INTRODUCTION TO FCRA, 2010
(THE FOREIGN CONTRIBUTION (REGULATION) ACT, 2010)
What is FCRA, 2010?
Foreign contribution (regulation) ACT, originally passed in 1976 and repealed in 2010. FCRA
2010 was passed by both the houses of parliament which received the assent of President on 26th
September,2010. It became law from 1st May 2011 vide S.O 909(E) Dated 29th April 2011.
What is the purpose and preamble of FCRA, 2010?
FCRA, 2010 has been enacted to consolidate the law:
• To regulate
• To prohibit
the acceptance and utilization of foreign contribution or foreign hospitality for any activities
detrimental to national interest and for matters connected therewith or incidental thereto.
Acts/rules/guidelines which regulate the flow of foreign contribution to India:
The flow of foreign contribution to India is regulated under
• Foreign Contribution (Regulation) Act, 2010,
• Foreign Contribution (Regulation) Rules, 2010
Read with and other notification / orders etc., issued there under from time to time. These are
available at the website fcraonline.nic.in
To whom FCRA, 2010 is applicable?
As per Section 1(2) of FCRA, 2010, the provisions of the Act shall apply to:
• Whole of India
• Citizens of India outside India; and
• Associate Branches or subsidiaries, outside India, of companies or bodies corporate,
registered or incorporated in India
Applicability of FCRA
An individual; HUF; An association; Company registered u/s 8 of Companies Act 2013
Meaning of Foreign contribution
Donation, delivery or transfer made by foreign source (either directly or through one or more
persons):
• Any article
• Any currency whether Indian or foreign
• Any security including foreign security
Foreign Company means:
• Foreign company as defined as per sec 2(1) (g) of FCRA 2010, means any company or
association or body of Individual incorporated outside India and includes –
• A foreign company within the meaning of sec 379 of companies Act 2013.
• A company which is a subsidiary of a foreign company
Foreign Source Means:
“Foreign source” includes:
• Foreign company
• Citizen of foreign country
• Government of foreign country
• Any international agency of foreign Government
• A trade union in any foreign country
• Foreign Trust or Foreign Foundation
• Society, Club, Association of Individuals formed outside India.
A foreign source includes an Indian company if more than 50% of its share capital is held by
persons covered under foreign source
The Scope of Foreign Contribution:
• Under Section 2(h) FC means transfer, delivery or donation of any currency, article or
security.
• Except Fees or commercial receipt.
• Includes interest or any other income from FC funds for assets
Business/Consultancy Income of an NGO
❖ Under FCRA1976, the definition of ‘foreign contribution’ included all kinds of foreign
receipts. It does not distinguish between a commercial receipt or a voluntary contribution.
❖ FCRA 2010 excludes income from business, trade or commerce from the ambit of foreign
contribution.
Who can receive Foreign Contribution?
A person as defined Under FCRA 2010 having a definite cultural, economic, educational, religious
or social programme can receive FC after gets itself registered with central government or obtain
prior permission.
Transactions Excluded from foreign contribution
✓ Movement of foreign funds in normal course of commerce and business is outside the
purview of FCRA 2010
✓ Contribution by Indian citizen
✓ Fee paid by foreign delegates attending a conference / seminar
✓ Any article gifted to a person for his personal use whose value does not exceed Rs. 25,000.
Persons debarred from receiving Foreign Contribution:
• Candidate for election
• Correspondent, cartoonist, editor, columnist, printer or publisher of registered news paper
• Judge, government servant or employee of any corporation
• Member of any legislature
• Panchayat (has been included in the definition of legislature under FCRA 2010)
• Political party or office bearer thereof
• Organization of political nature
• Association or company engaged in broadcasting of audio or visual news
Debarred persons can receive followings as referred in sec 4 of FCRA 2010
❖ Salaries or wages received from foreign source
❖ Receipt towards business transaction with foreign entities
❖ Gift from relatives
❖ Stipend and scholarship
❖ Remittance under normal course under FEMA 1999
Can an organisation of political nature receive foreign contribution?
Political nature organizations are not eligible for registration under FCRA. Such organizations can
not apply even for prior permission as was allowed earlier. Therefore, such organizations are not
eligible for receiving Foreign Contributions.
Declaration of an organization to be of a political nature
• Having affirmed political objectives
• Any Trade Union with political goals;
• Any voluntary action group with political objectives
• Students Unions, Workers’ Unions, Youth Forums and Women’s wing of a political party;
• Farmers, workers, students, youth based on caste, community, religion, language with
political objective
• Habitually engages in ‘bandh’ or ‘hartal’, ‘rasta roko’, ‘rail roko’ or ‘jail bharo’ in support
of public causes
Community radio and FCRA
❖ Community Radio is generally used to broadcast programmes on developmental,
agricultural, health, educational, social welfare, community development and cultural
issues
❖ In case, it is used for broadcast of news, then the FCRA permission is needed
Power To Prohibit Sources From Which FC Can Be Accepted
The Act provides power to notify such source(s) from which foreign contribution shall be accepted
with prior permission only. It implies that the Central Govt. may notify specific donors or countries
from which foreign funds could not be received or shall be received with prior permission only.
Foreigners on Board
Foreigners on Board through prior permission only under the following Category.
❖ Foreigner is married to Indian Citizen
❖ Has been working in India for last 5 years
❖ Has specialized knowledge in health in medical and health related fields.
❖ Foreigner is the ex officio in terms of an inter-government agreement
❖ Foreigner is an ex officio from a multilateral body which is exempted from the definition
of foreign source.
Conditions for Registration for FCRA
• Person should not be benami
• Not likely to use FC for personal gains
• Not found guilty for diversion / misutilization of funds
• Not prosecuted or convicted for any offence
• Not likely to advocate sedition / violent methods
• Not violated FCRA earlier
• Reasonable project for prior permission
Submission of verification certificate from the District Collector or Deputy Commissioner or
District Magistrate is not required
Application for Registration:
❖ Application for Registration is required to be made U/s 11 of FCRA 2010
❖ All new registration has to be made in form FC -3
❖ Application to be made online for registration along with a fee of Rs. 5000 /- (for prior
permission along with a fee of Rs.3000/-)
❖ All application should be made electronically.
Application has to be processed within 90 days. FCRA department shall also provide reasons for
rejections. If an application filed is invalidated then the person shall be eligible to reapply only
after 6 months from the date of cessation of the previous application.
Documents to be submitted with application for registration:
• Certified copy of registration certificate
• Details of activities during last three years
• Copy of audited financial statement for last three years
Eligibility criteria for prior permission
❖ Be registered as society / trust/ company
❖ Submit commitment letter from the Donor
❖ Submit Copy of reasonable project for which foreign contribution is proposed to be utilized
Bank Account
• A person applying for prior permission or registration shall open an exclusive an FC bank
account to receive the foreign contribution.
• Multiple bank accounts can be opened for utilization purpose only.
• The applicant may use local funds (minimum amount required to open and maintain a bank
account) for opening of the exclusive FC bank account.
• Inter account transfer of funds between multiple account is not permissible
The bank should report FCRA department if foreign contribution is received in excess of Rs 1
Crore during a period of 30 days. If any foreign contribution is received without registration or
prior registration.
Books of Account:
Separate books of accounts and records shall be maintained by every person who has been granted
registration or prior registration exclusively for foreign contribution received and utilized. It is
necessary to place the summary data on receipts and utilization of the FC in public domain if the
FC receipt is in excess of Rs 1 Crore in financial year.
Renewal of Registration:
❖ FCRA 2010 provides for renewal of registration of NGOs in every 5 years
❖ All existing registered NGOS have to renew their registration at the end of the period of 5
years from the date of enactment of FCRA 2010
❖ NGOs have to apply in form FC-5 six month before the due date
❖ An NGO fails to apply for renewal within the due date, its registration shall become invalid.
Suspension of Registration Certificate:
• Section 13 of FCRA act allows the power to suspend the registration for a period up to 180
days.
• During suspension the organization cannot receive any foreign funds without prior
approval
• The organization can utilize the existing foreign funds to the extent of 25% with the prior
approval from FCRA department
• Central government shall provide reasons in writing to the organization whose certificate
is suspended.
• FCRA 2010 does not provide any opportunity of being heard before affecting the
suspension order.
Cancellation of Registration Certificate:
Central Government may cancel the registration certificate for various reasons. No certificate shall
be cancelled unless reasonable opportunity of being heard is provided. Once a registration
certificate is cancelled, such person shall not be eligible for registration or prior permission for
next three years from the date of cancellation.
Reasons for cancellation are:
• Violating the Act or rules
• Providing false information
• Acting against public interest
• Violating the terms and condition
• No reasonable activity for two years
Transfer of FC fund to registered organization:
• Transfer of funds to another registered organization can be made without taking prior
approval.
• Such transfer is subject to the condition that such organization has not been
proceeded against under any provisions of the Act.
• The recipient organization shall reflect it on FC -6 return.
• Both the transferor and recipient shall be responsible for ensuring proper utilization of FC
fund and such transfer shall be reflected in form FC -6 by both.
Transfer of FC fund to Un registered organization:
❖ FCRA 2010 permissible to transfer of funds to other Un registered organization
which does not have any registration/permission under the Act.
❖ Such transfer can be made only with prior permission in compliance of section 7 and rule
24.
❖ Total amount of transfer to unregistered organization shall not exceed 10% of the total FC
receipt.
❖ Rule provides that an organization may apply in Form 10 for transfer of FC fund to
unregistered organization. Such transfer could be made to multiple recipients through one
prior approval.
Methods of Accounting:
FCRA 2010 and the rules thereof do not specify any method of accounting. Any method of
accounting may be followed but the receipt of FC fund should be reported on Cash basis only. The
new requirement of filing Income & Expenditure account shown that accrual basis of accounting
is also permissible. Rule 17 ( 7) provides that accounting statement shall be preserved for 6 years
Filing of Return
• Rule 17 provide that the Annual return accompanied by Income & Expenditure, Receipt &
Payment A/c and Balance sheet shall be Submitted by 31st Dec of the following year.
• Return shall be filed in Form FC-6
• Submission of Copy of bank statement certified by the Bank
• Nil return is required to be filed even if there are no Transactions/ Activities.
• All NGOs are required to file FC-7 if they receive Foreign contribution in Kind
Audit of Accounts:
Central govt. has a power to audit any premise at any reasonable time for the purpose of auditing
the prescribed books of accounts. A Gazetted officer or an officer holding Group A post can
undertake the audit under central Govt
Change of more than 50% of Board Members:
Any change in the board members in excess of 50% shall be made with prior permission. There
may be change of more than 50% in the board for reasons such as death or election by voting. In
such Cases the organization should inform Central Government and get retrospective approval.
Those organizations who had not taken permission even after such change has occurred should
apply for permission and condonation. The FCRA law shall apply to the board members which
were mentioned at the time of making application.
Administrative Expenses: should not exceed 50% of the total utilization of FC fund received in
that year. If it exceeds more than 50%, then the approval of the FCRA Department is required. It
includes:
• Salaries, wages, travel of Board / Trustees.
• Expenses towards hiring and travel of personnel for management of the activities
• Consumables
• cost of accounting for and administering funds;
• expenses towards running and maintenance of vehicles;
• cost of writing and filing reports;
• legal and professional charges; and
• Rent & repair of premises and other utilities:
• However, it excludes expenditure directly towards activity
Investment on FC fund: Surplus FC fund may be placed in Fixed deposit with the bank. All the
investments are in compliance with the section 11(5) of IT act. Investment in Speculative Activities
are not permissible. The interest earned on FC investment is considered as FC receipt. Interest
earned should be reported as FC receipt as subsequent recipient in the FC-6 form
OFFENCE & PENALTIES
• If Foreign contribution is not available for confiscation, then central Government may
impose on such person a fine not exceeding 5 times of the value of foreign contribution or
1000 Rs whichever is more. (Sec 36).
• Where no separate punishment is provided then person shall be punished with
imprisonment, may extend to 1 year or fine or both. (Sec 37)
• Central government may inspect any account or report maintained by any person covered
in act
• Seize such account or record if there is reasonable cause to believe with the violation of
any of provision of act
• Should return the seized accounts with in the maximum period of 6 months if there is no
proceedings are initiated
FORMs to be filed:
FORM FC-1 Intimation of central Government of Receipt of foreign contribution by way of gift
from relative
FORM FC-2 Application for seeking prior Permission of the Central Government to accept
foreign hospitality
FORM FC-3 Application for registration for the acceptance of foreign Contribution
FORM FC-4 Application for prior Permission for acceptance of foreign contribution
FORM FC-5 Application for seeking renewal of registration Certificate
FORM FC-6 Account of Foreign Contribution for the Year
FORM FC-7 Intimation about Foreign Contribution (Articles) account
FORM FC-8 Intimation about foreign Contribution (Securities) account
FORM FC-9 Intimation to Central Govt of receipt of foreign contribution received by a
candidate for election
FORM FC-10 Application for seeking permission for transfer of foreign contribution to other
registered / unregistered persons
Points for clarity
Who can receive foreign contribution?
Any “Person” can receive foreign contribution subject to following conditions:
a) It must have a definite cultural, economic, educational, religious or social programme.
b) It must obtain the FCRA registration / prior permission from the Central Government
c) It must not be prohibited under Section 3 of FCRA, 2010
Who cannot receive foreign contribution?
Following are prohibited to receive foreign contribution:
a) candidate for election;
b) correspondent, columnist, cartoonist, editor, owner, printer or publisher of a registered
newspaper;
c) Judge, Government servant or employee of any corporation or any other body controlled
or owned by the Government;
d) member of any legislature;
e) political party or office bearer thereof;
f) organization of a political nature as may be specified under sub-section (1) of Section 5 by
the Central Government.
g) Association or company engaged in the production or broadcast of audio news or audio-
visual news or current affairs programmes through any electronic mode, or any other
electronic form as defined in clause (r) of sub-section (1) of Section 2 of the Information
Technology Act, 2000 or any other mode of mass communication;
h) correspondent or columnist, cartoonist, editor, owner of the association or company
referred to in point (g).
(i) Individuals or associations who have been prohibited from receiving foreign contribution.
Can foreign contribution be received in rupees?
• Yes, Any donation, delivery or transfer received from a ‘foreign source’ whether in rupees
or in foreign currency is construed as ‘foreign contribution’ under FCRA, 2010.
• Such transactions even in rupees term are considered as foreign contribution.
Will interest or any other income earned from foreign contribution be considered foreign
contribution?
Yes. It will become part of F.C
Whether interest or any other income earned out of foreign contributions be shown as fresh
foreign contribution receipt during that year or not
No. The interest or any other income earned out of such deposit should be shown against Column
2(i)(b) in the annual return (Form FC-4) during the year in which it is earned. Such interest or
income would be considered as F.C
Whether donation given by Non-Resident Indians (NRIs) is treated as ‘foreign contribution
Contributions made by a citizen of India living in another country (i.e., Non-Resident Indian),
from his personal savings, through the normal banking channels, is not treated as foreign
contribution. However, while accepting any donations from such NRI, it is advisable to obtain
his passport details to ascertain that he/she is actually an Indian citizen.
Whether donation given by an individual of Indian origin and having foreign nationality is
treated as ‘foreign contribution’
Yes. Donation from an Indian origin person who has acquired foreign citizenship is treated as
foreign contribution
Power to Manage FC after Cancellation of Certificate
• After cancellation of registration certificate all the foreign contribution and assets thereof
shall vest with such authority as may be prescribed.
• The government authorities may take charge of the foreign contribution and the FC assets
till the registration is restored.
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