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The organizations signed up under the Foreign Contribution Regulation Act need to keep separate accounts incurred under the FC head and send a return in the recommended format to the Ministry together with the audited statement of accounts of the previous year. Every organisation which receives foreign contributions is required to furnish a certificate from a chartered accountant. The certificate to be given by the chartered accountant is provided in Form FC-6. Along with this certificate, audited Balance Sheet, Income & Expenditure statement and the statement of receipt and payment account should also be submitted along with Declaration and authentication signed by Chief Functionary.
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The 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 each year. Submission of a ‘Nil’ return, even if there is no receipt/utilization of foreign contribution during the year, is mandatory. The return is to be submitted, in prescribed Form FC – 6, duly accompanied with the balance sheet and statement of receipt and payment, which is certified by a Chartered Accountant. On the basis of the relevant books and vouchers, the chartered accountant is required to certify the following:
What is foreign contribution?
Foreign contribution has been defined in Section 2(1)(h) of FCRA, 2010. However, foreign contribution excludes earnings from foreign client(s) by an association in lieu of goods sold or services rendered by it as this is a transaction of commercial nature.
Who cannot receive foreign contribution?
As defined in Section 3(1) of FCRA, 2010, foreign contribution cannot be accepted by any
What are the type of FCRA registrations?
|Regular registration (Apply inform F.C 3)||Prior permissionregistration (Apply in Form F.C 4) -|
What are the eligibility criteria for grant of prior permission?
An Organization in formative stage is not eligible for registration. Such Organization may apply for grant of prior permission under the law. Prior permission is granted for receipt of specific amount from specific donor for carrying out specific activities/projects. For this purpose, the association should:
What is the accounting method for foreign contribution received in kind ?
As per rule 8(1)(a), account has to be maintained for foreign contribution received in kind. Form FC-6 provides the format for recording the receipt as well as the utilisation of contributions received in kind. The entries made in FC-6 should correspond with entries made in Form FC-3.
Does FCRA impose 'cash basis' method of accounting?
No, FCRA does not impose any particular method of accounting. But it does have certain specific reporting requirements, which have to be complied diligently.
What documents are required to be filed annually?
Every organisation which receives foreign contributions shall file an annual return in Form FC-3 under rule 8(2) within 120 days of the closure of the year.
The following should be submitted in duplicate duly signed by the chief functionary and certified by the chartered accountant:
It is necessary to file annual return even when the organisation does not receive any foreign contribution ?
If an organisation having FCRA Registration does not receive any foreign contribution, even then it should file nil returns. It is mandatory to file Form FC-3 every year as long as the organisation wants to validly retain its registration. The Ministry of Home Affairs (FCRA division) in its press notes dated 09.01.1998 has specifically clarified that even if no foreign contribution is received, filing of nil return is mandatory. In the same press note it has been clarified that non-submission of return in time or furnishing of false submission would constitute violation of the provision of the Act and attract penal consequences.
What is the implication for delay in filing of annual return?
FCRA is silent about consequences for delay in filing FC-3. It can be construed that an NGO would stand the risk of losing the FCRA registration if it does not file returns properly but whenever an NGO is not able to file FC-3 by 31st of July, it should write a letter to the FCRA office explaining the circumstances causing the delay. Normally FCRA authorities condone such delay in filing of returns.
Do Not Delay in filling FC6, else pay heavy penalty previously, Is there any penalty?
Delay in Filing FC-6 : FCRA is silent about consequences for delay in filing FC-6. It can be constructed that an NGO would stand the risk of losing the FCRA registration if it does not file returns properly but whenever an NGO is not able to file FC-6 by 31st December, it should write a letter to the FCRA office explaining the circumstances causing the delay. Normally FCRA authorities condone such delay in filing of returns. SO No, there is no such late filling penalty under FCRA Act. Before FC6, Organization having FC registration has to file FC3. However there is no such penalty for Late filling of either FC3 or FC6.
Last Date of Filling FC6 : As we aware Annual return of FCRA has to be filled before 31st December of following the financial year. e.g. for FY 201213, last date for filling FC6 is 31/12/2013. As many organizations are not enthusiastic to file FC6 return on time duration, which is 9 months after completion of Financial Year, Home Ministry has taken this kind of harsh decision to take penalty for such kind of delays. However new penal Provision has been introduced by notification:
|Delay in filling return||Amount of Penalty|
|Beofre 31st December||No Penalty|
|Up to 90 Days after 31st December(in case of non leap year – before 31st March and in case of leap year – before 30th March)||2% of Foreign Contribution received During the respected Financial Year OR Rs. 10,000 whichever is higher|
|From 91 Days to 180 days after 31st December(in case of non leap year – before 29th June and in case of leap year – before 28th June)||3% of Foreign Contribution received During the respected Financial Year OR Rs. 20,000 whichever is higher.|
|After 181 Days from 31st December(in case of non leap year – After 29th June and in case of leap year – After 28th June)||In this case there are two types of monetary penalties ONE 5% of Foreign Contribution received During the respected Financial Year OR Rs. 50,000 whichever is higher TWO Rs. 500 per day for each day after 181 days from 31st December.|
What are the common offences, which are subject to severe penalty and punishment?
NGO’s receiving foreign contributions should guard against violating the provisions of FCRA. The following are a few common offences, which aresubject to severe penalty and punishment:
What are the Penalties punishments under FCRA?
To sum up the discussions: Violation of FCRA can attract severe penalties which could be as under :
Private Limited Companies are those types of companies where minimum number of members is two and maximum number is two hundred. A private limited company has the limited liability of members but at the same time it has many characteristics as those of a partnership firm. A private limited company has all the advantages of partnership namely flexibility, greater capital combination of different and diversified abilities, etc., and at the same time it has advantages of limited liability, greater stability and legal entity. In this sense, a private limited company stands between partnership and widely owned public company. Identifying marks of a private limited company are name, number of members, shares, formation, management, directors and meetings, etc., The maximum number of directors shall have to be mentioned in the Articles of Association. In the grand of privileges and exemptions, the Companies Act has drawn a distinction between an independent private company and other private company which is a subsidiary to the other public company.
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