FCRA Annual Return Filling

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

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.

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.

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.

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.

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.

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:

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.

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.