THE FOREIGN CONTRIBUTION
(REGULATION) ACT,2010
THE FOREIGN CONTRIBUTION
(REGULATION) ACT,2010
FCRA
2010 was passed by both the houses of parliament
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.
SCOPE OF FCRA

Extends to whole of India,

Every citizen of India outside India

Associate branches or subsidiaries outside India

Person
APPLICABILITY OF FCRA
An
individual
HUF
An
association
Company
registered u/s 8 of Companies Act 2013
IMPORTANT DEFINITIONS
Foreign
Contribution(defined below)
Foreign
company(defined below)
Foreign
Source(defined below)
Legislature
Political
party
FOREIGN CONTRIBUTION

Donation, delivery or transfer made by foreign
source (either directly or through one or more
persons) :
a. Any article
b. Any currency whether Indian or foreign
c. Any security including foreign security
FOREIGN COMPANY

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
The term foreign sources is given only an inclusive definition in FCRA
“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 REDEFINED
Under
Section 2(h) FC means transfer, delivery or
donation of any currency, article or security.
Except
Fees or commercial receipt.
Includes interest or
for assets
any other income from FC funds
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.

This clause is in conflict with section 2(15) of the
Income Tax Act.
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 organisations are not eligible for receiving
Foreign Contributions
DECLARATION OF AN ORGANIZATION TO BE OF
A POLITICAL NATURE
Having avowed
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
PROCEDURE TO NOTIFY AN ORGANIZATION TO
BE OF POLITICAL NATURE
The
Central Government may notify an organization as of political nature not
being a political party.
An
opportunity in writing shall be provided
The
organization may respond within a period of thirty days from the date of
the notice
Every
order shall be made within a period of one hundred and twenty days
from the date of issue of notice.
ORDER DECLARING AN ORGANISATION OF
POLITICAL NATURE TO BE LAID BEFORE
PARLIAMENT

An order notifying an organisation as political
nature become effective after it is laid before
both houses of Parliament
PANCHAYAT DEFINED

Panchayat have been defined as a “legislature “
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

RESTRICTION ON SPECULATIVE BUSINESS &
SPECULATIVE ACTIVITY

Section 8 of FCRA 2010 provides that FC funds cannot
be used for speculative business.

Rule 4 prohibits investment in speculative activities.
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 OR PRIOR
PERMISSION

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
APPLICATION FOR REGISTRATION

Application for Registration is required to be made U/s 11 of FCRA
2010

All new registration have to be made in form FC -3

Application to be made online for registration along with a
fee of Rs. 2000 /- (for prior permission along with a fee of
Rs.1000/-)

All application should be made electronically followed by hard
copies within 30days of the electronic submission otherwise the
application will become void.
TIME LIMIT FOR PROCESSING AN APPLICATION FOR
REGISTRATION

Application has to be processed within 90 days . FCRA
department shall also provide reasons for rejections.
TIME LIMIT FOR SUBMITTING REAPPLICATION

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

Hard copy of the online application

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
APPLICATION FOR PRIOR PERMISSION

Application for Registration is required to be made U/s 11 of
FCRA 2010

All new prior permission registration has to be made in form FC -4

All application should be made electronically followed by hard
copies within 30days of the electronical submission otherwise the
application will become void.
APPLICATION FOR PRIOR PERMISSION

Application to be made online for prior
permission along with a fee of Rs. 1,000/-
TIME LIMIT FOR PROCESSING AN APPLICATION FOR
REGISTRATION

Application has to be processed within 90 days. FCRA
department shall also provide reasons for rejections.
Time limit for submitting reapplication

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
No Deemed approval

There is no provision which allows deemed approval in case
of prior permission under FCRA 2010.
Utilization for specific purpose

The FC fund received through prior permission should be
utilized only for the purpose for which the prior permission
has been granted
DOCUMENTS TO BE SUBMITTED WITH APPLICATION
FOR PRIOR PERMISSION

Hard copy of the online application

Certified copy of registration certificate

Commitment letter from foreign donor specifying the amount of
foreign contribution

Copy of project report for which foreign contribution is being
offered.
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
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.
FOREIGN GIFTS

Gift from Relatives exempted still to be reported in FC-1 excess
of Rs. 1 lakh.

Earlier FC up to Rs. 1,000 was exempted now there is no such
lower limit
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
REPORT BY BANK IN CASE OF RECEIPT OVER RS 1
CRORE

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
Maintain separate books of Accounts

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.
Display of Financial Information if receipts exceeds Rs1 crore

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.
Reapplication for registration after cancellation
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 organisation
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
recipient 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
PRESERVATION OF ACCOUNTING RECORDS

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

Administrative Expenditure 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
ADMINISTRATIVE EXPENSES
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
INTEREST EARNED ON INVESTMENT

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
Creation of Fixed Assets
 Any asset purchased out of FC fund should be recorded as FC
asset
 FC asset will continue to remain an FC asset irrespective of
time factor or closure of the project
Sale of fixed assets

Sale proceed of FC asset should be shown as foreign receipt

The sale proceed of FC asset should be deposited in
designated bank account
INCOME FROM FC ASSET
All income generated from all FC assets should be consider as a
part of
FC contribution and should be reflected in FC -6 as subsequent
recipient. Some examples income from FC assets are :

Income from FC projects

Income from FC vehicles

Income from FC machine & Equipments (Photo copier machine,
projector, Laptop etc.)

Income from building , Training centers
CUSTODY AND MANAGEMENT OF FC & ASSET IN CASE OF
CANCELLATION OF REGISTRATION

The central government determines the manner in which the asset shall be
disposed off.

Central Government reserve the right to utilize the fund during the
cancellation period.

Central Government shall return all the assets and fund if the FC registration
is restored.
DISPOSAL OF ASSETS

Any person , permitted for acceptance of foreign contribution under
this act , ceases to exist or has become defunct , all the assets of
above said person will be disposed off in accordance of relevant
provisions of act .

Central government in the absence of applicable act will act with
regard to the nature of assets created out of foreign contribution .
SECTION 3
OFFENCE & PENALTIES & FORMS

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)
COMPOUNDING OF OFFENCES

Any offence not being an offence punishable with imprisonment
only be compounded .

Once an offence is compounded the same person cannot avail
the benefit of compounding if such offence is committed again
within three years.
INSPECTION AND SEIZURE

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
MISCELLANEOUS

Power to call for information or documents

Investigation powers are same as that of an officer in-charge at
police station

CBI or any other agency investigating cases under the act to
furnish quarterly return on progress on all cases.

No suit / other legal proceeding against any of the govt.
agencies or their officers for acting in good faith in the
pursuance of act.

Certain administrative powers to make rules
CONTD..

Procedure for laying of rules in parliament.

Power to exempt organizations from of all or any provision of
this act .

Not to apply to transactions between Government of India &
foreign governments.

Not to apply Government Bodies.
CONTD..

Certain administrative powers to make rules.

Procedure for laying of rules in parliament.

Power to exempt organizations from of all or any provision of
this act .

Not to apply to transactions between Government of India &
foreign governments.
FORMS TO BE FILED
FORM FC-1
Intimation of central Government of
Receipt of foreign contribution by way of
gift from relative.
FORMFC-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.
FORMFC-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
account
FORMFC-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.
( Securities)