FOREIGN CONTRIBUTION (REGULATION) ACT (FCRA)

(An Overview on Applicability, Key Definitions, Registration, Filings & Penalties)

Naveen Khandelwal
Naveen Khandelwal

Published on: Mar 11, 2021

Monika Taparia
Monika Taparia

Updated on: Nov 28, 2022

(20 Ratings)
3051

INTRODUCTION

Foreign Contribution (Regulation) Act (FCRA), 2010 regulates the acceptance and utilization of foreign contribution or foreign hospitality by certain individuals, associations or companies and prohibits acceptance and utilization of foreign contribution or foreign hospitality for any activities detrimental to national interest and connected matters

APPLICABILITY

The Act shall apply to
  • Whole of India
  • Citizens of India outside India
  • Associate branches or subsidiaries, outside India, of companies or bodies corporate, registered or incorporated in India
The Act shall not apply to
  • Transactions between Government of India and Government of any other country

KEY DEFINITIONS

  • Association means an association of individuals, whether incorporated or not, having an office in India and includes a society, whether registered under the Societies Registration Act, 1860 (21 of 1860), or not and any other organization, by whatever name called.
  • Foreign Contribution means the donation, delivery or transfer made by any foreign source
    • of any article, not being an article given to a person as a gift for his personal use, if the market value, in India, of such article, on the date of such gift, is not more than such sum as may be specified from time to time, by the Central Government by the rules made by it in this behalf
    • of any currency, whether Indian or foreign
    • of any security as defined in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) and includes any foreign security as defined in clause (o) of section 2 of the Foreign Exchange Management Act, 1999 (42 of 1999).
  • Foreign Source includes
    • the Government of any foreign country or territory and any agency of such Government
    • any international agency, not being the United Nations or any of its specialized agencies, the World Bank, International Monetary Fund or such other agency as the Central Government may, by notification, specify in this behalf
    • a foreign company
    • a corporation, not being a foreign company, incorporated in a foreign country or territory
    • a multi-national corporation
    • a company within the meaning of the Companies Act, 2013 and more than one-half of the nominal value of its share capital is held, either singly or in the aggregate, by one or more of the following, namely
      • the Government of a foreign country or territory
      • the Citizens of a foreign country or territory
      • corporations incorporated in a foreign country or territory
      • trusts, societies or other associations of individuals (whether incorporated or not), formed or registered in a foreign country or territory
      • foreign company
    • a trade union in any foreign country or territory, whether or not registered in such foreign country or territory
    • a foreign trust or a foreign foundation, by whatever name called, or such trust or foundation mainly financed by a foreign country or territory
    • a society, club or other association of individuals formed or registered outside India
    • a citizen of a foreign country.
  • Person includes
    • an individual
    • a Hindu undivided family
    • an association
    • a company registered under section 8 of the Companies Act, 2013
Who can receive foreign contribution Who cannot receive foreign contribution
Any Person subject to the following conditions
  • A definite cultural, economic, educational, religious, or social programmers are required
  • FCRA registration / prior authorization must be obtained from the Central Government
  • Must not be prohibited under FCRA
  • Election candidate
  • A licensed newspaper reporter, columnist, cartoonist, editor, owner, printer or publisher;
  • A judge, servant of the government, or employee of any company or entity governed or owned by the government
  • A member of any statutory authority
  • Political party or bearer of the office thereof
  • Institution of a political nature
  • An organization or company engaged in the production or broadcasting, via any electronic mode or any other electronic medium, of audio news or audio visual news or current affairs programmers
  • The reporter or columnist, the cartoonist, the publisher, the owner or business of the association
  • Individuals or organizations which have not been approved to accept a foreign donation

Registration and Prior Permission

  1. Registration
    The applicant must apply for registration through online portal of FCRA, in Form FC – 3A (Application for FCRA Registration) and comply with the following requirements
    • shall have an FCRA Account
    • 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
    • has undertaken reasonable activity in its chosen field for the benefit of the society
    • spent a minimum of Rs. 10,00,000 in the last 3 years towards achieving its objectives (Excludes administrative expenditure)
    • submit the copies of the financial statements of the last 3 years that are duly audited by qualified Chartered Accountants
    • Weblink - https://fcraonline.nic.in/fc_public_login.aspx?Resp_Id=1
  2. Prior Permission Registration
    The Prior Permission route is ideally suited for those organizations that are not eligible for registration and for those organizations which are newly registered and would like to receive foreign contributions. The applicant must apply for registration through online portal of FCRA, in Form FC – 3B (Application for FCRA).
    The prior permission granted for receipt of a specific amount from a specific donor for carrying out specific activities/projects. For prior permission the organization 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
      • Amount of contribution given
      • Purpose for which it is proposed to be given.
    • Where the Indian recipient organization and foreign donor organization have common members, Prior Permission shall be granted to the Indian recipient organizations subject to following conditions
      • The Chief Functionary of the Indian organization can’t be part of the donor organization
      • 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
        • He cannot be the Chief Functionary of the Indian organization.
        • 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.

Validity and renewal of Certificate of Registration

  • The Certificate of Registration shall be valid for 5 years from the date of the grant of certificate
  • The Certificate of Registration shall be renewed within six months before the expiry of the period of the certificate, in electronic form in Form FC-3C accompanied with an affidavit executed by each office bearer, key functionary, and member in Performa ‘AA’.

Filing of Annual Returns

The Annual returns are to be filed online for every financial year (1st April to 31st March) within nine months from the closure of the year i.e. by 31st December each year in Form FC – 4, at 

  • However, after the cancellation/expiry of the registration certificate, it is optional and does not entitle any claim whatsoever
  • Submission of a ‘NIL’ return, albeit there's no receipt/utilization of foreign contribution during the year, is additionally mandatory
  • Weblink for online filing: https://fcraonline.nic.in/fc_public_login.aspx?Resp_Id=4.

Other Compliances

  • Every Registration holder shall intimate to the Central Government, and authority specified by the Central Government, as to the amount of each foreign contribution received by it, the source from which and how such foreign contribution was received, and the purposes for which, and how he utilized such foreign contribution.
  • Every person receiving foreign contribution shall submit a copy of a statement indicating therein the particulars of foreign contribution received duly certified by an officer of the bank or authorized person in foreign exchange and furnish the same to the Central Government along with the intimation above point.
  • Every Registration holder shall maintain
    • an account of any foreign contribution received
    • a record on the way during which such contribution has been utilized by him

Penalty

  • The penalties under FCRA are usually Monetary or Imprisonment.
  • While the monetary values are high, but the risk of closure notice always hangs under various non-compliance

Disclaimer

The information provided in this article is intended for general informational purposes only and should not be construed as legal advice. The content of this article is not intended to create and receipt of it does not constitute any relationship. Readers should not act upon this information without seeking professional legal counsel.

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