Are you a registered non-profit organization looking for funding from international sources? Or, are you a foreign donor planning to donate funds to an Indian NGO? If yes, then you must be aware of the Foreign Contribution (Regulation) Act, 2010 (FCRA). The FCRA registration in India is mandatory for any organization that seeks foreign funding beyond a certain threshold. In this blog post, we will dive deeper into what FCRA registration entails, why it is important, and how to obtain it. So, let’s get started!
1. FCRA Registration: Overview and Eligibility Requirements
FCRA registration is essential for any organization that accepts foreign contributions or donations in India. It is mandated by the Foreign Contribution Regulation Act of 2010, and therefore, every charity or organization must register under Section 6(1) of this act. In order to be eligible for FCRA registration, an organization must meet certain requirements. It should be registered under the Societies Registration Act 1860, Indian Trusts Act 1882 or section 8 of the Companies Act 2013, and should have a bank account with state bank of India’s main branch in New Delhi. Additionally, the organization should have undertaken reasonable activities for the benefit of society in its chosen field for a minimum of three years. It must have spent at least Rs. 15,00,000 over the last three years on core activities for the benefit of society. If these requirements are fulfilled, an application for registration can be submitted.
Apart from the above requirements, an association seeking FCRA registration must possess a 12A registration certificate and a registration certificate. The organization should also have an FCRA Account, and should include the existing capital investment like bank building, vehicles in computation of its eligibility of minimum spending of Rs. 15 Lakh. The organization seeking registration must open an FC designated bank account with SBI Main Branch New Delhi. The application process is simplified with the Ministry of Home Affairs website. The required documents for FCRA registration include activity report and audited statement of accounts for the last 3 years, affidavit of each key functionary, chief functionary signature and seal of the association. A FCRA Registration Form must be filled with a fee of Rs. 10,000.
2. Types of Organizations Eligible for FCRA Registration
There are several types of organizations in India that are eligible for FCRA registration. These include trusts, section 8 companies, and societies that wish to receive foreign contributions or donations for charitable purposes. The Foreign Contribution Regulation Act (FCRA) 2010 mandates that all such organizations must register themselves under this Act if they want to receive funds or donations from foreign entities/resources.
FCRA registration offers numerous benefits to such organizations. Firstly, it ensures that the group is recognized in society for its work and actively engaged in social welfare activities. Secondly, it helps these groups receive lawful government aid as well as foreign donations. Thirdly, FCRA registration makes the group eligible for full government support, as it is a government registration, and is prescribed by the regulatory authority. Finally, a group that has applied for FCRA registration is eligible to receive investments, continuing support, and donations from foreign organizations.
To obtain normal FCRA registration, the applicant must be a registered NGO operating for a minimum period of 5 years. They must have spent a certain amount in the past three years in furtherance of their objectives and submit their financial statements audited by a practicing chartered accountant. The registration form FC-3A needs to be filed. On the other hand, the prior permission FCRA registration is for individuals or groups not registered with the Central Government of India who want to take foreign contributions with the Government’s prior permission for a specific purpose and from an authorized source.
3. Minimum Requirements for FCRA Registration
An organization that has a definite cultural, economic, educational, religious, or social program must comply with certain requirements to be eligible for an FCRA (Foreign Contribution Regulation Act) registration in India. These requirements include registration under the Societies Registration Act 1860, Indian Trusts Act 1882, or Section 8 of the Companies Act 2013. The applicant must have an FCRA Account with the State Bank of India main branch in New Delhi and have been in existence for at least three years with a record of reasonable activity in its chosen field. Moreover, the organization should have spent a minimum of Rs. 15,000,00 on its core activities in the last three financial years. The central government can waive this condition in exceptional cases or in cases where the person making the registration application is controlled by the CG or SG. Another essential requirement is the possession of 12A registration certification and registration certification. The application process requires filling out the FCRA Registration Form, uploading required documents, paying a fee of Rs. 10,000, and printing the application.
4. Procedure for FCRA Registration in India
To legally receive foreign contribution or donation from foreign resources, charitable trusts, societies, and Section 8 companies in India must obtain FCRA registration under the Foreign Contribution Regulation Act 2010. To apply for FCRA registration, the entity must have been in existence for at least three years and have spent more than Rs. 1000000 on its aims and objectives in the previous three years, excluding administrative expenditure. The applicant must not have received any foreign contribution without the government’s approval and should not have been prosecuted or convicted for certain activities. The registration can be obtained through the Prior Permission (PP) method for specific activities and purposes from specific sources.
To apply for FCRA registration, the entity must gather essential documents such as the incorporation certificate, PAN, MOA, AOA, activity reports, audited financial statements, and authorizing resolutions of the governing body. The entity can register online by accessing the FCRA portal and creating a username and password. The applicant needs to fill in the application form and submit it along with the required documents and bank details. After receiving the application, the government verifies the eligibility and criteria for grant of FCRA registration, and upon approval, issues the registration certificate.
FCRA registration offers several benefits to social institutions, trusts, and NGOs, such as lawful receipt of foreign contribution or government aid, acceptance of donations from foreign bodies, and alignment with national interests. The entities eligible for FCRA registration include Section 8 companies, Trusts, and Societies, provided they have charitable objectives to serve society by promoting health, education, economic development, art, culture, religion, and sports. The entity must not be prohibited in any manner by the provisions of FCRA and should ensure that foreign contribution or hospitality does not endanger anyone’s life or safety or result in any offense.
5. Documents Required for FCRA Registration
The Foreign Contribution Regulation Act of 2010 regulates the acceptance of foreign contributions in India. As per Section 6 of FCRA, an organization can only accept foreign contributions after obtaining FCRA registration. The registration process is electronic, and the applicant must provide all necessary documents and information. The organization should ensure that all documents are complete and legible. Photocopies of documents should be attested, and if any documents are in a language other than English, a certified translation copy is required. The documents required for FCRA registration include details of the association, executive committee members, bank details, and past applications. The organization must also provide additional documents for prior permission, if required.
The organization must be registered and must have a definite cultural, social, educational, religious, or economic objective to accept foreign contributions. It must agree to receive foreign contributions only through one specific bank account. The applicant should provide the name, address, and status of the organization, PAN number, and details of the persons managing the affairs of the organization. The audited balance sheet, profit & loss account or income & expenditure account for the latest year and all preceding years should also be provided. The organization should also submit its formation documents, registration certificate, and annual report.
The organization must also provide a copy of any journal or publication it has produced, as well as a copy of the resolution of the governing body authorizing registration under FCRA. The chief functionary of the organization must submit the FCRA application, and the organization should provide a copy of the power of attorney or resolution of the governing body authorizing the chief functionary to submit the FCRA application. If the organization has received any foreign contribution with or without the prior approval of the Central Government, then the details should be given.
The organization must also provide an undertaking letter from the chief functionary. The letter should state that the organization does not have a permanent FCRA registration number, the FCRA registration number has been cancelled by the Government, or the organization has been instructed by the Central Government to take prior permission. The FCRA number may also be suspended due to violation of the provisions and conditions specified under the FCRA. If the organization is of political nature or any person residing in India or any citizen of India residing outside India receiving foreign funds on behalf of an organization of political nature, the organization must provide details of the beneficiaries and the project for which foreign contribution is expected.
Aditya NGO Consultancy provides complete assistance in FCRA registration. Payment can be made through cash, DD, or cheque in favor of Aditya Consultancy Payable in Nagpur. Once the payment is made, the organization must provide intimation via phone, SMS, or email. FCRA registration is mandatory for any organization that wishes to accept foreign contributions in India.
6. Fees and Payment Process for FCRA Registration
FCRA Registration in India is essential for any NGO, Trust or Section 8 Company seeking donations from foreign entities. The Foreign Contribution Regulation Act (FCRA) 2010 governs the registration process to ensure that the foreign funds are not used for any illegal purpose. One important aspect of FCRA registration is the payment of fees. An application made for the grant of prior permission attracts a charge of Rs. 5000 while an application for the grant of registration requires a fee of Rs. 10,000. The payment process for FCRA registration is online, where the applicant submits the scanned copies of all necessary documents with the Form FC-3, which serves as the application. Once granted, FCRA registration is valid for five years.
The FCRA registration process involves meticulous documentation, and the applicant must ensure that all requirements are met before applying. An entity seeking FCRA registration must have spent at least Rs. 10,00,000 lakhs in the past three years, with audited statements of expenditure and income reviewed by a Chartered Accountant. The applicant must also submit copies of the registration official document of society, annual reports for the past three years, bank details, and the name of the chief functionary. With FCRA registration, entities can avail some tax exemptions for foreign contributions, allowing them to attract foreign donations towards their organization.
FCRA registration has various benefits, including promoting transparency and accountability in the utilization of foreign funds and encouraging social and charitable work in the country. Organisations can receive foreign funds for development projects, such as healthcare and education projects, contributing to nation-building. The FCRA also strengthens international relations, promoting collaboration and cooperation between India and other nations.
Non-eligible entities for FCRA registration include registered companies, except for companies wholly owned by the government. It is essential to ensure that all requirements are met, as violation of FCRA registration could attract severe penalties, including seizure and cancellation of foreign donation receipts, inspections, and compulsory prior permission requirements. Therefore, applicants must seek professional assistance from online and legal services providers such as eStartIndia to facilitate a smooth and successful registration process.
7. Criteria for Grant of FCRA Registration
Those seeking FCRA registration must meet certain criteria before their application is approved. The entity or person making the application must not have been prosecuted or convicted for activities aimed at conversion through inducement or force, communal tension or disharmony. Additionally, they must not be guilty of diverting funds, propagating sedition or advocating violent methods. The entity should not be likely to use foreign contribution for personal gain or for undesirable purposes and must not have contravened any of the provisions of the Foreign Contribution Regulation Act. If the foreign contribution is accepted, it must not infringe on the sovereignty, integrity, security, strategic interests, or friendly relations of India, nor influence elections, and must not endanger anyone’s life or physical safety. Any individual or office bearer involved in the organization cannot have a pending prosecution or conviction under any Indian law.
8. Restrictions on Accepting Foreign Contributions
The Foreign Contribution Regulation Act (FCRA) is a law that regulates how non-profits can receive donations from abroad. Its objective is to prevent foreign entities from having undue influence on the workings of governmental or non-governmental organizations in the country through contributions. The FCRA prohibits several categories of persons from accepting foreign contributions, including public servants, judges, political parties, persons involved in the production or broadcast of news, and owners of certain media entities. However, certain exceptions are allowed, such as accepting contributions as part of regular business earnings or gifting norms established by the Central Government.
Foreign contributions refer to donations, deliveries, or transfers made by any foreign source, including articles valued above a stipulated amount. The interest accrued on foreign contributions also comes under the purview of the Act. However, donations made by Indians residing abroad from their personal savings through normal banking channels are not considered foreign contributions, provided they fulfill certain criteria. It is mandatory for all associations, groups, and non-governmental organizations intending to receive foreign donations to register under the FCRA.
Any individual, association, or company registered under the Companies Act 2013 in India can receive foreign contributions, provided they obtain FCRA registration or prior permission from the Central Government. The FCRA registration encompasses donations for cultural, economic, educational, religious, or social program(s). However, electoral candidates, members of any state or central legislature, political parties, public servants, judges, or media entities’ owners, among others, are prohibited from receiving any foreign contributions under the Act.
Recently, the Union Ministry of Home Affairs decided to restrict certain data from public viewing on the FCRA website. These include the annual FCRA returns filed by non-governmental organizations. The MHA restored FCRA registration for Mother Teresa’s Missionaries of Charity after it submitted the necessary documents to the concerned department. However, they had earlier refused to renew the NGO’s license due to some adverse inputs. The Act requires the home ministry to approve or reject an application within 90 days, failing which the application is deemed approved.
9. Consequences of Non-Compliance with FCRA Regulations
Non-compliance with FCRA regulations can lead to severe consequences for NGOs in India. The Foreign Contribution Regulation Act (FCRA) mandates that Indian nonprofits have a valid FCRA registration to receive charitable funds from donors outside the country. Therefore, accepting foreign contributions without proper registration or prior permission is an offence punishable under the Act. NGOs must also maintain separate books of accounts for foreign contributions, and any diversion of funds for purposes other than that for which they were received is illegal. Additionally, failing to file annual returns or providing false information in them can incur penalties. Mixing local funds with foreign contributions is strictly prohibited. NGOs receiving foreign contributions on behalf of unregistered organizations can also face problems.
10. Renewal and Cancellation of FCRA Registration
Renewal and cancellation are important aspects of FCRA registration in India. NGOs that want to receive foreign funds must apply online in a prescribed format with the required documentation. FCRA registrations are granted to individuals or associations that have definite cultural, economic, educational, religious, and social programs. Once granted, FCRA registration is valid for five years. NGOs are expected to apply for renewal within six months of the date of expiry of registration. If an NGO fails to apply for renewal, the registration is deemed to have expired. It’s worth noting that the government reserves the right to cancel the FCRA registration of any NGO if it finds any violation of the Act, even before the expiry date.
For NGOs aggrieved by the cancellation of their FCRA registration licences, they can file an online revision application before the Union home secretary. As per the MHA’s order, the application can be made within a year from the date on which the cancellation order was communicated. They would be required to pay a fee of Rs 3000 and provide justification for the revision order along with the documents. NGOs will be required to submit documents clarifying their stand regarding any adverse input flagged by the competent authority. The revision application operates under section 32 of the FCRA 2010 and rule 20 of the Foreign Contribution Regulation Rules 2011. It’s noteworthy that the Supreme Court rejected the pleas of over 6000 NGOs in early 2022 after their licenses were withdrawn.
It is essential to note FCRA’s aim, which seeks to regulate the acceptance and utilization of foreign contributions or foreign hospitality by certain individuals or associations or companies and to prohibit such acceptance and utilization for any activities detrimental to the national interest. The law was enacted during the Emergency in 1976 to regulate foreign donations to individuals and associations so that they functioned in a manner consistent with the values of a sovereign democratic republic. This Applicable law requirements also require every person or NGO wishing to receive foreign donations to be registered under the Act, to open a bank account for the receipt of the foreign funds in State Bank of India and to utilize those funds only for the purpose for which they have been received and as stipulated in the Act. NGOs have to file annual returns and must not transfer the funds to another NGO. The Act prohibits the receipt of foreign funds by candidates for elections, journalists or newspaper and media broadcast companies, judges and government servants, members of legislature and political parties.
11. Advantages of FCRA Registration in India
FCRA Registration in India is an essential requirement for NGOs that wish to receive foreign funds or donations. The Foreign Contribution Regulation Act 2010 was enacted by the Ministry of Home Affairs to regulate the flow of foreign currency in and out of the country. The FCRA registration grants a Permanent Certificate, which is valid for up to five years, to organizations that meet the eligibility criteria. The certificate is issued to organizations that have been registered under an existing statute, such as the Companies Act, 2013, or the Indian Trusts Act, 1882, for at least three years. Additionally, the organization must have a definite cultural, social, economic, or educational background and must submit financial statements duly audited by the concerned authority. FCRA registration ensures transparency and prevents any misuse of foreign contributions.
One of the primary benefits of FCRA Registration in India is that it enables NGOs to receive foreign donations legally. It ensures a transparent flow of foreign currency and ensures that the funds are not misused for personal gains. The registration process is easy and straightforward, and once registered, organizations can receive foreign funds for a wide range of charitable activities. The FCRA registration certificate is valid for up to five years, after which it can be renewed. FCRA registered NGOs are eligible for tax exemptions, making it an added advantage for organizations. Additionally, FCRA registration enhances the credibility of NGOs, making them more trustworthy and reliable in the eyes of the donors.
12. Disadvantages of FCRA Registration in India
FCRA registration in India has become necessary for charitable institutions that require funds or donations from foreign entities. However, there are disadvantages to FCRA registration that must be considered. Firstly, the registration process is lengthy, tedious, and complicated. It can take up to 9 months to receive approval from the government. Secondly, the compliance requirements for FCRA registered institutions are quite strict. They may need to submit annual reports, conduct regular audits, and maintain detailed records of transactions. This can be a burden for smaller NGOs or charitable organizations that may not have the resources to comply with these requirements. Additionally, receiving foreign contributions through the FCRA can attract unwanted attention from government authorities and NGOs may be subject to scrutiny. Lastly, having FCRA registration may restrict NGOs from enjoying certain freedoms such as the ability to spend funds on administrative expenses or sub-granting funds to other smaller NGOs. This may limit their ability to fulfill their objectives. Overall, while FCRA registration is advantageous in terms of receiving foreign contributions, the compliance and operational disadvantages must also be taken into account.
13. Frequently Asked Questions about FCRA Registration in India
1. What are the different types of FCRA registrations available in India? What is the duration of each registration?
FCRA in India has different types of registrations available based on eligibility requirements and duration. The registration could either be permanent or temporary.
2. What is the timeline for an FCRA registration? Can it be extended?
The timeline of the FCRA registration is valid for 5 years and can be extended by filing for renewal before six months of its expiry date.
3. What are the documents required for FCRA annual compliance after registration? What is the deadline to file the annual return?
The organization needs to comply annually after receiving the FCRA License and file an annual return in specified form FC-4, along with documents approved by a chartered accountant, within 9 months of the end of the financial year.
4. Can an organization failing to renew its FCRA registration update it later?
If someone fails to renew their registration within six months of the certificates expiry date, they need to reapply for the registration, and it could not be updated later.
5. What documents are required for FCRA registration update?
The registration certificate, Memorandum of Association/ Trust Deed of associations, and a self-certified copy of registration must be uploaded. The goal of FCRA is to assist start-ups in addressing the applicable laws and regulations.