FRCA Registration

Introduction

1. Foreign Contribution (Regulation) Act, 1976
2. Foreign Contribution (Regulation) Act, 2010 (FCRA)
3. Purpose – Acceptance and utilization of foreign contribution by certain associations or companies and to prohibit acceptance and utilization of foreign contribution for any activities to the personal interest
4. Interpretation of FCRA:

FCRA applies, inter-alia, to the following charitable institutions which are ‘persons’:

• Companies
• Societies registered under the Societies Registration Act
• Trusts

When is FCRA applicable?

1. FCRA is applicable to a charitable institution if
   • the contribution is to be received from “foreign source”; and
   • The contribution is “foreign contribution”.
2. Conditions for receipt of contributions

A charitable institution can receive such a contribution only if

• it has a definite cultural, economic, educational, religious or social program; and
• it has obtained from the Central Government-
  1. Certificate of registration; or
  2. Prior permission.

“Foreign source” includes-

• foreign company [as defined in section 2(1)(g) of FCRA];
• a company under Companies Act, 1956 with more than 50% of the nominal value of share capital held, singly or in the aggregate, by one or more of:
  1. governments of a foreign country or terribly;
  2. citizen of a foreign country or territories;
  3. foreign corporations;
  4. foreign trusts, societies or other associations of individuals;
  5. foreign companies.

Primary contribution

• There is a delivery, transfer or donation;
• Such delivery etc. is made by any foreign source
• Such delivery etc. is of-
  1. any article;
  2. any Indian currency;
  3. any foreign currency;
  4. any security as defined in section 2(h) of the Securities Contract (Regulation) Act, 1956 

Exclusion: an article given to a person as a gift for personal use if the market value of

such articles in India are not more than the prescribed sum on the date of such a gift.

Indirect contribution

Any contribution received from any person who has received it from any foreign source, either directly or through one or more persons.

Secondary contribution

• Any interest accrued on foreign contribution deposited in a bank; or
• Other income derived from the foreign contribution; or
• Interest thereon.

Excluded contribution

1. Receipt of fees in India (including fees charged from foreign student)
2. Receipt towards cost in lieu of goods or services rendered by the charitable institution in the ordinary course of its business, trade or commerce

Contribution received from an agent of a foreign source towards 1. or 2. above.

Registration with the Central Government

1. Online application in Form FC-3.
2. Some eligibility conditions / criteria:
   • The charitable institution has a satisfactory track record of at least 3 years.
   • registered under the Societies Registration Act, 1860 or the Indian Trusts Act, 1882 
   • It has a definite cultural, economic, educational, religious or social 
   • has undertaken reasonable activity in its chosen field for the benefit of the society for which the foreign contribution is proposed to be utilized
   • it has a reasonable project for the benefit of the society for which, a foreign contribution is proposed to be utilized
   • has spent at least the amount as per condition over the last 3 years on its activities, excluding administrative expenditure
3. It (or any of its office bearers) is not prosecuted or convicted for creating communal tension or disharmony, conversion, etc. ;
4. the acceptance of foreign contribution by the charitable institution is not likely to affect prejudicially – the sovereignty and integrity of India, religious harmony, etc.

The statutory time limit for registration: 90 days, extendable after communication.

Another bank account for utilization:

1. the other bank account is opened to utilize foreign contributions. 
2. no funds other than such foreign contributions can be transferred into such bank account (iii) intimation to be sent to the Central Government within fifteen days of the opening of such an account.

CA certificate

• Accounts to be audited by a Chartered Accountant.
• Certificate from Chartered Accountant required in the format given in Form FC-6.

Annual return

A charitable institution registered under FCRA is required to submit a report in Form FC-6 within 9 months of the closure of the financial year, i.e. by 31st December each year [rule 17(1) of FCR Rules].

  Validity of certificate

• Registration under FCRA, 2010: 5 years 
• Registration under FCRA, 1976: 5 years from 01.05.2011, that is, up to 30.04.2016