FCRA

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FCRA

  1. 1. Brief Overview of Foreign Contribution (Regulation) Act Presented by: CA. Gaurav Sangtani Partner, Shekhar Chandra & Co., Rishikesh +91-9897271555 | Contact@GauravSangtani.com
  2. 2. Introduction • FCRA – To curb the use of foreign funds for anti- national purposes. • FCRA – An internal security legislation. • FCRA – Not Regulated by RBI. • FCRA – Regulated by Ministry of Home Affairs, Government of India.
  3. 3. Registration • Any Organization having a definite -  Cultural  Social  Educational  Religious  Economic object
  4. 4. shall accept Foreign Contribution ONLY after satisfying two conditions : 1. It must registers itself with the Central Government. 2. It must agrees to receive foreign contribution only through one specific bank account.
  5. 5. Foreign Contribution Foreign Contribution means the donation, delivery or transfer made by any Foreign Source; (i) of any article, not being on article given to a person as a gift for his personal use, if the market value in India, of such article, on the date of such gift, exceed one thousand rupees, ii) of any currency, whether Indian or foreign, iii) of any foreign security as defined in clause (i) of section 2 of the Foreign Exchange Regulation Act, 1973 (46 of 1973)
  6. 6. Explanation: A donation, delivery or transfer of any article, currency or foreign security referred to in this clause by any person who has received it from any foreign source, either directly or through one or more persons, shall also be deemed to be foreign contribution within the meaning of this clause.
  7. 7. Foreign Source “ 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 specialised 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,
  8. 8. Foreign Source iii) a foreign company within the meaning of Section 591 of the Companies Act, 1956 (1 of 1956), and also includes- (a) a company which is a subsidiary of a foreign company, and (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,
  9. 9. Foreign Source 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,
  10. 10. Foreign Source 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,
  11. 11. Foreign Source 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 ;
  12. 12. Eligible Organization • Society under Society Registration Act, 1860 • Company under section 25 of companies Act, 1956 • Trust registered under the Bombay Public Trust Act, 1950 • A Public Trust under general law.
  13. 13. Every association so registered shall give An Intimation to the Central Government within prescribed time As to the Amount of each foreign contribution received Source and the Manner from which such foreign contribution was received Purposes and Manner for which such foreign contribution was utilised
  14. 14. Specification of bank branch • Open a Bank Account for FC Only. • Account opened with Indian Bank before Applying for Registration. • Mention this Bank Account in Registration Application • Only this account used for receiving FC
  15. 15. • Account used exclusively for crediting foreign contribution only. • Under no circumstance domestic contribution should be mixed in this account. • This foreign contribution does not mean in foreign currency or exchange, and therefore an organisation may receive foreign contribution in Indian currency.
  16. 16. • Bank account can be changed if reasons are relevant and justifiable, but with prior permission from Central Government. • Interest earned from foreign funds and investments should also be considered as foreign contribution. • Sale proceed from FC asset should be deposited in the designated bank account.
  17. 17. Check List of the Documents to be Filled for Registration
  18. 18. 1. Form FC-8 duly filled up in triplicate. (Online Now) 2. Audited statement of accounts of past three years. 3. Annual Report specifying activities of past 5 years. 4. Detail of the beneficiaries and detail of the socio-economic factors of the region in which the NGO is working.
  19. 19. 5. List and geographical detail of the state, and districts proposed for work. 6. Certified copy of the Registration Certificate. 7. Certified copy of the Bye-laws and Memorandum and Article of Association whichever is applicable. 8. Copy of certificates of exemption or registration issued by the Income Tax Department u/s. 80G and 12A. 9. Copy of any prior permission granted to the organization.
  20. 20. 10. Copy of resolution of Governing Body of the organisation, authorising the registration under FCRA. 11. Copy of Power of Attorney or the resolution of Governing Body by which the Chief Functionary is authorized to submit FC-8. 12. List of present members organization. 13. Copy of any Journal or other publication of the organisation.
  21. 21. 14.If the association is having any parent or sister or subsidiary organisation, which is registered under the FCRA then the registration number along with Ministry of Home Affairs file number should be mentioned. 15.If the association has submitted any application earlier then its reference number should be mentioned.
  22. 22. www.MHA.NIC.in/FCRAweb/Register.aspx
  23. 23. Time limit for making application for Registration
  24. 24. • No specific time limit has been provided under FCRA for making an application, – unlike Income Tax Act an organisation to apply within one year from its creation or registration under section 12A. • Normally FCRA is granted after 3 years of active existence, therefore, the application should be made after three years. *
  25. 25. Field Enquiry
  26. 26. • Report/Certificate from Local DM (District Magistrate) is sought by MoH, certifying:  The address and the field of activities in which the organisation is working.  No adverse antecedents of the organisation,  The proposed activities will be beneficial to the people living in that area  The detail of prior permission if taken earlier. • Intelligence Bureau may be asked for report. • May visit Project Area, Office • Inspect the records and books of accounts
  27. 27. Time limit for granting registration
  28. 28. • There is no time limit mentioned under the FCRA either for granting or rejecting the application. * • Normally, the application is expected to be processed within a period of six months. • But it is found that applications for registration are delayed for even two to three years.
  29. 29. Whether registration under Income Tax Act necessary The FCRA does not specify registration under Income Tax Act as a pre-condition for getting registration under the FCRA
  30. 30. Undertaking by the Chief Functionary
  31. 31. Amended FC-8 requires: Chief Functionary to give undertaking to: Inform within 30days regarding change of name, address, objects, etc. with evidence. Not to accept any foreign contribution without prior permission, if more that 50% of the office bearers as were mentioned in the application for registration are changed or replaced.* Not to change the bank account or branch of the bank without prior permission. Not to accept foreign contribution before the registration is granted or with prior permission only.
  32. 32. Appellate Remedies
  33. 33. If an application is rejected and the applicant believes that an unjust order was passed against him, then he can appeal to High Court within a period of sixty days from the date of the order of rejection. * The period of sixty days should be counted from the date of the order and not the date of receipt of the order.
  34. 34. Prior Permission
  35. 35. Prior permission is given on •case-to-case basis and •separate permission would be necessary for any subsequent receipt and separate transactions. Procedure for Prior Permission: - Apply in Form FC-1A for prior approval to the FCRA department along with the required documents.
  36. 36. Time limit for granting prior permission: • Time limit of 90 days for disposal of application • Department may avail a further period of 30 days to dispose Deemed Permission: •If permission not granted/rejected within time limit •Prior permission is deemed to be granted.
  37. 37. Books of Accounts
  38. 38. Maintenance of Accounts: For FC in kind – In Form FC-6 For FC in currency – In Cash Book and Ledger on double entry basis. For FC in Foreign Securities – In Form FC-7 Accounts maintained on yearly basis Year starting on 1st April Balance Sheet and Statement of receipt and payments In Form FC-3 Duly certified by Chartered Accountant To be furnished in duplicate Within four months of closure of the year
  39. 39. FCRA 2010 Major Changes
  40. 40. -Indian Company with more than 50% equity held by foreigners, excluded from Foreign Source. -Any Fee or cost against business, trade or commerce shall not be considered as foreign contribution. -Transfer to non FC organization can be made with prior approval. -FCRA registration shall be renewed every 5 years. - Time limit of 90 days for disposal of Application for registration and prior approval.
  41. 41. -Central Government may specify donors or countries from which FC could not be received or shall be received with prior permission only. -Power to cancel registration for ‘No Reasonable Activity for 2 years’. -After Cancellation of registration certificate all the foreign contribution and assets shall vest with such authority as may be prescribed. -Multiple bank accounts can be opened for the purposes of utilisation provided only one bank is maintained

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