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    FCRA Registration:

    According to section 6(1) of the FCRA (Foreign Contribution Regulation Act) 2010, “every society, charitable trust, and section 8 companies that receive donations or contributions from foreign sources are required to obtain registration under this Act.”

    The primary objective of FCRA registration is to legalize the receipt of any foreign contribution by domestic entities and for ensuring the proper utilization of such funds for the specified purpose.

    Eligibility Criteria of FCRA Registration: 

    FCRA registration is the mandatory requirement for receiving any kind of foreign contribution. The applicant applying for FCRA registration must be a non-profit organization registered and operating under any act applicable in India.

    Documents Required for FCRA Registration:

    Foreign Contribution Regulation Act (FCRA) registration is required for organizations in India that intend to receive foreign funds. Here are the documents required for FCRA registration:

    Registration certificate of the organization: The organization must be registered under the appropriate Act or law such as the Societies Registration Act, Companies Act, Trust Act, etc. The registration certificate must be submitted along with the application.

    Memorandum of Association (MOA) and Articles of Association (AOA): The MOA and AOA of the organization must be submitted along with the application.

    FCRA bank account details: A separate bank account for receiving foreign funds must be opened and the details of the account must be submitted along with the application.

    Prior permission letter: If the organization has received any foreign funds before applying for FCRA registration, it must submit the prior permission letter obtained from the FCRA department.

    PAN card: The Permanent Account Number (PAN) card of the organization must be submitted.

    Audit reports: The organization must submit the audit reports for the last three financial years.

    Annual reports: The annual reports of the organization for the last three years must be submitted.

    List of key members: The list of key members of the organization such as trustees, directors, etc., must be submitted along with their complete addresses and contact details.

    Activities report: The organization must submit a detailed report on the activities carried out by it in the last three years.

    Utilization certificate: If the organization has received any foreign funds before applying for FCRA registration, it must submit the utilization certificate for the funds received.

    Declaration: The authorized signatory of the organization must submit a declaration stating that the organization has not been blacklisted or prohibited under any law for the time being in force.

    These are some of the key documents required for FCRA registration. It is important to ensure that all the required documents are submitted along with the application to avoid any delays in the registration process.

     

    Criteria for grant of FCRA Registration

    Once, an FCRA application is made in the prescribed format, the following criteria are check before providing registration:

    The ‘person’ or ‘entity’ making an application for registration or grant of prior permission:

    • 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 mis-utilisation 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;
    • the person being an individual, such individual has neither been convicted under any law for the time being in force nor any prosecution for any offence 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 for the time being in force nor any prosecution for any offence is pending against him.

    The acceptance of foreign contribution by the entity / person is not likely to affect prejudicially:

    • the sovereignty and integrity of India;
    • the security, strategic, scientific or economic interest of the State;
    • the public interest;
    • freedom or fairness of election to any Legislature;
    • friendly relation with any foreign State;
    • 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.

     

    Advantages of FCRA Registration:

    The Foreign Contribution Regulation Act (FCRA) is a law in India that regulates the acceptance and utilization of foreign funds by organizations. Here are some of the advantages of FCRA registration for organizations:

    Legitimacy: FCRA registration adds legitimacy to an organization that intends to receive foreign funds. It shows that the organization is registered and regulated under the law and is eligible to receive foreign funds.

    Increased funding opportunities: FCRA registration enables organizations to receive foreign funds from individuals, organizations, and governments outside India. This opens up a wider range of funding opportunities for the organization.

    Diversification of funding sources: By receiving foreign funds, organizations can diversify their funding sources and reduce their dependence on local sources of funding.

    Enhanced visibility: Organizations that are registered under FCRA are listed on the official website of the Ministry of Home Affairs. This enhances the visibility of the organization and makes it easier for foreign donors to find and support them.

    Tax benefits: FCRA-registered organizations are eligible for tax benefits under the Income Tax Act. They can claim exemption on foreign contributions received for specific purposes, subject to certain conditions.

    Support for social causes: By receiving foreign funds, organizations can support a wider range of social causes and initiatives. This enables them to make a greater impact on society and contribute to the welfare of the country.

    Overall, FCRA registration can provide numerous benefits to organizations in India that intend to receive foreign funds. However, it is important for organizations to comply with the rules and regulations of FCRA and ensure that the foreign funds received are utilized for the intended purposes.

    Frequently Asked Questions (FAQs)

    Q1. When is FCRA Registration Required?

    Whenever any NGO either in the form of Trust, Society or Section 8 company is willing to receive any kind of foreign contribution or donation, they are required to obtain FCRA Registration under Section 6 (1) of Foreign Contribution (Regulation) Act, 2010. Irrespective of the nature of the contribution i.e., either cash or kind, the registration is mandatory. FinAccy is well known FCRA Consultants in India. We help organization willing to register under FCRA.

    Q2. In case of prior approval can foreign contributor and Indian recipient organization have common members?

    Yes, it is possible. But there are certain pre-conditions to be satisfied. They are:

    1. The Chief Functionary of the recipient organization shall not be the foreign contributor (if contributor is individual) or a part of foreign contributor organization.
      2. Majority (51%) of members of the governing body of the recipient organization are not related in any way either as family or as members/employees of the foreign contributor.

    Q3. What is the difference between prohibited and disqualified person?

    There is a basic difference between prohibited and disqualified person. The prohibited person does not qualify for FCRA registration just because of its inherent nature. However, on the other hand in case of disqualification the person could have been able to apply for registration if it was restricted because of any act done by them. Such ‘act’ disqualifies them from filing an application.

    Q4. What is the difference between Registration and Prior Permission under FCRA?

    As we have discussed there are two separate ways to receive foreign contribution, i.e., registration and prior permission. Following are the point of difference is the eligibility criteria.

    For registration: It is required that the applicant
    1. Is in existence for a minimum period of 3 years.
    2. Has done reasonable work in the area to public interest.
    3. Has spent at least Rs.10,00,000/- over the span of last 3 years for the furtherance of their main objects.

    For Prior Permission: The applicant is not required to be registered for any minimum period as they are in the initial state. No work experience is required. However, the registration is situation specific in nature. This means that the prior permission is for:

    1. Receipt of a specific amount of foreign contribution.
      2. From a specific contributor.
      3. For any specific project/ activity.

    The applicant is required to submit a copy of approval letter from the foreign contributor for the stated amount of contribution.

    Q5. Who is prohibited to accept foreign contribution?

    1. Anyone contesting election.
      2. Editor, owner, printer, publisher, columnist, cartoonist or correspondent of any registered newspaper.
      3. Judge of court of law, government servant or any employee of a corporation either owned or controlled by the Government.
      4. Member of any legislature.
      5. Any political party or its office bearer.
      6. Any other organization of political nature specified under sub-section (1) of Section 5 by the Central Government.
      7. Any company or association engaged in the production or broadcast of news or current affairs programmers through any electronic mode of mass communication, or any other electronic form as defined in clause (r) of sub-section (i) of Section 2 of the Information Technology Act, 2000 or otherwise.
      8. Editor, owner, correspondent, cartoonist or columnist, of any organization referred to in point 7.
      9. Anyone else who have been prohibited from receiving foreign contribution.

    Q6. Who can be a foreign contributor?

    Section 2(1) (j) of FCRA, 2010 has provided clear definition of foreign source who can provide foreign contribution. This list includes the following: –

    • Any foreign Government including any agency of such Government.
    • Any international agency, this will not include any agency specifically excluded by the Central Government by notification ( like United Nations or any of its specialized agencies, the World Bank, International Monetary Fund etc.).
    • Foreign company incorporated outside India.
    • Any foreign corporation.
    • Any multi-national corporation referred to in Section 2(g) sub-clause (iv) of FCRA, 2010.
    • Company registered under Companies Act, who’s minimum 51% of share capital is held, either singly or in the aggregate, by:
      Foreign Government.
      b. Foreign citizens.
      c. corporations incorporated in a foreign country or territory
      d. trusts, societies or other associations of individuals (whether incorporated or not), formed or registered in a foreign country or territory
      e. Foreign company.
    • Foreign trade union either registered or not.
    • Foreign trust or a foreign foundation financed majorly by a foreign country or territory.
    • Any society, club or other association or individuals formed or registered outside India.

    Q7. Under FCRA what constitutes as foreign contribution?

    In order to apply for registration, first it is necessary to understand what actually constitutes as foreign contribution. The definition of ‘foreign contribution’ is stated under Section 2 of the Foreign Contribution (Regulation) Act, 2010. It states that “foreign contribution” will include any donation, delivery or transfer made by any foreign source:

    • of any currency, whether Indian or foreign.
    • of any article. However, if such article is a gift and its market value at the time of transfer does not exceed Rs. 25,000/-.
    • of any security as defined in clause (h) of section 2 of the securities Contracts (Regulation) Act, 1956 and includes any foreign security as defined in clause (o) of Section 2 of the Foreign Exchange Management Act, 1999.

    Q8. How can a person accept foreign contribution Under FCRA?

    As it was above mentioned, for receiving any kind of foreign contribution FCRA registration is mandatory. There are two ways to receive such contribution under the Act, they are:

    Proper Registration: They are already under business for a minimum period of 3 years.
    Prior Permission: This route is for organizations in their initial formative stage.

    In order to accept foreign contribution following conditions must be satisfied:

    • The receiver must have been involved in cultural, economic, educational, religious or social program me.
    • It must either have FCRA registration or prior permission under the Act.
    • The receiver is not included in the prohibited list under Section 3 of FCRA, 2010

    Q9. Who are disqualified to apply for FCRA registrations?

    Before making an application for registration we have to be clear that the applicant is not disqualified under the Act. Following are the conditions which disqualify a person:

    • It is fictitious or benami in nature.
    • Either the applicant being an individual or in case of any organization any of its directors/ office bearers has not been prosecuted or convicted for
      Forcing religious conversions either directly or indirectly through their activities.
      b. For creating communal tension.
    • Is involved in propagation of sedition or advocating violence of any nature.
    • Found guilty of wrongful utilization of its funds and is likely to use amount of contribution for its personal gains.
    • Has contravened any of the provisions of this Act.
    • Is prohibited from accepting foreign contribution.

    Q10. Who can be an applicant for FCRA?

    One basic pre requisite for registration under FCRA is that the applicant must be a registered under an existing statute including:

    • Societies Registration Act, 1860 or
    • Indian Trusts Act, 1882 or
    • Section 8 of Companies Act, 2013) etc.

    Q11. What is validity period of registration under FCRA?

    Once the applicant is granted registration under FCRA, such registration shall remain valid for a period of 5 years. However, in case of Prior Approval the validity expires once the forien contribution is fully utilized, for which the permission was/is granted. This period shall not exceed 5 years.

    Q12. What are the restrictions relating to foreign contribution?

    Under Section 12 (4) (g) it is clearly stated that no registered person under FCRA can accept any amount of any foreign contribution which:

    1. Can lead to incitement of an offence or
      2. Can endanger the life or can cause physical harm to any person

    Q13. Whether any donation by an individual of Indian origin and having foreign nationality be counted as ‘foreign contribution’?

    Yes. Such donation will be treated as foreign contribution. However, ‘Non-resident Indians’, who still have Indian citizenship will not be counted in this category.