FCRA Registration – An Overview

The Foreign Contribution (Regulation) Act, 2010 (FCRA) governs the receipt and utilisation of foreign contributions by individuals, associations, and companies in India. FCRA registration is mandatory for any entity wishing to receive foreign funds for specified purposes like cultural, economic, educational, religious, or social programs.

Who Needs to Register Under FCRA?

Organisations, charitable or religious trusts, educational institutions entities, and individuals can register under the FCRA act as per the following criteria:

• Societies Registration Act, 1860
• Indian Trusts Act, 1882
• Section 8 of Companies Act, 2013

Societies or associations not registered under the abovementioned laws but have been granted specific permission under FCRA to receive foreign contributions for certain activities. Individuals can also register under FCRA, but only for specific activities permitted under the Act, such as:

• Engaging in research or academic work related to foreign contribution or its utilisation
• Undertaking cultural exchange programs
• Providing humanitarian assistance in case of natural disasters or emergencies.

Certain organisations are exempt from FCRA registration if they receive foreign contributions for specific purposes, such as:

• Educational institutions receiving contributions from their alumni or foreign universities for academic purposes
• Hospitals receiving donations from foreign patients or organisations for medical treatment
• Individuals receiving scholarships or stipends from foreign universities or organisations.

Eligibility for FCRA Registration

To be eligible for FCRA registration, You must have well-defined objectives and activities aligned with the permissible purposes under FCRA, such as:

• Cultural exchange programs
• Economic development projects
• Educational programs
• Religious activities
• Social welfare initiatives

Apart from this your organisation or individual must meet the following criteria

• You must be a registered entity under specific Indian laws like Societies Registration Act, 1860, Indian Trusts Act, 1882 or Section 8 of Companies Act, 2013
• Your organisation must have been in existence for at least 3 years with demonstrable experience in your chosen area
• Your governing body must have sound financial standing and no criminal record
• Your organisation must have spent at least ₹15 lakhs on its core operations for the benefit of society in the last 3 financial years
• You must submit audited financial statements for the last 3 years to demonstrate your financial stability and utilisation of funds
• At least 80% of the foreign contribution received must be used for your core activities.The remaining 20% can be used for administrative expenses, but exceeding that requires prior approval from the Ministry of Home Affairs (MHA).

Individuals can register under FCRA only for specific activities permitted under the Act, such as:

• Engaging in research or academic work related to foreign contribution or its utilisation
• Undertaking cultural exchange programs
• Providing humanitarian assistance in case of natural disasters or emergencies.

Documents Required For FCRA Registration

• Form FC-3 for the FCRA registration process
• An active account in State Bank of India (SBI)
• A self-certified copy of the organisation’s registration certificate or Trust deed
• A self-certified copy of relevant pages from the Memorandum of Association or Article of Association outlining the organisation’s aims and objectives
• An activity report outlining the organisation’s activities over the past three years
• Copies of audited financial statements for the preceding three years
• Financial statements cover assets and liabilities, receipts and payments, and income and expenditures
• Documents on expenditures incurred towards the organisation’s objectives and administrative costs.

Steps for FCRA Registration

Get in touch with our experts and get complete FCRA compliance, answering your queries and providing valuable insights tailored to your organisation’s needs.

Our dedicated team at AccountsWaale ensures that you have comprehensive documentation support throughout the FCRA registration process. From organising necessary paperwork to streamlining the submission process, we make sure you are well-prepared at every step.

Our assistance extends beyond paperwork to help you navigate the incorporation process seamlessly. Additionally, we provide support in establishing a FCRA bank account, which is a crucial component of FCRA compliance.

Trust AccountsWaale to guide you through the final steps to secure FCRA certification. We streamline the certification process, ensuring that your organisation meets all the necessary requirements for FCRA compliance.

Types of FCRA Registration

In general the entities can register under the FCRA Act following any one of the certifications explained below:

This method is suitable for new organisations that are registered and would like to receive foreign contributions. In this method, only a specific amount from a specific donor is permitted for carrying out specific activities or projects. The following pre-requisites must be fulfilled for this process:

• The NGO or the organisation should be running for at least 1 years
• The applicant should provide a list of foreign donors along with their credentials, like the address, designation, and cause for which the donors are contributing
• The applicant entity should specify the actual amount of money that is received from the foreign sources along with the registration form.

In this method, a permanent registration certificate is issued, which is valid for up to 5 years. They will have to fulfil the following criteria in order to complete the certificate:

• The non-government organisation should be active and in business for at least 3 years
• Annual returns for the last 3 years, along with an audit report from a registered chartered accountant, should be submitted for the particular time frame
• Other documentation, such as pan cards, the by-laws, MOA, and AOA, should be submitted for registration.

Exemptions From FCRA Registration

• Acceptance of foreign contribution exempted for salary, wages, or other remuneration due to the person or group of persons working under him from any foreign source
• Exemption for foreign contributions received in the ordinary course of business transacted in India or in the course of international trade or commerce, both in India and outside
• Exemption applies when received as an agent of a foreign source in relation to transactions with the Central Government or State Government
• Foreign contributions received as a gift or presentation are exempted if accepted in accordance with rules made by the Central Government
• Exemption granted for foreign contributions received from relatives
• Acceptance is exempted when received by way of remittance in the ordinary course of business through official channels, post office, or authorised persons in foreign exchange
• Exemption includes foreign contributions received by way of scholarships, stipends, or similar payments.

Note: Contributions received for purposes other than those specified in this section deemed to be accepted in contravention of Section 3.

Benefits of FCRA Registration

The FCRA registration offers several benefits to non-profit organisations in India that intend to receive foreign contributions for their various programs. Some of them are discussed below:

FCRA registration provides legal status and credibility on both domestic and international platforms. It guarantees that the organisation can lawfully accept donations or contributions from overseas sources and that it conforms with national legislation.

An FCRA-registered organisation can access foreign individuals, agencies, and foundations. This provides opportunities for increased funding, which can significantly improve the capacity of an organisation to carry out and expand its operations.

Donors, both domestic and foreign, are probably more confident in an organisation that has an FCRA registration. This is due to the registration’s stringent adherence to the FCRA’s rules and regulations, which serves to reassure contributors that their money will be spent responsibly.

Organisations that are registered with the FCRA are eligible for specific tax benefits, including exemptions under the Income Tax Act. These benefits can help allocate more funds to the organisation’s goals.

Long-term viability of non-profit organisations can be enhanced by access to overseas finance, particularly in situations when domestic funding sources are scarce or unpredictable.

Checklist to Register Under FCRA

1. Determine Eligibility: Ensure your organisation is a Trust, Society, or a Section 8 Company and has been operational for a minimum of three years.

2. Form FC-3: This is the form used to apply for FCRA registration. Make sure it’s completed accurately.

3. Registration Certificate/Trust Deed: You’ll need a self-certified copy of your organisation’s registration certificate or Trust deed.

4. Memorandum of Association/Article of Association: Submit a self-certified copy of the relevant pages that highlight your organisation’s aims and objectives.

5. Activity Report: Prepare an Activity Report detailing your organisation’s actions and projects over the past three years.

6. Audited Financial Statements: Prepare and submit audited financial statements for the previous three years, including Assets and Liabilities, Receipts and Payments, and Income and Expenditure statements.

7. Renewal: FCRA registration is valid for five years. Start the renewal process six months before the expiration date.

8. Compliance: Ensure your organisation hasn’t been barred from receiving foreign contributions and complies with all stipulations of the FCRA.

9. Submission: Submit the completed application form along with the required documents to the Ministry of Home Affairs.

Regulations That Registered Entities Must Follow

FCRA registration requires the entities to submit their annual returns and reports directly to the Ministry of Home Affairs (MHA). It is crucial to procure prior permission for particular foreign contributions directly from the MHA. FEMA laws must also be followed by registered organisations in order to convert foreign currency into Indian rupees.

Post-registration Compliance

As per the law, registered FCRA entities should comply and file annual returns in Form FC4 along with the balance sheets of the company. It is mandatory to get the balance sheets certified by a registered CA. The form IFC 4 should be filed online before 31 December of every year.

Penalties for Violation of FCRA

Any individual, bound by the provisions of this Act, who deliberately:

• (a) provides false information under clause (c) of Section 9 or Section 18; or
• (b) attempts to obtain prior permission or registration through fraudulent means, false representation, or concealing material facts

Upon conviction by a court, is subject to imprisonment for a term of up to six months or a fine, or both. In some cases violations might provide serious penalties for violating the FCRA like:

• Foreign contribution receipts may be seized and confiscated
• A fine of up to five times the amount donated overseas may also be imposed
• Looking through and taking accounts and papers.

Renewal of FCRA License

The FCRA registration is valid for a period of five years. It may be extended by submitting a renewal application. The following deadlines must be followed by an organisation when submitting a request for renewal:

• It is necessary to submit the renewal application at least six months prior to the licence expiration date
• Whenever the organisation is engaged in a project that will take more than a year, and at least a year before the registration expires.

Six months before the present registration expires, any request to renew a certificate of registration must be electronically filed with the Central Government using form FC-3C. The new FCRA 2010 has limited the validity of the registration certificate to five years.

Cancellation/Suspension of FCRA Registration

The central government has the power to suspend based on the grounds in Section 141 of the Act. The suspension period can extend up to 180 days, as specified in the order. During the suspension, individuals or entities will not be able to receive foreign contributions. However, the central government may permit receipt with specified conditions. The government can also cancel the certificate on the following grounds:

• The certificate holder provides incorrect or false statements in the application for registration or renewal
• Violation of the terms and conditions of the certificate or renewal
• Deemed necessary in the public interest
• Violation of provisions of the FCRA or associated rules and orders
• Lack of engagement in any reasonable activity for the benefit of society for two consecutive years or becoming defunct.

Why You Need AccountsWaale for FCRA Registration

AccountsWaale has a dedicated team of legal professionals with extensive knowledge of FCRA regulations and the registration process. We can guide you through every step, ensuring accurate documentation and minimal delay.

AccountsWaale provides a simplified online platform for applying and managing your FCRA registration. We take care of the paperwork and communication with authorities, reducing your administrative burden.

AccountsWaale goes beyond just registration. We offer ongoing compliance support, reminding you of reporting deadlines, advising on utilisation of funds, and helping you navigate any regulatory changes.

AccountsWaale expertise helps minimise the risk of errors or omissions in your application, reducing the chances of rejection or penalties from the MHA.