FCRA REGISTRATION FOR NGO – Semantic Taxgen Pvt Ltd
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FCRA REGISTRATION FOR NGO

July 02, 2021
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In accordance with the present situation, the world focuses more towards environmental and social causes. Itself the business, apart from the basic objective that is profit-making, are further involved in such activities that promote economic, cultural, social and environmental prosperity and growth.
In Today’s world is well connected and linked where accessibility to any wherein the world is easy. The transactions within places, people and countries that happen on daily basis. Consequently, the flow of foreign currency in and out of every country is completely natural and common.
The volume of these transactions carried on is at a pretty high level, and henceforth, it is impossible to track the inflow and outflow of foreign currency in a regular fashion. This brings the need for the Foreign Contribution Regulation Act, 2010.

Permission under FCRA,2010

There are two modes of permission to accept foreign contribution under FCRA,2010, which are as under:

  1. Permanent Registration

This generates applicability for those Associations that are already registered under the prevailing statute such as Societies Registration Act, 1860, Section 8 of Companies Act,2013 or Indian Trust Act,1882 and these Associations must exist for at least 3 years and thus undertaken charitable activities in such field. These Association must have spent at least Rs.10 lakhs on charitable based activities in last 3 years.

Application for FCRA registration can be done with the help of Form FC-3,also along with the application, the below mentioned documents must be submitted:

  • Self-certified copy of Trust deed/Registration certificate etc., of  the association
  • Self-certified copy of related pages of Articles of Association/ Memorandum of Association that defines the objects and aim of the association.
  • Activity Report providing details of activities of the last three years;
  • Copies of related audited statement of accounts for the last three years (Assets and Liabilities, Income and Expenditure, Receipt and Payment) clearly reflecting expenditure incurred on objects and aims of the association and on administrative expenditure;

After FCRA registration is granted, its validity is for a period of five years. The renewal application for FCRA registration is to be made prior 6 months to the date of expiry, in order to keep the registration valid.

Inquiry at the time of Renewal of FCRA

Section 16 of the FCRA Act, 2010 states the process with respect to FCRA renewal, which needs to be done after every 5 years. However, the mentioned section does not entitle the department in making any inquiry of the renewal application at the time of processing, although FCRA department can start inspection and audit as per section 20 and 23 individually at any point of time. Although, together in these sections 20 and 23 the Central Government should with a reasonable reason for commencement of such audit or inquiry.

The latest FCRA Amendment Act, 2020 dated 29th September 2020, states that the central government is authorized in making inquiries and satisfy itself in respect to compliance of Section 12(4) prior for the renewal of FCRA. It should be noted that Section 12(4) is the provision where verification is done at that time of granting registration. Also, the government might make same inquiries before they grant the renewal of FCRA registration. Henceforth, with the proposed amendment, the renewal process has become difficult.

Delayed Application for Renewal

Situation where an NGO fails in applying for renewal that to within the due date, there the registration becomes invalid automatically. Hence, the department might accept the delay if the reason is satisfactory for not submitting the renewal application on time. Any delayed application for renewal can be filed within 1 year from the date of the expiry of the FCRA Certificate.

The rule 12(6) of FCRA Rules 2011 says that 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 of such person shall be deemed to have ceased from the date of completion of the period of five years from the date of the grant of registration. For instance, if there are no application is received or is not accompanied with renewal fee, the validity of the registration certificate issued on the 1st November, 2016 shall be believed to have expire with effect from the close of the day on 31st October, 2021.

Any application given for the renewal of the registration should be submitted with a fee of Rs. 1500 (Fifteen hundred only). But, in case of a delayed renewal application should be submitted with a fee of Rs. 5000(Five thousand only).

Documents needed for renewal of the FCRA Registration

Subsequent documents are needed for the renewal of FCRA registration

  • Copy of signature of Chief Functionary
  • Copy of seal of the Association.
  • Registration certificate of the Association
  • Trust Deed or Memorandum of Association.
  • FCRA Registration Certificate of Association issued by MHA.
  • Associations needs to upload affidavit of every key functionary
  • Every key functionary in details that includes Aadhar of the Board members where the Indian members and also a copy of passport or overseas citizen card (OCI) in case of foreign members.

Situations where the registration can be cancelled

There are several reasons where a NGO’s foreign funding registration can be canceled on situations like-

  • The fund transferred by the foreign contributor is not used appropriately and further used for their own individual interest
  • When the NGO is unable to submit annual compliance for three successive years
  • When any member of the company lodges a complaint where it says that the NGO is not working efficiently and further if it gets proved.

2. FCRA PRIOR PERMISSION

Overview

Any individual, if not registered under the Central Government, can receive foreign contribution only soon after getting the prior permission of the Central Government and with such prior permission this can be valid for a particular purpose for which it is obtained and from the specific source.

Any association registered through the Central Government or granted prior permission under section of the Foreign Contribution (Regulation) Act, 1976, as it stands immediately before the start of this Act, shall be considered to be registered or granted prior permission, as per the case, under such Act and hence the registration will be valid for a duration of five years from the date this section comes into existence.

For this purpose, the Association should meet following criteria:

  • Should be registered with an existing statute such as the Indian Trusts Act, 1882 or the Societies Registration Act, 1860 or section 8 of the Companies Act, 2013 etc.
  • The submission of a particular commitment letter from the donor representing the amount of foreign contribution and the purpose for which it is proposed to be given.

Documents Required for the FCRA Prior Permission

Following documents are needed

for FCRA prior permission

  • Signature of the chief functionary
  • Self-certified copy of registration certificate/Trust deed etc., of the association.
  • Duly signed Commitment Letter from Donor.
  • Project Report on the basis of FC received.
  • Associations needs to upload affidavit of every key functionary.
  • Copy of Chief Functionary signature and copy of Seal of the Association which should be saved in JPG/JPEG format.
  • Particulars of the designated bank account in SBI, Sansad Marg, New Delhi
  • Applicant seeking prior permission for foreign contribution of more than Rs.50,00,000/- (Fifty Lakh rupees) should include audited statements of accounts and activity report of an Association for the last three years since the date of submission of application.
  • In case of Indian members Aadhar copy of the Board members and in case of foreign members a copy of passport or overseas citizen card (OCI).

RESTRICTION ON USE OF FUNDS UNDER PRIOR PERMISSION

As per section 11 of the FCRA 2010 it says that if a person is registered or grants prior permission, if found “guilty” of any breach under this act, then the central government can levy restrictions on the receipt and usage of the foreign contribution.

Although, FCRA Amendment Act, 2020 dated 29th September 2020 says that, if taken prior permission, the specific limitations may be levied based on any information or report putting hold on the summary inquiry and the FCRA department has grounds to accept that if a person who has been approved prior permission breach any of the provisions of this Act. In other words, such limitations may be levied even if violations are alleged. It may not be necessary that the breach is proved or obtained finality in imposing such restrictions.

Feature of Prior permission under Act:-  An organization or an association can obtain foreign contribution deprived of registration using prior permission from the FCRA department. Foreign materials and funds may only be obtained under two such circumstances-

  1. The organization must have obtained permanent registration from the FCRA department, or
  2. An organization or an association received prior permission from the FCRA department based on the cases
  3. B. The applicable circumstances- The reference of the term ‘prior permission’ that is made in sections 5 and 6 of the FCRA. Prior permission is stated based on case to case and different permission would be important for any following receipt and different transactions. Mostly, prior permission is required under the following circumstances:
  4. Organization does not possess a permanent FCRA registration number.
  5. The FCRA registration number has been called off by the Government.

iii. The association is directed by the Central Government in taking prior permission under the provisions of section 10 where the power has been given to forbid any organization in receiving foreign funds.

  1. The FCRA number is deferred because of violation of the conditions and provisions as specified under the FCRA.
  2. The organization is political in nature and not a political party.
  3. Any resident of India or any citizen of India who is residing outside India, and acquiring foreign funds in place of an organization of political nature.

FCRA RETURN FILING

FCRA Annual Return Filling

Organization that are listed under the FCRA must hold separate records under the Head Office of the FC and provide prescribed templates to the Ministry with the audited report of records of previous year. Any of the companies getting the foreign donations are expected to have issued a certification from a CA. The certificate to be issued by the CA and is offered in the form FC-6. Along with this document, Revenue and Expense statement and the collection, the audited Balance sheet and payment account statement, together with the verification and certification approved by the Chief Functionary, shall also be issued.

For each year the return is to be submitted (1st April to 31st March) that is within 9 months of the end of the year, that is by 31st December each year. The filling of a ‘0’ refund, even if none of the international donation is obtained/ used all over the year, is mandatory. The report will be issued in the specific form FC-6 consequently followed by the balance sheet and revenue and expenditure statement approved by the chartered accountant. On the basis of the suitable receipts and accounts, the chartered accountant is projected to report the following:

  • the amount of the international donation received at the start of the year
  • the foreign contribution obtained during the year
  • the predicted amount of the foreign contribution at the close of the year
  • certifies that the organization has held the foreign contribution account and the documents of the foreign contribution throughout the way stated in Foreign contribution (Regulation) Act, 2010
  • the information provided in the certificate and the balance sheet used, the declaration of receipt and payment and the declaration of income and expense are exact.

FCRA Quarter Return Filing

  • Additionally, on quarter basis every organization/ person who have been provided with registration or prior permission should upload their financial information related to the donor and the information of grants obtained. Such of this information should be uploaded onto their website as specified by the Central Government. It is to be noted that the revised rule does not give any relaxation to a smaller NGO.
  • Soon after the laws were amended, every organizations with not any financial limit should upload financial information either on their website or complete the requisite Form at the FCRA website. The data to be uploaded includes:

(i) Information of the donors
(ii) Amount received
(iii) The date of receipt.

  • The data is to be uploaded within 15 days following the last day of the quarter in which the funds were received.
  • It may be noted that all the organizations have to upload 1st quarter financial information (that is for the period from 15th October to 15th December to be by the following 15th January.
  • The form for quarterly returns can also be submitted online.

     Frequently asked questions: –

Ques: – What is the limit up to which person can accept donation without FCRA registration?

Ans: -Foreign Contribution is defined as donation and contribution made by foreign source of:

  • Any articles (excluding an article specified to a person as a gift for his personal use where market value in India is not more than Rs.25000/-)
  • Any currency, whether foreignor Indian
  • Any security that includes foreign security as describedin Foreign Exchange Management Act 1999

Ques:Can foreign contribution be obtained in and avail from multiple bank accounts?

Ans: Foreign contribution can either be deposited or received in the exclusive designated Foreign Currency account of a bank, as mentioned in the order for registration or prior permission granted by Ministry of Home Affairs.

However, single or more accounts in single or more banks may be opened for using the foreign contribution after it has been received.

Disclaimer : The information contained in this article is intended solely for the dissemination of information and does not aim at solicitation of work. Though meticulous care has been taken but the author assumes no liability in respect of any loss/ damage incurred while acting on the information provided in this article. The author can be reached at sanjeev@semantictaxgen.in and can be called at +91-8126700005.

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