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FCRA

What you need to know when receiving foreign contributions. This is relevant if you are a non-profit organisation, including trusts. Here is what you need to know about FCRA Act, 2010:

An association granted prior permission or registration under the repeated Foreign Contribution(Regulation) Act,1976 shall be deemed to have been registered or granted prior permission, as the case may be under the Foreign Contribution(Regulation) Act,2010 (FCRA, 2010) and such registration shall be valid for a period of 5 years.
Every certificate of registration granted under FCRA,2010 shall be valid for a period of 5 years from the date of its issue.
Every certificate of registration shall have to be renewed. The application for renewal is to be made in Form FC-5 along with the prescribed fee, 6 months before the date of expiry of the certificate of registration. In case no application for renewal of registration is received or such application is not accompanied by the requisite fee, the validity of the certificate of registration shall be deemed to have been ceased from the date of completion of the period of 5 years from the date of the grant of registration.
An association granted prior permission or registration under the Foreign Contribution (Regulation) Act, 2010 (FCRA, 2010) should receive the foreign contribution in the same exclusive designated Bank Account mentioned in the order granting prior permission or registration. This account number would be the same as has been intimated by the organisation in their application for prior permission/registration. Deposit of any local fund in this bank account is not allowed. One or more accounts in one or more scheduled banks may be opened for utilizing the foreign contribution provided that no fund other than foreign contribution shall be received or deposited in such account or accounts. Section 17 of FCRA, 2010 may please be referred.
Foreign contribution (FC) CANNOT be mixed with local funds being handled by the organisation.
An association granted prior permission or registration is required to carry out the activities, for which foreign contribution is received, in India only and the amount should not be utilised for purposes other than for which it is received.
Any fixed asset acquired out of FC and any article received in kind from the foreign source should be in the name of the association and not in the name of any individual in the association.
Not more than 50% of the FC shall be defrayed to meet administrative expenses of the association. What constitutes â€œAdministrative Expensesâ€ has been defined in Rule of 5 of the Foreign Contribution (Regulation) Rules, 2011 (FCRR, 2011).
Any FC or any income arising out of it shall not be used for speculative business. What constitutes â€œSpeculative Businessâ€ has been defined in Rule 4 of FCRR, 2011.
An association granted prior permission or registration should maintain a separate set of accounts and records, exclusively for foreign contribution received and utilised. If the FC relates only to articles, the intimation shall be submitted in Form FC-7. If the foreign contribution related to foreign securities, the intimation shall be submitted in Form FC-8. Every report submitted shall be duly certified by a chartered accountant.
Every account giving details of the receipt and purpose wise utilisation of the FC, including the interest earned on the FC amount, should be maintained on an yearly basis, commencing on the 1st day of April each year, and every such yearly account is to be submitted, in prescribed Form FC-6 along with the income and expenditure statement, balance sheet and statement of receipt and payment, duly certified by a chartered accountant in duplicate, within 9 months of the closure of the year, i.e., before 31st December. Every such return in Form FC-6 shall also be accompanied by a copy of a statement of account from the bank where the exclusive foreign contribution account is maintained by the person, duly certified by an officer of such bank. The cash book and ledger account on double entry basis, where the FC relates to currency received and utilised. The annual return in Form FC-6 shall reflect the foreign contribution received in the exclusive bank account and include the details in respect of the funds transferred to other bank accounts for utilisation.
The accounting statements shall have to be preserved by the NGO/association for a period of 6 years.
Even if no FC received during a year, a â€œNilâ€ return is required to be filed with the Ministry of Home Affairs within the prescribed time limit.
Associations/NGOs granted registration or prior permission, which have received foreign contribution in excess of one crore rupees, or equivalent thereto, in a financial year, shall place the summary data on receipts and utilisation of the foreign contribution pertaining to the year of receipt as well as on year thereafter in the public domain.
No FC should be transferred to an association which has not obtained either prior permission or registration under FCRA or to any person or association, prohibited under FCRA from receiving any FC. However, if the foreign contribution is proposed to be transferred to a person who has not been granted a certificate of registration or prior permission by the Central Government to transfer a part of the foreign contribution, not exceeding 10%, of the total value of the foreign contribution received. The application shall be countersigned by the District Magistrate concerned shall take an appropriate decision in the matter withing 60 days of the receipt of such request from the person. The donor shall not transfer any foreign contribution shall be reflected in the returns in Form FC-6 as well as in Form FC-10 by the transferor and the recipient.
Change of name, address, registration, nature of activities or aims and objectivities of an association should be intimated to the Ministry of Home Affairs within 30 days of effecting the change, along with the documentary evidence effecting the change.
Prior permission of Ministry of Home Affairs should be obtained for replacing 50% or more of the office bearers.
Prior permission of Ministry of Home Affairs should be obtained for changing bank account for valid and convincing reasons.

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