,1882 or Section 8 of Companies Act,2013 and such Associations must be in existence for at least 3 years and has undertaken charitable activities in choose filed. Such Association has to spent at least Rs.10 lakhs on charitable activities in last 3 years.

• Steps involved in registration process

a. The Association has to obtain DRPAN ID from Darpan portal of NITI AYOG (URL: ngodarpan.gov.in). It involves simple process of signing up with the website by providing the basic details of Association and uploading Registration Certificate granted the above said statutes or Trust Deed should be uploaded

b. The Form FC-3A has to be filed by logging into Ministry of Home Affairs website (URL:fcraonline.nic.in) along with the following documents

• • Registration Certificate of Association
  • Memorandum of Association in case of Company / Trust Deed
  • Activity Report for the last 3 Years
  • Audited Statement of accounts for last 3 Years
  • Affidavit (standard format is available in URL:fcraonline.nic.in)

ii. Prior Permission

The Association which are in formation stage are not eligible for registration under FCRA,2010. However, such Associations can get prior permission for receipt of a specific amount from a specific donor carrying out specific activities/projects. In order to get prior permission such Associations should meet the following criteria:

a. The Association must be registered under existing statutes as discussed above

b. The Association has to submit specific commitment letter from the donor indicating amount of foreign contribution and purpose for which it is proposed to be given

c. Further, the recipient Indian Association should satisfy the following conditions;

• • The Chief Functionary of recipient Indian Association should not be the part of donor organization
  • At least 75% of the office-bearers / members of governing body of the recipient Indian Association
  • In case of foreign donor organization being single person / individual that person should not be Chief Functionary or office – bearers of the recipient Indian Association
  • In case of a single foreign donor, at least 75% office bearers / members of the governing body of recipient Indian Association should not be the family members and close relatives of the donor.
• Steps involved in getting prior permission:

a. The Association has to obtain DRPAN ID from Darpan portal of NITI AYOG (URL: ngodarpan.gov.in). It involves simple process of signing up with the website by providing the basic details of Association and uploading Registration Certificate granted the above said statutes or Trust Deed should be uploaded

b. The Form FC-3B has to be filed by logging into Ministry of Home Affairs website (URL:fcraonline.nic.in) along with the following documents:

• • Registration Certificate of Association
  • Memorandum of Association in case of Company / Trust Deed
  • Commitment letter from the donor organization and agreement
  • Project Report for which foreign contribution will be received
  • Affidavit (standard format is available in URL:fcraonline.nic.in)

4. Bank account and maintenance of books for those Registered with FCRA

The Association has to open FCRA bank account for the purpose of receipt and utilization of foreign contributions. Even if contributions are received in Indian rupees, such contribution has to be deposited in FCRA bank account.

Further, separate set books of accounts have to be maintained to keep track of receipt and utilization of foreign funds. These books of accounts are subject to audit by a Chartered Accountant.

5. Annual Return under FCRA

Every Association which is in receipt of foreign contribution has to file the annual return in Form FC-4 for financial year along with the following documents;

• Duly signed Chartered Accountant Certificate
• Declaration certificate from Chief Functionary relating correctness and completeness of information provided in the annual return
• Audited Statement of Accounts containing Receipts and Payment Account, Income and Expenditure Statement, and Balance Sheet)

Due date

The annual return has to be filed within 9 months from the close of financial year i.e. 31 December every year.