FCRA i.e. Foreign Contribution Regulation Act was earlier enacted in year 1976 by Ministry of Home Affairs (MHA) to regulate the foreign funding that received by various charitable institute, political parties, print and other media and to prevent the foreign organizations or individuals from influencing the social, political economic and religious matters in India. The 1976 Act allows the Indian Organizations and political parties to accept the foreign donation freely but by reporting the same to the MHA.

In 1984 the act was amended and it was made mandatory for the organization to get registered under FCRA before receiving any foreign funding or donations.

A brief on Foreign Contribution Regulations in India

In 2010 the act was repealed and replaced by Foreign Contribution (Regulation) Act, 2010 along with Foreign Contribution (Regulation) Rules, 2011 with prime two objectives,

– To regulate the acceptance and utilization of Foreign Contribution or Foreign Hospitality by certain individuals or associations or companies

– To prohibit such acceptance and utilization for any activities which are detrimental to National interest

What is Foreign contribution

Foreign contribution means a donation, delivery or transfer of any article, any currency whether Indian or foreign, any security or share of the company made by a foreign government or its agencies, foreign companies or its subsidiary, MNCs, trust or society registered outside India or foreign citizens to an Indian person. However, article given as gift for personal use to a person upto the amount of Rs. 1 lakh is not to be considered as Foreign contribution.

If any interest has been earned or accrued from the aforesaid contribution in India shall also be considered as Foreign contribution.

However, any amount received by way of fee including fee of educational institute or in business transaction undertaken in the normal course of trade shall be outside the purview of Foreign contribution.

Who can receive Foreign contribution

Any person can receive foreign contribution subject to the condition that the same is intended to be utilized in a definite cultural, economic, educational, religious or social program. However, a prior registration under FCRA is mandatory and it should not be prohibited under section 3 of FCRA.

Who cannot receive Foreign contribution

There is complete prohibition under section 3 of FCRA on below mentioned person on receiving the Foreign contribution directly or indirectly,

– A candidate for election

– Any media house or media person whether it is a columnist, cartoonist, editor, owner printer or publisher of newspaper or whether it is association or company engaged in production or broadcast of any mean of news whatsoever

– Judge or Government servant

– Member of legislature

– Political party or any organization of political nature

No any person can receive Foreign contribution on behalf of political party neither can transfer such contribution to political party or to the person who is connected with the political party.

Registration under FCRA

There are two modes of getting the permission to receive Foreign contribution. One, is to get the FCRA registration and other is to get a Prior Permission under FCRA.

> Eligibility criteria under FCRA registration

– The association willing to receive Foreign contribution shall be registered under existing statute like Societies Registration Act, 1860 or Indian Trust Act, 1882 or section 25 of Companies Act (now section 8 of Companies Act, 2013) etc.

– It shall be in existence for at least three years and shall have spent at least Rs. 15 lakhs during the last three years for the purpose of definite cultural, economic, educational, religious or social program

– It shall not be convicted or prosecuted for any offence under any law

> Eligibility criteria under prior permission

– The person willing the receive the Foreign contribution shall be registered under existing statutes like Societies Registration Act, 1860 or Indian Trust Act, 1882 or section 25 of Companies Act (now section 8 of Companies Act, 2013) etc.

– It shall submit a commitment letter from the donor indicating the amount of contribution and purpose

– It shall not be convicted or prosecuted for any offence under any law

> How to apply

– Form FC-3A for registration and Form FC-3B for prior permission shall be submitted online along with a fee of Rs. 10,000/- in case of registration and Rs. 5,000/- in case of prior permission

– FCRA Bank Account with SBI, Main branch, Aadhar number and a DARPAN Id is mandatory

– The registration is valid for 5 years and it shall be renewed before 6 month of expiry of 5 years’ period in Form FC-3C

Compliances

– Proper books of account and records shall be maintained

– Annual return in Form FC-4 along with balance sheet and statement of receipt and payment account duly certified by Chartered Accountant shall be submitted annually online by 31st of December every year.

– Even if there is no receipt or utilization of Foreign contribution, submission of nil return is mandatory.

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About the Author

Author is Amit Jindal, ACA working as Manager Taxation in Neeraj Bhagat & Co. Chartered Accountants, a Chartered Accountancy firm helping foreign companies in setting uAmit Jindalp business in India and complying with various tax laws applicable to foreign companies while establishing their business in India.

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Qualification: CA in Practice
Company: Neeraj Bhagat & Co.
Location: New Delhi, New Delhi, IN
Member Since: 28 Feb 2019 | Total Posts: 113
Neeraj Bhagat & Co. is helping foreign companies in opening up of Liaison/ Branch Office in India and complying with various tax laws applicable to foreign companies while establishing a business in India. Neeraj Bhagat is the founder of Neeraj Bhagat & Co. Chartered Accountants, a Chartered View Full Profile

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