An Overview of FCRA Registration
Charitable Trusts, Section 8 Companies, Societies in India that receive foreign donations or contributions from foreign sources are required to get FCRA Registration under Section 6(1) of FCMA, 2010. The primary purpose of the Foreign Contribution Regulation Act, 2010 is to keep a check on foreign donations or contributions and after the enactment of this Act, the Government will prevent money laundering cases. Now all the association that gets overseas contribution or donation need to register under FCRA.
As per Section 2(1)(h) of FCRA, Foreign Contribution is the donation given to the bodies or institutes by foreign sources and that donation comprises:
- Any currency, Indian or Foreign;
- Any article not being a gift to a person for its personal use;
- Any securities comprising stocks, bonds, shares, etc.
Objective of FCRA Registration in India
In the year 2010, the Foreign Contribution Regulation Act, 2010, was enacted in India. This Act was enacted with the following objectives:
- To regulate the acceptance and utilization of foreign hospitality or foreign contribution by certain individuals, companies, or associations.
- To prohibit the acceptance and utilization of the foreign hospitality or foreign contribution for any unfavourable activities to the national interest and for the matters related to it in addition to that of the incidental.
Types of Registration Under FCRA Act
There are two different ways in which the applicant can get Registration as per FCRA Act:
- The applicant must be registered under:
- The Indian Trust Act, 1882;
- The Societies Registration Act, 1860;
- Registered Section 8 Company under the Companies Act, 2013.
- An applicant must have made appropriate contributions by undertaking activities in its elected field for the benefit of society;
- Spent a minimum of Rs. 15 lakhs in the last 3 years towards achieving its objectives;
- Submission of the financial statements of the last 3 years that are duly audited by qualified CA;
- If a company is newly registered and likely to receive the foreign contribution, then approval can be made to the MHA (Ministry of Home Affairs) via the PP Method or Prior Permission Method.
For Prior Permission Registration
The Prior Permission method of FCRA Registration is ideally suited for organizations registered newly and would like to receive some foreign contributions. Such a Registration is granted for the receipt of a specific amount from any specific donor for carrying out the specific activities or projects.
The association is required to:
- Be registered under the Indian Trusts Act, 1882, or the Societies Registration Act, 1860, or registered as a Section 8 Company as per the Companies Act, 2013, or any such other Act as may be required by the authorities.
- Make a submission of a specific commitment letter from the donor to the Ministry of Home Affairs or MHA, which will indicate:
- The amount of contribution given;
- The Purpose for which such a contribution is proposed is to be given.
- Where the Indian recipient organization and the foreign donor organization have common members, the following conditions need are to be met:
- The Chief Functionary of an Indian organization cannot be part of the donor organization.
- At least 51% of the members or office-bearers of the governing body of the Indian recipient organization should not be the employees or members of the foreign donor organization.
- The case where the foreign donor is an individual:
- He/she cannot be the Chief Functionary of an Indian organization.
- At least 51% of the office bearers or members of the governing body of the recipient organization are required not to be the family members and close relatives of the donor.
Eligibility Criteria for FCRA Registration in India
The eligibility criteria for FCRA Registration in India are as follows:
- Section 8 Companies must be registered under the Companies Act, 2013;
- Societies incorporated under the Indian Society Registration Act;
- Trust registered under the Indian Trust Act;
- Foreign contribution or donation accepted by the Trust shall not risk the life/safety of any person or shall not result in any offence;
- The entity or any company must not be prohibited in any form by the provision of the FCRA;
- The NPO for Registration must have charitable objectives to serve the society by promoting education, promotion of art, culture, religion, sports, promoting education, etc.
Who are not eligible for FCRA Registration in India?
The entities that are entities are not allowed to be granted FCRA Registration in India are as follows:
- The applicant is Benami or fictitious;
- An applicant against whom prosecution is conducted for indulging in any unfair activity;
- An applicant who has been prosecuted or convicted for any communal tension made in any area of a specified district or any other part of the country;
- The entity is engaged in some violent activities;
- The entity has utilized some foreign contributions for its personal use;
- An entity is debarred from accepting any foreign receipt or foreign grant under any provision of the law;
- Any such acceptance of the foreign grant that affects the entity prejudicially;
- The sovereignty of India;
- In the interest of the public;
- The relationship with any state in India.
Documents required for FCRA Registration in India
The documents required for FCRA Registration in India are as follows:
- Self-certified copy of the certificate of incorporation, trust deed, or any other relevant certificate held by such an entity;
- PAN of the NGO;
- Copy of Memorandum of Association (MoA) and Articles of Association (AoA) of institutions;
- Signature of the chief judiciary in the JPG format;
- A complete detailed report on the activities of the preceding 3 years;
- Audited copy of the financial statement, Income-Expenditure details, P&L Account, and cash flow statement of the preceding 3 years;
- Certified original copy of the resolution passed by the governing body authorized by the NGO;
- Certificate obtained under Section 80G and 12A of Income Tax Act. Section 80G and 12A provide certain tax exemptions to the NGOs under the Income-tax Act of India.
Procedure for FCRA Registration in India
The step-by-step process of FCRA Registration in India is as follows:
- First, the applicant is required to access the online portal of FCRA. Then, the applicant is required to fill the Form FC – 3A application for FCRA Registration or Form FC – 3B application for FCRA Prior Permission, as the case may be.
- To start the new Registration, the applicant needs to file the FC-3 application; then, the applicant is required to fill out the relevant details along with the necessary attachments containing the documents, which are as follows:
- Association Address;
- The number of Registration;
- The date of Registration;
- Nature of the Association formed;
- Main Object of the Association formed;
- Once the details are filled in along with the necessary attachments, then submit it.
- After that, the necessary details will be filled in the application form for Executive Committee.
- Further, the details of the bank are required to be provided, including the name of the bank, account number, IFSC code, and bank’s address.
- Once the bank details are entered in by the applicant, all the required documents should be uploaded in PDF format.
- The date and place are needed to be entered next, after which the final submission of the application can be selected.
- The last step in the procedure is to make the online payment by clicking on that particular payment button. Once the required payment is made and the form is submitted by the applicant, no further changes can be made to the application form.
Renewal of FCRA Registration in India
FCRA Registration in India is valid for 5 years, which can be further renewed by applying for the renewal application. An entity shall apply for the renewal within the following timeline:
- At least 6 months before the expiry date;
- At least 12 months before the date when registration lapses, in cases the entity is operating on a multi-year project.
Cancellation or Suspension of FCRA Registration in India
In case the authorities are of the view that the entity registered is not operating as per the prescribed provisions of the law and the FCRA Registration of the entity needs to be cancelled. The authority can make such a cancellation by giving the notice to the concerned entity.
The reasons that can be considered while cancelling the FCRA Registration of an entity in India are as follows:
- The NGO fails to comply with the prescribed provisions of the Foreign Contribution Regulation Act;
- The entity failed to submit the annual return within the prescribed due date;
- In the case where an inquiry is made for an allegation imposed against such an organization for certain misconduct or wrongdoing in the operations, and such an allegation is proved to be true;
- The foreign contribution received by the entity is not utilized for the attainment of the primary object of the entity and neither for achieving the main purpose stated during the FCRA Registration application made in India.
FAQs of FCRA Registration
The 2 types of FCRA Registration are Proper FCRA and Proper permission for FCRA Registration.
The points of difference are Eligibility Criteria and Period of Existence.
FCRA Registration in India, once granted, is valid for a time period of 5 years.
Yes, you can get your FCRA Registration renewed by applying for the same within 6 months before the date of expiry.
After the receipt of FCRA Registration, the entity is required to file an annual return in the prescribed form FC-4 online through the official website of https://fcraonline.nic.in.
The documents required for Form FC-4 are the scanned copy of the Income Statement, Balance Sheet, Foreign Receipt, and the expenses incurred by the entity.
Yes, it is mandatory to get all the documents certified by the Practising Chartered Accountant.
The term “FCRA” stands for Foreign Contribution Regulation Act.
What is the due date of the filing of an annual return by an entity with FCRA Registration in India?
An entity must file Form FC-4 within the end of 9 months from the end of the financial year, i.e., on or before the 31st day of December each year.
Does Foreign Contribution include the Donation made by an individual of Indian Origin but having a Foreign Nationality?
Yes, such a donation will be treated as a foreign contribution to India.
No, the Non-resident Indians, who still have Indian citizenship, will not be counted in this category.
What are the restrictions relating to the foreign contribution to the process of FCRA Registration in India?
As per Section 12 (4) (g) of the Regulation Act, no registered person under the FCRA can accept any amount of foreign contribution which Can lead to the incitement of an offence; endangers the life of a person; or causes any physical harm to a person.
An applicant who is registered either under Societies Registration Act 1860, Indian Trusts Act 1882, or Section 8 of the Companies Act 2013 is eligible to apply for FCRA Registration.
There are chances that the regulatory authorities might cancel or suspend your registration.
If you choose to use the contribution received for any purpose other than the objectives prescribed, there are chances that the regulatory authorities might cancel or suspend your registration.
Foreign Contribution Regulation Act 2010 acts as the governing law for FCRA Registration in India.