FCRA Registration

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.

As defined in Section 3(1) of FCRA, 2010, foreign contribution cannot be accepted by any

• 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 Section 5(1) by the Central Government.
• Association or company engaged in the production or broadcast of audio news or audio visuals or current affairs programs through any electronic mode, or any other electronic form as defined in clause (r) of subsection (i) of Section 2 of the Information Technology Act, 2000 or any other mode of mass communication;
• Correspondent or communist, cartoonist, editor, owner of the association or company referred to in clause (g).
• Individuals or associations who have been prohibited from receiving foreign contribution.

Requirements for Registration Under FCRA

Under Section 6 of Foreign Contribution Regulation Act, it is provided that any organization having a definite cultural / social/ educational/ religious/ economic object shall only accept foreign contribution after obtaining Foreign Contribution Regulation Act Registration.

• It must be a duly registered organization for charitable purposes.
• It must agree to receive foreign contribution only through one specific bank account.
• Organization should have active existence for last three years.

Instance in Which the Prior Permission is Required

• The organization does not have permanent FCRA registration number Or FCRA registration number has been cancelled by the Government .
• The association is instructed by the Central Government to take prior permission under the provisions of Section 10 where power have been provided to prohibit any organization from receiving foreign funds.
• The FCRA number is suspended due to violation of the provisions and conditions specified under the FCRA.
• The organization is of political nature, not being a political party.
• Any person residing in India or any citizen of India residing outside India, receiving foreign funds on behalf of an organization of political nature.

For grant of registration, the association should:

• be registered under the Societies Registration Act, 1860 or the Indian Trusts Act, 1882 or section 25 of the Companies Act, 1956;
• normally be in existence for at least three 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. For this purpose, the association should have spent at least Rs. 6,00,000 over last three years on its activities, excluding administrative expenditure. Statement of Income & Expenditure duly audited by Chartered Accountant for last three years may be enclosed to substantiate that it meets the financial parameter.
• Meet the following conditions:
  • The person making an application for registration or grant of prior permission under subsection(1),Sec. 12 (4) (a)(1) 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 misutilisation 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; (9) the person and/or any of its directors or office bearers has neither been convicted under any law for the time being in force nor any prosecution forany offence is pending against him.
• the acceptance of foreign contribution by the association/ person is not likely to affect pre judicially –
  • the sovereignty and integrity of India; or
  • the security, strategic, scientific or economic interest of the State; or
  • the public interest; or
  • freedom or fairness of election to any Legislature; or
  • friendly relation with any foreign State; or
  • harmony between religious, racial, social, linguistic, regional groups,castes or communities.
• the acceptance of foreign contribution
  • shall not lead to incitement of an offence;
  • shall not endanger the life or physical safety of any person.

Two ways of registration under FCRA

Regular registration (Apply inform F.C 3)

• Under this registration, there is no restriction (either the total amount or from specific donor) for receiving Foreign Contribution.
• Regular registration certificate for 5 years under this registration, there is no restriction either on the total amount or from specific donor for receiving foreign contribution.
• After five years, FCRA certificate must be renewed. This rule will be implemented from the year 2015. However, in both the cases it is compulsory to file annual return.

Prior permissionregistration (Apply in Form F.C 4) - Registration

• Under this registration, the permission is granted for a specific amount from a specific donor. A letter of intent from the donor to donate the amount must be enclosed along with the application form (Form F.C 1A).
• Prior permission certificate which is possible after one year under this registration, the permission is granted for a specific amount from a specific donor. A letter of intent from the donor to donate the amount must been closed along with the application form.

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:

• be registered under the Societies Registration Act, 1860 or the Indian Trusts Act, 1882 or section 25 of the Companies Act, 1956;
• Submit a specific commitment letter from the donor; and
• Submit copy of a reasonable project for the benefit of the society for which the foreign contribution is proposed to be utilised.
• Should meet all the conditions for the grant of registration.

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.

No, FCRA does not impose any particular method of accounting. But it does have certain specific reporting requirements, which have to be complied diligently.

No. Foreign contribution cannot be deposited or utilized from the bank account being used for domestic funds.

Yes. Any amount received from 'foreign source' in rupees or foreigncurrency is construed as 'foreign contribution' under law. Such transaction even in rupees term are considered foreign contribution.

Yes

Yes. When an application is filed online, a printout of the same may betaken after submission and thereafter, it should be submitted, duly signed,along with the requisite documents to the Ministry of Home Affairs. Theprescribed forms for submission of application for grant of Registration andPrior Permission are FC3 and FC4 respectively.

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:

• NGO’s accepting foreign contribution without registration or prior permission.
• NGO’s having FCRA registration but receiving foreign contribution in different bank accounts.
• NGO’s having FCRA registration and not filing annual return in prescribed Form.
• NGO’s having FCRA registration filing false information in the annual return.
• NGO’s with FCRA registration or prior permission not maintaining the required books of account.
• NGO’s receiving foreign contribution on behalf of other NGO’s not having FCRA registration.
• Not filing nil return in the year when foreign contribution is received.
• Diversion of funds for the purposes other than for which they were received.
• Not maintaining the separate books of account
• Mixing of Local funds with foreign funds.

The provisions of the Code of Criminal Procedure, 1973 shall apply in so far as they are not inconsistent with the provisions of this Act to all seizures made under this Act Persons liable for punishments under FCRA The following persons may be liable to penalties and punishments depending on the nature of the offences:

• NGO Chief Functionary
• Governing body members
• Other officers
• Other persons who indulge

To sum up the discussions: Violation of FCRA can attract severe penalties which could be as under :

• Seizure and confiscation of foreign contribution receipts.
• Fine upto 5 times the value of the foreign contribution spent.
• Inspection and seizure of accounts and records.
• Compulsory prior permission requirement even if the NGO is registered under FCRA.
• Imprisonment upto 5 years and/or fine.
• Prohibition on accepting foreign contribution for 3 years for persons convicted twice.