FCRA REGISTRATION

What is FCRA?

·                    Foreign Contribution Regulation Act (FCRA)

·                     It regulates the foreign contribution (money donation) and foreign hospitality (e.g. free airplane tickets and hotel lodging during videsh-yaatra) given to various NGOs, institutes, judges, journalists, public servants etc.

What is the need of FCRA Act?

·                    To check that foreigners are not affecting India’s electoral politics, public servants, judges, journalists, NGOs etc. for wrong purposes.

·                    If someone violates the FCRA act, he can be sent to jail for up to 5 years.

Who can accept Foreign Contribution?

·                    Organizations working for definite cultural, social, economic, educational or religious programs.

·                    But first, they’ve get permission from the Ministry of Home Affairs AND

·                    Second, they have to maintain separate account book listing the donation received from foreigners and get it audited by a Chartered Accountant and submit it to Home Ministry every year.

Who cannot accept Foreign Contribution?

1.                 Election candidate.

2.                 MP and MLAs.

3.                 Newspaper-walla: Correspondent, columnist, cartoonist, editor, owner, printer or publishers of a registered Newspaper.

4.                 Public Servents: Judge, government servant or employee of any Corporation or any other body controlled on owned by the Government.

Why is FCRN Act in news?

·                    Earlier Mohan said that “US based NGOs are financing the protests @KundanKullam Nuke Power Plant.”

·                    So Home ministry got in action, bank accounts of some NGOs were frozen after it was found that they were diverting money received from their donors abroad into funding protests at the Koodankulam plant.

·                    Now, Home ministry has cancelled some more registrations including top 8 national educational institutions such as –Jawaharlal Nehru University, IIT-Kanpur and Jamia Milia Islamia saying that these institutes are not maintaining proper FCRA accounts.

·                    so, Unless their registrations are restored, these institutions cannot receive contributions from abroad.

Controversy

·                    The Home Ministry had earlier made a notification that if xyz organization’s accounts are audited by CAG then it doesnot need to maintain FCRA accounts.

·                    Jamia Milia,  JNU etc. = Central Universities = hence audited by CAG = They don’t need to maintain FCRA accounts in the first place.

Mock Questions

Q1. Which of the following statements are correct?

1.                 Finance Ministry is responsible for implementing Foreign Contribution Regulation Act (FCRA)

2.                 Kundankullam Power plant is located in Andhra Pradesh.

3.                 A Lok Sabha election candidate can accept foreign donations for campaign after taking necessary approval from Chief Election Commissioner.

Q2. Write a note on the Salient Features of Foreign Contribution Regulation Act (FCRA). 12 marks.

NGO Receiving Donation from Outside India:

There are certain restrictions for NGOs to receive donation from outside India. The source of money is the important determination in applying Foreign Contribution Regulation Act (FCRA) of 1976 on the recipient NGO. Any foreigner or organization, which is not controlled by Indians, is a 'foreign source’. Some organizations such as World Bank and UN Agencies are not called 'foreign source'.

NGO need to have either prior permission or registration under FCRA.

In order to receive contribution in any kind or currency from foreign sources NGO needs the approval from Indian government which is called prior permission or they have to register under FCRA (foreign contribution regulation act) . Foreign source includes:

i. The Government of any foreign country or territory and any agency of such Government.

ii. Any international agency, not being the United Nations or any of its specialized agencies, the World Bank, International Monetary Fund or such other agency as the Central Government may, by notification in the official Gazette, specify in this behalf.

iii. A foreign company within the meaning of the section 591 of the Companies Act, 1956 (1 of 1956), and also includes-

a. A company which is a subsidiary of a foreign company. 
b. A multi- national corporation within the meaning of this Act.

iv. A corporation, not being a foreign company, incorporated in a foreign country or territory.

v. A multi-national corporation within the meaning of this Act.

vi. A company within the meaning of the Companies Act, 1956 (1 of 1956), if more than one-half of the nominal value of its share capital is held, either singly or in the aggregate, by one or more of the following, namely:

a. Government of a foreign country or territory.
b. Citizens of a foreign country or territory.
c. Corporations incorporated in a foreign country or territory.
d. Trusts, societies or other associations of individuals (whether incorporated or not), formed or registered in a foreign country or territory.

vii. A trade union in any foreign country or territory, whether or not registered in such foreign country or territory.

viii. A foreign trust by whatever name called, or a foreign foundation which is either in the nature of trust or is mainly financed by a foreign country or territory.

ix. A society, club or other association of individuals formed or registered outside India.

x. A citizen of a foreign country, but does not include any foreign institution, which has been permitted by the Central Government by notification in the Official Gazette, to carry on its activities in India.

Any organization, which has a 'definite cultural, economic, educational, religious or social program', is covered by FCRA. For practical purposes, this definition covers all NGOs and also the unregistered societies like Mahila Mandals. NGO with FCRA registration or prior permission should not give FCRA funds to NGOs which do not have FCRA registration or prior-permission. NRI donations to an Indian NGO may be Indian funds or FC funds. If the NRI holds an Indian passport, then the donation will be Indian funds. If not, then these will be FC funds. The type of bank account or currency does not matter.

i. If you are holding Indian Passport, you are free to donate to any NGO registered in India. Your donation will not be treated as of foreign source.

ii. If you are a non-resident Indian, not holding Indian Passport, you can donate to NGOs that registered under FCRA. Your donation will be treated as of foreign source.

If you wish to donate an NGO that is not registered under FCRA, you may give a letter of intention to donate a specified amount for a specific purpose/program of the NGO to the Central Government of India and the NGO.

NGO need to apply for prior permission, under FCRA act, by attaching your letter of intention. Once prior permission is received by the NGO, then that NGO is eligible to accept your donation.

iii. If you are a citizen of any country other than India, the norms as stated above in point (ii) will apply.

Nonprofit NGO organization should have a FCRA certificate to receive foreign currency funds. Any type of NGO should apply to the Central government for prior permission to receive foreign currency from outside India towards their foreign fundraising. When you deal with FCRA, you should also know about the documents during and after the process of FCRA. There are several penalties and punishable offenses, if you misuse foreign contribution, or if you import foreign funds without prior permission with Central government of India.

The important point which you should keep in mind before foreign fundraising or any type of foreign contribution from outside India.

A. You should maintain a separate bank account for foreign contribution, you should not mix your local bank transactions or any local currency dealings, with such FCRA bank account. Bankers may guide you more.

B. Up to date you should maintain accounts in separate books and account to avoid penalties, punishments, and imprisonments related to FCRA and foreign contribution activities.

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Fcra Registration

NGOs planning to get funds and donations from other nations need to initially registered under the provisions of Foreign Contribution Regulation Act, 1976. Either permanent registration or prior authorization for a particular contribution can be looked for from the FCRA Section of Ministry of Home Affairs. A signed up NGO having existence for at least 3 years can be registered under this arrangement.

The NGOs can not take foreign contribution straight. For this function they need to be registered under the Foreign Contribution Regulation Act 1976, frequently called the FCRA.

There can be 2 types of contribution from the foreign source, i.e. one time or anticipated more than as soon as as well as routinely. For any one time contribution the NGOs can get the amount by seeking prior approval of the FCRA Area of the Ministry of House Affairs, Government of India; whereas for multiple and regular contributions of the foreign source it is a good idea to look for long-term registration from the stated Ministry.

For this purpose an application is to be made by the NGO, which need to be in working for at least three years after its due registration, to the Secretary to the Government of India, ministry of House Affairs, 26 Mansingh Road, New Delhi âEUR" 110003 in the prescribed Form FC-8 in addition to the wanted enclosures (Certification of Registration, Memorandum and Rules or the Depend on Deed or other evidence of registration, audited monetary statement and activity report of the least 3 years, and if possible letter of the potential benefactor.

The Ministry sends the accepted application to neighborhood intelligence individuals for verification of the credentials and records of the organization. On their favorable opinions, the FCRA Section of the Ministry problems the Certification of Registration to the applicant organization.

It is important to get foreign contribution only in one designated savings account. For that reason, the applicant organization ought to open a fresh savings account with the intention to run it for such funds and discuss it in the application. The said Ministry will directly notify the worried bank to keep watch on the use of the foreign contribution and report back to the Ministry in case of any discrepancy.

The companies signed up under the FCRA need to preserve separate accounts incurred under the FC head and submit a return in the recommended format to the Ministry along with the audited statement of accounts of the previous year by 31 July every year.

The organizations registered under the FCRA, ought to notify to the Ministry about any change in name of the organization, its Registered Office and aims and items within 30 days of the suitable change. Likewise, prior consent will be required from the said the Ministry for any modification in the designated bank or replacement of majority of members of the governing body at the time of its registration under the FCRA.

The management should be well aware of numerous provisions of the FCRA and ought to strictly follow the same otherwise they could deal with a variety of strenuous penalties under the Act.

Foreign Contribution Regulation Act (FCRA) was enacted in the year 1976 and just recently, modified in the year 2010 with the prime goal of controling the acceptance and usage of foreign contribution and foreign hospitality by associations and individuals working in the vital areas of national interest. The focus of this Act is to guarantee that the foreign contribution and foreign hospitality is not made use of to impact electoral politics, public servants, judges and other individuals working in to the essential areas of national interest viz reporters, printers and publishers of newspapers, and so on