FCRA Registration & Compliance

The Foreign Contribution Regulation Act (FCRA) is an Indian law that regulates the acceptance and utilization of foreign contributions or donations by individuals, associations, and organizations. The objective is to ensure that foreign donations do not affect the sovereignty, integrity, or public interest of India. It aims to monitor and control the inflow of foreign funds to prevent any unlawful or detrimental activities

Key Aspects of FCRA Registration and Compliance

Who Needs FCRA Registration?

Non-Governmental Organizations (NGOs), charitable organizations, trusts, societies, and other entities involved in public interest work are required to get FCRA registration if they wish to receive foreign funds.

Certain government bodies, political parties, or organizations involved in activities affecting the integrity and security of India are not eligible to receive foreign funds under FCRA.

FCRA Registration Process

EligibilityTo qualify for FCRA registration, an organization must be:

• Registered under the Indian Societies Registration Act, Indian Trusts Act, or other relevant Indian laws.
• Active for at least 3 years and should have a track record of at least 3 years in social, educational, or religious activities.
• The organization must have a bank account with an Indian bank to receive foreign contributions.
• It must comply with various legal and administrative norms like the submission of annual reports and audited accounts.

Application for Registration

The organization must apply for FCRA registration online through the FCRA Portal of the Ministry of Home Affairs (MHA).

The application must be submitted with documents such as the organization's registration details, bank account information, financial statements, and details of office bearers.

The registration process usually takes around 6 months, and the organization will be given a unique FCRA number upon approval.

FCRA Compliance Obligations

Utilization of Funds

Funds received under FCRA must be used only for the purpose for which they were received, and the organization should maintain proper records.

Foreign contributions cannot be used for political purposes, or activities that may be detrimental to India's sovereignty, integrity, and interests.

Annual Return Submission

Every organization registered under FCRA is required to file an Annual Return for the previous financial year (April to March) by 31st May every year.

The return should be filed electronically via the FCRA portal with audited financial statements (Balance Sheet, Income & Expenditure Account, etc.) and other supporting documents.

Failure to submit the return on time could lead to suspension or cancellation of FCRA registration.

Designated Bank Account

FCRA funds must be kept in a designated FCRA account at a scheduled bank in India. This is the only account through which foreign contributions can be routed.

Audited Accounts

The organization must maintain transparent financial records and get them audited by a certified Chartered Accountant.

The financial statements should clearly show how foreign funds have been utilized.

FCRA Violations

Violations of FCRA provisions, such as misuse of foreign funds or failing to comply with filing requirements, can result in penalties, suspension, or cancellation of FCRA registration.

Intimation of Changes

The organization must notify the Ministry of Home Affairs about any significant changes in the administration, objectives, or governance of the organization, as well as changes in the designated bank account.

Renewal of FCRA Registration

FCRA registration is typically valid for 5 years. At the end of the 5-year period, the organization needs to apply for renewal of its registration.

Renewal requires the organization to submit proof of compliance with FCRA regulations and may involve a review of financial records and past performance.

Suspension and Cancellation

The Ministry of Home Affairs can suspend or cancel FCRA registration for non-compliance or violations, including:

• Misuse of funds.
• Non-filing of annual returns.
• Violation of the legal or regulatory provisions under the FCRA.
• If the organization is found to be involved in activities detrimental to India's interests.

Penalties for Non-compliance

Organizations found guilty of non-compliance with FCRA may face penalties such as fines, suspension, or cancellation of registration. They may also be barred from receiving foreign contributions, and the offending individuals may face criminal charges.

Recent Changes in FCRA Regulations

The FCRA amendments of 2020 introduced several significant changes, including:

• Restriction on Foreign Contributions to Political Entities: Political parties and organizations cannot accept foreign contributions.
• Reduction of FCRA Registration Validity: The validity period of FCRA registration was reduced from 5 years to 3 years.
• Bank Account Requirements: A designated FCRA account must be opened at a specific branch of a scheduled bank.
• Severe Penalties: Stricter penalties for the misuse of foreign contributions, including criminal penalties.