FCRA Annual Return Filling

Organizations listed under the Foreign Contribution Regulation Act must hold different records under the head office of the FC and give a report in the prescribed template to the Ministry along with the audited report of records of the previous year. Any company obtaining foreign donations is expected to have a certificate from a CA. The certificate to be issued by the CA is offered in the form FC-6. In addition to this document, the audited Balance Sheet, Revenue & Expense Statement and the collection and payment account statement, together with the certification and verification approved by the Chief Functionary, will also be issued.

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The return is to be submitted for each financial year (1st April to 31st March) within 9 months of the end of the year, i.e. by 31st December of each year. The filing of a ' 0 ' refund, even though no international donation is received / used throughout the year, is compulsory. The report shall be issued in the specified form FC–6 accordingly followed by the balance sheet and the revenue and expenditure statement approved by the Chartered Accountant. On the grounds of the appropriate accounts and receipts, the chartered accountant is expected to report the following:

  • the amount of the international donation received at the start of the year.
  • the foreign contribution received during the year
  • the expended amount of the foreign contribution at the close of the year
  • certifies that the organisation has held the foreign contribution account and documents of the foreign contribution throughout the way stated in the Foreign Contribution (Regulation) Act, 2010.
  • the details contained in the certificate and the balance sheet used, the declaration of income and expense and the declaration of receipt and payment are accurate.

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  • 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

    • 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.
  • What are the type of FCRA registrations?

    Regular registration (Apply inform F.C 3) Prior permissionregistration (Apply in Form F.C 4) -
    • 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.
    • 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.
  • 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:

    • be registered under the Societies Registration Act, 1860 or the Indian Trusts Act, 1882 or section 25 of the Companies Act, 1956; (ii) 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.
  • 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:

    • Form FC-3,
    • Balance Sheet and statement of Receipt and Payment exclusively for foreign contribution received and utilised during the year.
  • 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:

    Amount of Penalty as per 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:

    • 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.
  • What are the Penalties punishments under FCRA?

    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.

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