guide to foreign contribution (regulation) act, 2010(fcra) - amended till dec 15

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VALUE ADDED PROFESSIONAL SERVICES LLP

Corp Office: 404 I, 4th Floor, Devika Towers I Chander Nagar I Ghaziabad, U.P. -201011, Telephone: +91 120 4264301

Guide to Foreign Contribution (Regulation) Act, 2010(FCRA)

[As amended from time to time particularly by way of Foreign Contribution

(Regulation) Amendment Rules 2015 amended on 14th December 2015]

Legal Objective of the Act: To regulate the acceptance and utilisation of Foreign Contribution (FC) /

Donations or Foreign hospitality by certain individuals or associations or

companies; and To prohibit acceptance and utilisation of Foreign Contribution (FC) / Donations or

Foreign hospitality for any activities detrimental to the national interest and

matters connected thereto.

Applicability: It applies to whole of India including (also applies to the following): Citizens of India outside India;

Foreign Branches and Subsidiaries of ‘Body Corporates registered in India’.

However, not applies to a company registered under Companies Act, 1956 / 2013 whose more than half of nominal capital is held by foreign company or a foreign

source.

Who can receive Foreign Contribution (FC) Legally: Any Person who is having a definite cultural, economic, educational, religious or

social programme (practically all NGO’s having nationalist objects) can receive FC after getting registered under FCRA law or obtaining a prior permission from the Central Government. A Private Limited Company too may seek prior

permission / registration for receiving foreign funds in case they wish to do some charitable work.

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Section 3(1) of FCRA, following Persons cannot accept FC:

(a) candidate for election;

(b) correspondent, columnist, cartoonist, editor, owner, printer or publisher of a registered newspaper;

(c) Judge, government servant or employee of any Corporation or any other body

controlled on owned by the Government; (d) Member of any legislature;

(e) Political party or office bearer thereof;

(f) Organization of a political nature (section 5(1) of the Act) (g) Association or company engaged in the production or broadcast of audio

news or audio visual news or current affairs programme as per Section 2(i)(r) of

the Information Technology Act, 2000 and their owners. (h) Prohibited Individuals or Associations.

Section 3(2): Acceptance or Delivery of FC:

A person ‘resident in India’ or ‘citizen of India’ shall not accept / deliver any FC to any person directly or indirectly, which in a way ultimately leads to delivery to a Political

Party or Person mentioned in Section 3(1).

Section 4: The following can be accepted by anyone (even by the persons prohibited in section 3), however subject to section 10:

Relative

Business receipt from official channel or as per FEMA,1999 Scholarships

Wages for employees working under him

As an agent of foreign of source for transactions with MHA/SG Section 10: Prohibitory Order:

Deals with passing of prohibitory order by MHA to not pay, deliver or transfer any

article, security or currency unlawfully kept or controlled. Sub Section 2, 3, 4, 5 of section 7 of UAPA, 1967 shall apply.

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FC Utilization and Foreign Currency (FC) Account: As per the objectives of association.

Not for Speculative Business; Should not incur FC for administrative expenses for more than 50%, except with

prior approval of MHA.

Exclusive Foreign Currency (FC) Account, No fund other than FC can be deposited. Further, this A/c number would be mentioned in the letter granting

registration or prior permission to the association.

One or more accounts in one or more banks may be opened for utilizing the FC and intimation required for every account to MHA within 15 days of opening.

All accounts will be on the online platform of public finance management service

(PFMS) of controller general of accounts, ministry of finance.

Section 7, Transfer of FC to another registered person: A person who is registered or obtained Prior Permission can transfer FC only if he also registered or obtained PP provided that the recipient has not been

proceeded against under any of the provisions of the Act. (The transferor takes a

written declaration from transferee that no proceeding is pending)

Section 7, Procedure for transferring FC to any unregistered persons: Make an application (FC-10) supported with a declaration to the Central Government The amount proposed to be transferred during the financial year is less than ten

per cent of the total value of the FC received during the financial year and will

transfer only after approval; Can be transferred only after approval of MHA.

Both the transferor and the recipient shall be responsible for ensuring proper

utilisation of the FC so transferred and reflected in the annual returns in Form FC-4 of both.

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Eligibility criteria and other documents required for grant of registration Online: Association should: be registered (under the Societies Registration Act, 1860 or the Indian Trusts Act,

1882 or section 25 of the Companies Act, 1956 / section 8 of the Companies Act,

2013 etc.) Existence for at least three years and required to Submit Activity Report of the

undertaken activity in its chosen field. (Spent at least Rs.10,00,000/- over the last

three years on its activities, excluding administrative expenditure). Submit Audited Statement of Accounts, duly audited by Chartered Accountant,

for last three years.

Fees of Rs.2,000/- and form(FC-3).

Eligibility criteria and documents required for grant of prior permission- Online: An Organisation in formative stage is not eligible for registration. Such Organisation

may apply for grant of prior permission under FCRA. Prior permission is granted for

receipt of a specific amount from a 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 / section 8 of the Companies Act,

2013 etc.;

Submit a specific commitment letter from the donor indicating the amount of FC and the purpose; and

Submit copy of a reasonable project for the benefit of the society for which the FC

is proposed to be utilized. Fees of Rs.1,000/- and form(FC-3).

Payment of fees and all the documents mentioned above must made / uploaded

online within thirty days of the submission of the on-line application with the DSC of chief functionary, else need to be reapplied.

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Submission of verification certificate from the District Collector or Deputy

Commissioner or District Magistrate is not mandatory. However, assists in speedy

clearance if the amount of FC for which prior permission is being sought is less than Rs.50 lakh.

There is no need for prior permission from the FCRA authorities for change of

name, aims & objects, registered address, change of bank account or change in governing body members. A mere intimation through the FCRA website will suffice.

Amount for which prior permission was granted may be received in Instalments.

However, the aggregate amount should not exceed the specified amount of prior permission.

Sec.12 (4), Conditions of granting Registration / Prior Permission: The following shall be the conditions for the grant of registration and prior

permission:

1. The 'person' making an application: • is not fictitious or benami;

• has not been prosecuted or convicted for conversion, from one religious

faith to another; • has not been prosecuted or convicted for creating communal tension; • has not been found guilty of mis-utilisation of its funds;

• is not engaged or likely to engage in sedition or violent methods to achieve its ends;

• is not likely to use the FC 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 FC;

• The person being an individual, has neither been convicted under any law nor any prosecution is pending against him.

• The person being other than an individual, any of its directors or office bearers has neither been convicted under any law nor any prosecution is pending against him.

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2. The acceptance of FC:

• Shall not lead to incitement of an offence;

• Shall not endanger the life or physical safety of any person.

Exempted Statutory Bodies: All statutory bodies constituted or established by or under a Central Act or State Act required to have their accounts compulsorily audited by the Comptroller &

Auditor General of India are exempted from all the provisions of FCRA.

Section 16, Renewal of Certificate: Certificate is renewed by MHA ordinarily within ninety days from receipt of

application (else will specify the reasons for delay or denial). Certificate is renewed for a period of 5 years.

Information on Website: Information with regard to foreign funding received and utilised on their

website or FCRA website every three months.

The annual returns must be placed on the FCRA website maintained by the home ministry.

Separate Sets of Accounts, Annual Return & Annual Declaration: Separate sets of accounts to be audited by CA.

The association shall have to submit the mandatory online return within 9

months i.e. 31st December for every financial year in FC-4 form for receipt and utilization of the FC on a yearly basis, till the amount of FC is fully utilized. If no

transaction takes place during a year, no need for returns, etc. (Please refer to

Sections 17, 18 and 19 of FCRA and Rule 17 of FCRR). The interest or any other income earned out of deposit of FC should be shown

as second/subsequent FC receipt in the annual return during the year in which it

is earned.

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Annual affirmation at the time of filling return(and at the time of Registration /

Prior Permission / Renewal) that FC receipt will not likely to “prejudicially affect”:

o Security, strategic, scientific or economic interest of the country; o Sovereignty and integrity of India, public interest, freedom or fairness of

elections, friendly relations with a foreign state and harmony between

religious, social or linguistic groups. Offences and Penalties: Sec. Offence Penalty Sec.

33

Obtains Registration or PP on basis of fraud or

concealment

Imprisonment up to Six Months

and / or fine

Sec.

34

Contravention of prohibitory order served upon a

person under section 10 (Prohibitory Order: by

MHA prohibiting delivery, transfer of any article,

security, currency kept by a person illegally i.e.

in contravention of Act)

Imprisonment up to three years

and / or fine plus fine as per

courts order up to the value of

article or currency involved

Sec.

35

Obtains Registration or PP on basis of fraud or

concealment

Imprisonment up to Six Months

and / or fine

Sec.

36

Article / Currency not available for

confiscation as per court order

Fine up to five times of the value

of article, etc. or Rs.1000/-

whichever is more

Sec.

37

Offences where no separate punishment has

been provided

Imprisonment up to a year and /

or fine

Sec.

38

Convicted of any offence under section 35 or

section 37 relating to acceptance or utilization of

FC is again convicted

Shall not accept any FC for a

period of five years from the date

of the subsequent conviction

Sec.

39

Offence by a company, association, firm, etc.

Every person responsible for the conduct of

business, except who proves that it was

committed without his knowledge or tried

prevention

Shall be guilty of offence and

punished accordingly.

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No court shall take cognizance of any offence, except with the previous sanction of the Central Government.

Compounding of Offences: The offences for which only imprisonment is awarded are not capable for

compounding.

Further the second / subsequent offence can be compounded only if committed

after a period of three years from the date of compounding of first. The categories of offences can be compounded under section 41 of FCRA and the

quantum of penalty for compounding are as under:

Acceptance of cheque or draft towards FC by a 'person' without registration or prior permission of the Central Government

Acceptance of cheque or draft without registration

or PP

Rs. 10,000/- or 2 percent whichever

is higher

Depositing the same in a Bank not withstanding

non-utilisation

Rs. 25,000/- or 3 percent , whichever

is higher

Utilisation notwithstanding ‘its use as per objectives

of association and proper records are kept’

Rs. 1,00,000/- or 5 per cent

whichever is higher.

Acceptance of FC in kind notwithstanding ‘that

nothing adverse was reported’

Rs. 10,000/- or 2 per cent, whichever

is higher.

In the event of failure to pay the penalty, for whatever reason, necessary action

for prosecution of the person shall be initiated.

The Central Bureau of Investigation or the investigating agencies of the State Governments for cause of action which arises in their respective States are the

designated agencies for investigating and prosecuting.

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Cancellation of Certificate of Registration or Prior Permission (PP): As per Section 14, The Central Government may cancel the certificate after giving

reasonable opportunity of being heard if: Incorrect or false statement for the grant of Registration / PP or renewal or

Violated any of the terms of the certificate; or

In the public interest; or Has violated any of the provisions of this Act or rules or order; or

Not engaged in any reasonable activity for two consecutive years or has become

defunct. Once cancelled, not be eligible for registration / PP for next 3 years.

Suspension: As per Section 13, the MHA may suspend certificate for the same grounds as

given for cancellation pending consideration of questions of cancellation for up to

180 days. Every person whose certificate has been suspended shall not receive and utilize

any FC except with the permission of Central government

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Summary of Recent changes made in FCRA Compliances

S.

No. Change Implications / Details

1

Consolidated

Form for

Registration,

Prior Permission

and Renewal of

Registration

Earlier Form FC-3 was used only for applying for registration, while Form FC-4 was used for applying for prior permission and Form FC-5 for the purposes of renewal. Now onwards, The application form for applying for registration,

prior permission and renewal has been merged together and Form

FC-3 has been provided for all the above three processes. Further,

w.e.f. 14.12.2015, the Form shall be filed online only and no need

to send hard copies after filing of Form online. The signature and

seal of the company need to be scanned and affixed on the online

filed form and the payment also need to be made online.

2

New list of the

Forms has been

provided with

the purpose of

the Form

Form FC-1: Intimation for gift received from relative or FC received by candidates of election. Form FC-2: Prior permission to accept Foreign Hospitality. Form FC-3: Application for Registration / Prior Permission / Renewal. Form FC-4: Annual Return. Form FC-5: Transfer to unregistered Organizations/Persons

3

Annual

Uploading of

Information on

Website

(Rule13)

Earlier only those organizations who had received more than 1 Crore Rupees in a year were required to upload the financial information in public domain. Now onwards, all organizations having registration or prior

permission shall mandatory have to upload their financial

information on their website or on the website as may be specified

by the Central Government.

4

Quarterly

Uploading of

Grant

Information in

Website

All organizations having registration or prior permission shall

mandatory have to upload their financial information pertaining to

the donor and the detail of grants received on their website or on

the website as may be specified by the Central Government. The

information to be uploaded includes detail of the donors; amount

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(Rule13) received and date of receipt. The information should be uploaded

within 15 days following the last day of the quarter in which the

funds were received

5

Annual Return

Form changed

from FC-6 to

FC-4

The organisation has to upload scanned copies of Annual Financials with the return and no need to send hard copies. Form FC-4 has to be filed within 9 months of the closure of the Financial Year, i.e. before 31st December. Further, the organizations who have successfully filed form FC-6

on or before 14.12.2015 for FY 2014-15 are not required to file in

the new form FC-4. The organizations who have not filed Form

FC-6 before 15.12.2015 are required to file Form FC-4. The last

date for filing the annual return for the year 2014-15 in the new

Form FC-4 is 15.03.2016.

6 Form FC-7 &

FC-8 Omitted

If an organization receives any Foreign Article and/or Foreign

Security then it has to file Form FC-1

7

Rule 17: Nil

Foreign

Contribution

If the organization has not received / utilized any FC during the

year, then Nil return need to be filed and no need to enclose

audited Financial Statements. If there is any opening Carry

forward of Foreign Contribution and the same is utilized during the

year, then above benefit cannot be availed and audit is required to

be done and filed along with the Annual Return

8

Rule 17A: No

Prior Approval

for Change in

FCRA Bank

Account

Earlier, for change in designated Bank Account, prior approval of

the FCRA Department was mandatory but Now onwards, such

change can be made without permission and only intimation is

required to be filed electronically online in Form FC-6 within 15

days of such change.

9

Rule 17A: No

Prior Approval

for Change in

Governing

Board

Earlier, for change of more than 50% in the Governing Body, prior

approval of the FCRA Department was mandatory. The change of

50% shall be considered from the list of Board members submitted

at the time of application for Registration or Prior Permission. Now

onwards such change can be made without permission and

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only intimation is required to be filed electronically online in Form

FC-6 within 15 days of such change.

10

Rule 17A: No

Prior Approval

for Change in

Address within

the same State

If there is any change in address with in the state, then no prior

permission is required from the FCRA Department but

such change can be made without permission and only an

intimation is required to be filed electronically online in Form FC-6

within 15 days of such change

11

Rule 17A: No

Prior Approval

for Change in

Objectives of

the Organisation

Earlier, for change in the Aims and Objectives of the organization,

prior approval of the FCRA Department was necessary. It

is implied that the change of objectives should be within the

broader objects approved by the FCRA Department at the time of

registration. Now onwards such permissible change can be made

without prior approval and only intimation is required to be filed

electronically online in Form FC-6 within 15 days of such change.

12

Filing of

Renewal

Application in

Form FC-3

The renewal application has to be filed by all the organizations

including those who have already applied in the old Form FC-5. All

organizations have to file the renewal application by 15th March

2016,electronically in Form FC-4 at FCRA

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Online Renewal of FCRA Registration

Instruction and Procedure as per attached sheet

Online FCRA

Registration Instructio

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Quarterly Return Instructions for filling and submitting

(Intimation of receipt of foreign contribution)

1. Return is divided into parts such as Quarterly intimation, Donor Wise details

and Final Submit

2. Please fill all parts of application before clicking on Final Submit 3. Once all parts of the Return are filled up, you can click on Final Submit. It

shows the information that you have filled and Final Submit button.

4. You can check whether all particulars are correct or not. In case of any mistake, you can go back to that part and edit the information and click on

update button.

5. You may send email to [email protected] for any suggestion and Queries regarding FC® Act, 2010.

6. For any technical problem in filing online return, you may send email to

[email protected] for any suggestion and Queries regarding FC® Act, 2010.

Quarterly Intimation

mailto:[email protected]

mailto:[email protected]

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Donor Wise Information

Final Submission

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Annual Return

FORM FC - 4 [See rule 17]

The Secretary to the Government of India,

Ministry of Home Affairs,

Foreigners Division (FCRA Wing) NDCC-II Building, Jai Singh Road

New Delhi – 110001

Subject: Account of Foreign Contribution for the year ending on the 31st March, 2015 1. FCRA registration/ prior permission number and date:

2. Details of receipt and utilisation of foreign contribution:

i. Foreign Contribution received in cash/ kind (value)

S.

No. Details Amount (Rs.)

(a) Brought forward foreign contribution at the beginning of the year

(b) Interest or other receipt during the year *

(c)

Foreign Contribution received during the financial year

(i) Directly from a foreign source

(ii) as transfer from a local source

(d) Total Foreign Contribution (a+b+c)

* i.e. interest accrued on foreign contribution, or any other income derived from foreign

contribution, e.g. sale proceeds from assets created from foreign contribution, or interest

thereon during the year

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ii (a) Donor wise detail of foreign contribution received in excess of Rupees 20,000:

S.

No.

Name of

Donor(s)

Institutional

/ Individual

Details of Donor: Official

address, email address,

website address

Purpose(s)

for which

received

Amount

(Rs)

(1) (2) (3) (4) (5) (6)

ii (b) Cumulative purpose-wise amount of all foreign contribution donations received: Purpose 1 Purpose 2

Purpose 3

iii. Details of utilization of foreign contribution:

S.

No. Details

Amount

(Rs.)

(a) Total Utilisation** for Projects as per aims and objectives of Association

(b) Total Administrative Expenses as provided in Rule 5, FCRR, 2011

(c) Total invested in Term Deposits

(d) Total purchase of Fresh Assets

(e) Total Utilisation in the Year (a+b+c+d)

** It is affirmed that the utilisation of foreign contribution is not in contravention of the

provisions contained in FCRA, 2010 and more particularly in Section 9 and Section 12 of the

Act which, inter-alia, states that the acceptance of foreign contribution is not likely to affect

prejudicially

A. the sovereignty and integrity of India; or

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B. the security, strategic, scientific or economic interest of the State; or

C. the public interest; or

D. freedom or fairness of election to any legislature; or

E. friendly relations with any foreign State; or

F. harmony between religious, racial, social, linguistic or regional groups, castes or

communities

iv. Balance of unutilized foreign contribution, in cash / bank, at the end of the year:

v. Total number of foreigners working (salaried/ in honorary capacity):

3 (a) Details of designated FC bank account for receipt of Foreign Contribution (As

on 31st March of the year ending):

Name of the Bank Branch Address (with

Pin Code) IFSC Code Account No.

(1) (2) (3) (4)

3 (b) Details of all Unutilised bank accounts for utilisation of Foreign Contribution (As

on 31st March of the year ending):

Name of the Bank Branch Address (with

Pin Code) IFSC Code Account No.

(1) (2) (3) (4)

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Declaration

I hereby declare that the above particulars furnished by me are true and correct.

I also affirm that the receipt of foreign contribution and its utilization have not been

violative of any of the provisions of the Foreign Contribution (Regulation) Act, 2010, rules, notifications/ orders issued there under from time to time and the foreign

contribution was utilized for the purpose(s) for which the association was granted

registration/ prior permission by the Central Government

Place:

Date:

Signature of the Chief Functionary

(Name of the Chief Functionary in block letters) (Seal of the Association)

Certificate to be given by Chartered Accountant I / We have audited the account of __________________________________ (name

of Association and its full address including State, District and Pin Code, if registered

society, its registration number and State of registration) for the financial year ending the 31st March____________ and examined all relevant books and vouchers and

certify that according to the audited account:

i. the brought forward foreign contribution at the beginning of the financial year was Rs._________;

ii. foreign contribution of / worth Rs._________ was received by the Association

during the financial year ________;

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iii. interest accrued on foreign contribution and other income derived from foreign

contribution or interest thereon of/worth Rs._________ was received by the

Association during the financial year ________; iv. the balance of unutilised foreign contribution with the Association at the end of

the financial year________ was Rs. _________________;

v. Certified that the Association has maintained the accounts of foreign contribution and records relating thereto in the manner specified in section 19

of the Foreign Contribution (Regulation) Act, 2010 (42 of 2010) read with rule

17 of the Foreign Contribution (Regulation) Rules, 2011. vi. The information in this certificate and in the enclosed Balance Sheet and

statement of Receipt and Payment is correct as checked by me/us.

vii. The association has utilized the foreign contribution received for the purpose(s) it is registered/ granted prior permission under Foreign

Contribution (Regulation) Act, 2010

Place:

Date:

Signature of Chartered Accountant (Seal, Address and Registration number)

guide to foreign contribution (regulation) act, 2010(fcra) - amended till dec 15

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