FCRA Registration

FCRA Registration?

FCRA (Foreign contribution regulation act) was enacted in the year 1976. The primary objective of this act was to regulate the foreign contributions being received by the NGOs (non-government organizations), trust and societies that are functioning within the boundary of Indian peninsular. Also, it prevents several individuals such as Political parties, electoral candidates, judges, MPs (Member of Parliament) or cartoonist from taking any foreign contribution.

The time when the FCRA act was introduced the world was facing a disastrous effect of the cold war and also the reckless activities are on the rise. So, in order to keep the check on the funding by the U.S.A and the USSR, the Indian government launched the FCRA (Foreign contribution regulation act). The new FCRA act came into existence in the year 2010 and has also reduced some of the clauses and is far less stringent then the FCRA introduced in 1976. One of the major advantages of FCRA (foreign contribution regulation act), 2010 was MPs (Member of Parliament), political parties, can accept the fund as long as the funds are being channeled through the Indian Subsidiary.

We can see that a number of NGOs (non-government organizations), trust and societies have been banned. The numbers of 11319 NGOs (Non-government organizations) have been banned so far under FCRA (Foreign contribution and regulation act).

An NGO can receive funds from foreign countries. Section 8 companies or trusts/societies who receive a foreign donation from foreign sources are required to obtain registration under section 6(1) of foreign contribution Regulation Act, 2010. The next step is to avail registration for tax exemption on the income of an NGO. It is required to obtain approval from Income tax department under section 12A which also helps to attract donor, NGO prefers to get an 80G certificate so that contributors can utilize tax benefits on the donation made to the NGO.

Eligibility for FCRA Registration

Organizations looking for foreign contribution for definite economic, cultural, social, educational or religious programs may obtain FCRA (Foreign contribution regulation act) or may receive contribution through "prior permission" route. It is a necessity that the FCRA applicant should be trust or society or section 8 companies. While making the FCRA application non-for-profit entity must have also been in existence for a minimum of 3 years and should not have received any foreign contribution without the government’s approval. Also, the entity looking for the registration should have spent at least Rs. 10, 00,000 on its aim and objects over the last three years excluding administrative expenditure. Statement of Income & expenditure, duly audited by the chartered accountant is to be submitted to substantiate so that it can meet the financial parameters. If in case a newly registered entity like to receive a foreign contribution then the approval for a specific activity, and from a specific source can be made to the Ministry of Home affairs through the PP (prior permission) method.

There are two types of foreign contribution Regulation Act certificate.

1. Prior permission certificate:

  1. This certificate is given to those NGOs who have completed a minimum of one year.

  2. NGOs (Non-government organizations) has to give the list of all foreign donors along with their name, addresses, designations and the cause for which they are donating

  3. They have to specify the total amount of money which they have received as a foreign donation

2. Permanent certificate for 5 years

  1. For obtaining foreign contribution regulation act certificate for 5 years NGOs (non-government organizations) must be three years old

  2. Annual report, Audit report of last three years must be submitted

  3. Copy of PAN card and bylaws of NGO(non- government organization) shall also be given

Documents required for FCRA Registration

  1. PAN of NGO

  2. Copy of certificate issued by the Income-tax authority under section 80G & 12A of the Income-tax Act.

  3. Copies of audited statements of accounts for the last preceding years

  4. Bank details including Bank name, Account number, Bank address

  5. List of the governing body

  6. Annual report of NGO & details of work that has been done in the past 3 years

  7. Copy of resolution passed by the governing body of NGO.

  8. Copy of undertaking from the chief functionary of the NGO.

Resolve your queries

1. What is a foreign contribution?

Foreign contribution has been defined in section 2(1) (h) of FCRA (Foreign contribution regulation act) 2010. The foreign contribution does not include earning from the foreign clients by an association in place of services rendered and goods sold by it as this is a transaction of commercial nature.

2. What is the purpose of FCRA, 2010?

FCRA 2010 was implemented by the parliament to consolidate the law to regulate the utilization of foreign contributions done by certain individuals or companies or associations. And to prohibit the acceptance and utilization of foreign contribution for any activities that are detrimental to the national interest.

3. FCRA 2010 applies to whom?

  1. Citizens of India

  2. Citizens outside India

  3. Associate branches or subsidiaries

4. Who can receive a foreign contribution?

Any person can receive a foreign contribution but must satisfy the following conditions:

  1. Should obtain the FCRA registration from the central government

  2. Not be prohibited under section 3 of FCRA,2010

  3. Must have a definite cultural, educational, economic, religious or social program.

5. Who cannot receive foreign contribution?

  1. Individuals or associations who have been prohibited from receiving foreign contributions.

  2. Member of any legislature

  3. Candidate for election

  4. Editor, Owner, Printer, Cartoonist, correspondent, columnist or publisher of a registered newspaper.

  5. Employee, Judge or government servant of any corporation or any other body controlled or owned by the government.

  6. Company or association engaged in the production or broadcast of audio news or audio visual news or any current affairs programs through any electric mode or any mode of mass communication.

6. Can foreign contributions be received in rupees?

Yes, any donation, transfer or delivery received from the foreign source whether in rupees or foreign currency is considered as ‘foreign contribution' under FCRA (Foreign contribution regulation act) 2010.

7. Donation given by NRI (Non- Resident Indians) will be treated as a foreign contribution or not?

The contribution made by a citizen of India living in other countries i.e. NRI (Nonresident Indian) from his personal savings is not treated as foreign contribution. However, it is advisable to obtain his passport details to confirm that he/she is actually an Indian citizen.

8. Will the donation given by Indians having foreign nationality be treated as a foreign contribution?

Yes, Donation made by an individual of Indian origin who has acquired foreign citizenship is treated as foreign contribution. However, this would not be applicable to Non-Resident Indians who still hold Indian citizenship.

9. A company established in India under the companies act, 1956 having its operations in 2 or more countries will be treated as MNC/Foreign source under FCRA, 2010 or not?

No, as defined under section 2(j)(vi), a company incorporated in India under the companies act, 1956 having one half of the nominal value of its share capital held either in the aggregate or singly by one or more will be treated as ‘’foreign source’’

10. Whether an individual or HUF (Hindu undivided family) can be granted registration or prior permission to accept the foreign contribution in terms of section 11 of FCRA (Foreign contribution regulation act), 2010?

Definition of ‘person' in FCRA (Foreign contribution regulation act), 2010 includes any individual and Hindu undivided family. This means an individual or a HUF (Hindu undivided family) is also eligible to apply for prior permission to accept foreign contribution.

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