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FCRA Registration

About Foreign Contribution Regulation Act 2010

With the introduction of total globalization, international monetary transactions become very common now-a-days in one hand and on the other hand the world is becoming more focused towards social and environmental causes. Apart from their regular objective of profit making, businesses are actively involved in activities that promote social, economic, cultural and environmental growth and prosperity.

Now, the countries are so well connected and so well linked that accessibility to any part of the world is easy. Transactions between people, places and countries take place on a day to day basis. As a result, it becomes a necessity to formulate the proper management system for such transactions to avoid any potentially wrong funding.

The volume at which these transactions are carried on is at a pretty high level, and as a result, it is almost not possible to keep track of the inflow and outflow of foreign currency in a regular manner. This bought about the need for the Foreign Contribution Regulation Act 2010 by the Government of India.

Government of India opens up the opportunity for charitable organizations in India to receive foreign contribution or donation subject to the approval under Foreign Exchange Regulation Act, 2010.

The objective of Foreign Contribution Regulation Act 2010

The Foreign Contribution Regulation Act, 2010 was enacted with a view to:

  • Regulated the acceptance and utilization of foreign contribution or foreign hospitality by certain individual association or companies.
  • Prohibit the acceptance and utilization of foreign hospitality or foreign contribution for any activities unfavorable to national interest and for matters related to therewith or incidental thereto.

Benefits of having FCRA Registration

Benefits of having FCRA Registration
  • Major or crucial social objectives that require volume funding are highly benefited from FCRA Registration.
  • Once registered under FCRA, an organization can lawfully receive foreign contribution or government aids.
  • An entity registered under FCRA can receive donations from foreign bodies.

FCRA Registration for foreign funding

There are two ways in which an applicant can get registration under FCRA

Normal Registration

  • The applicant must be registered under Societies Registration Act, 1860 or The Indian Trust Act 1882 or Section 8 Company as per the Companies Act 2013 or any such act as may be prescribed.
  • Must have made reasonable contributions by undertaking activities in its chosen field for the benefit of society.
  • Must have spent a minimum of Rs 15,00,000 in the last three years towards achieving its objectives.
  • Must submit the copies of the financial statement of the last 3 years that are duly audited by qualified CA.
  • If newly registered entity likes to get foreign contributions, then an approval for a specific purpose, specific activity, and from a specific source can be made to the Ministry of Home Affairs via the Prior Permission (PP) method.

Prior Permission Registration   

The Prior Permission route is ideally suited for those organizations which are newly registered and would like to receive foreign contributions. This is granted for a receipt of a specific donor for carrying out specific activities/Projects. The association must:-

  • Be registered under the Societies Registration Act, 1860 or the Indian Trusts Act, 1882 or registered as Section 8 Company as per the Companies Act, 2013 or any such Act as may be required.
  • Submit a specific commitment letter from the donor to the Ministry of Home Affairs which indicates:-
  1. Amount of contribution given
  2. Purpose for which it is proposed to be given
  • Where the Indian recipient organization and foreign donor organization have common members, the following conditions need to be met:
  1. The Chief Functionary of Indian organization can’t be part of the donor organization.
  2. At least 51% of the members/office-bearers of the governing body of the Indian recipient organization should not be employees/members of the foreign donor organization.
  • Where the foreign donor is an individual:
  1. He cannot be the Chief Functionary of the Indian organization.
  2. At least 51% office bearers/members of the governing body of the recipient organization should not be the family members and close relatives of the donor.

FCRA (Amendment) Rules 2020

In 2020, Home Ministry had notified the FCRA (Amendment) Rules 2020 and the procedures for opening and operating the designated FCRA Account.

  • As per new condition for FCRA Registration, the institution seeking FCRA registration should be in existence for three years and must have spent a minimum amount of rupees fifteen lakh on its core activities for the benefit of society during the last three financial years.
  • Revised criteria have been prescribed for a person seeking prior permission for receipt of specific amount from a specific donor for carrying out specific activities or projects.
  • Among the major changes, it had been notified that  if application for renewal of FCRA registration is not received or not accompanied by requisite fee before the expiry of the validity of the certificate of registration, the validity of the certificate of registration shall be deemed to have ceased from the date of completion of the period of five years from the date of the grant of certificate of registration. In such cases the amount of foreign contribution lying unutilized in the FCRA Account shall vest with the prescribed authority.
  • Latest notification said that it is mandated to administer the FCRA and the Section 12(6) of the Act provides that the certificate granted shall be valid for a period of five years from the date of its issue.
  • FCRA registration of NGO is compulsory if the organization getting funding from foreign source. Strict punishment including cancellation can be done if NGOs found guilty of violating norms.

Documents required

Application for FCRA registration can be made using Form-3. Along with application, the following documents must be submitted:

  • Self-certified copy of registration certificate/Trust deed etc, of the organization.
  • Self-certified copy of relevant pages of Memorandum of Association/ Article of Association showing aim and objects of the association.
  • Activity Report of the last three years.
  • Audit statement of accounts for the past three years.

TRUSTLINK will be at your disposal serving you with any guidance relating to FCRA Registration and its compliance for the smooth functioning of your charitable objective. TRUSTLINK also expects its clients the proper utilization of the funds with full integrity and proper legal procedures.

Our professionals will assist you in completing the whole process in least possible time and cost.

 

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