A presentation made to comprehend the compliances applicable to NGOs under the Foreign Contribution (Regulation) Act, 2010 {FCRA} and the nuances to be considered.

1. ATMA Network Webinar Series
Registration and Compliances under the
Foreign Contribution (Regulation) Act, 2010 [FCRA]
Presented by:- Sunil Goel & Associates, CAs
Mr. Suhel Goel, FCA
&
Mr. Dhaval Kodilkar, ACA
www.sunilgoel.com
Private & Confidential
Wednesday, March 27, 2019
New Delhi | Noida | Gurgaon | Mumbai - India

2. 2
Objective
 To introduce and explicate compliances and reporting
requirements along with their timelines under the Foreign
Contribution (Regulation) Act, 2010 (FCRA).
 To understand the eligibility for the Registration and Prior
Permission.
 To elucidate on the associated compliances and regulations.
 To understand the recent developments made under the
Act.

3. 3
Why Foreign Funding ?
 Non-governmental organizations (NGOs) play a crucial role
in influencing change in the society and also in up-liftment
of the weaker sections. NGO’s in India operate in almost all
major sectors of the country, such as, health, education,
rural development, food security, etc.
 However, NGOs often function around a blurry line when it
comes to acquiring funding especially from the domestic
donors. This necessitates them to look beyond the
domestic frontiers of the country and raise funds through
foreign sources.
 This foreign funding of NGO’s is regulated by the Foreign
Contribution (Regulation) Act, 2010 i.e FCRA.

4. 4
AGENDA
4
Introduction
Key Definitions
Registration/Prior Permission
Renewal
Compliances - Returns
Do’s and Don'ts
Stringent Actions by MHA
Q&A’s Session

5. 5
Introduction

6. 6
Introduction
1969
o Home Minister raised the issue of regulation of foreign funding into India.
o The intention was to prevent the onslaught that would follow due to
foreign funding, which would have had an influence on the functioning of
the Government, Political Parties and Other Institutions in India.
1976-2009
o Foreign Contribution (Regulation) Act, 1976 was enacted and continued to
function for several years until short comings were noticed.
o Certain Amendments were carried out in the aforesaid Act from time to
time.
o However, a complete overhaul of the provisions was recommended
towards the mid-2000’s and accordingly a Bill was proposed in the
parliament for this purpose in the year 2006.

7. 7
Introduction
2010 - till date
o FCRA, 2010 was enacted with an aim to-
 Regulate the acceptance and utilization of foreign contribution or
foreign hospitality
 Prohibit any activities detrimental to the national interest and for
matters connected therewith
 With a view to streamline the functioning and digitize the filing
various amendments were proposed vide the Foreign Contribution
(Regulation) Amendment Rules, 2015.

8. 8
Key Definitions

9. 9
KEY DEFINITIONS - Foreign Contribution
Included
o Donation, Delivery or Transfer made by a foreign source of any -
 Article
 Currency whether Indian or Foreign
 Security
 Income Generated from Foreign Contribution.
Excluded
o Fee (including fees charged by an educational institution in India from a
foreign student)
o Amount towards cost in lieu of goods or services.

10. 10
KEY DEFINITIONS - Foreign Source
o The government of any foreign country or territory and any agency of such
Government;
o 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, specify in this
behalf;
o A foreign company
o A corporation, not being a foreign company, incorporated in a foreign
country or territory;
o A multi-national corporation referred to in sub-clause (iv) of clause (g);

11. 11
KEY DEFINITION - Foreign Source
(Amendment vide Finance Act, 2016)
A company within the meaning of the Companies Act, 1956 (1 of 1956), and
where 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:-
o The Government of a foreign country or territory;
o The citizens of a foreign country or territory;
o Corporations incorporated in a foreign country or territory;
o Trusts, societies or other associations of individuals (whether incorporated
or not), formed or registered in a foreign country or territory;
o Foreign company:
 [Provided that where the nominal value of share capital is within
the limits specified for foreign investment under the Foreign
Exchange Management Act, 1999, or the rules or regulations made
there under, then, notwithstanding the nominal value of share
capital of a company being more than one-half of such value at the
time of making the contribution, such company shall not be a
foreign source.]
o A trade union in any foreign country or territory, whether or not registered
in such foreign country or territory;
o A foreign trust or a foreign foundation, by whatever name called, or such
trust or foundation mainly financed by a foreign country or territory;
o A society, club or other association of individuals formed or registered
outside India;
o A citizen of a foreign country;

12. 12
Registration/Prior Permission

13. 13
REGISTRATION/ PRIOR PERMISSION
Registration
NO
YES
Simpler Prior
Permission Route
Closer Scrutiny &
3 Year Accounts/
Activity Report
Required
In existence
for 3 years?
YES
NO
Multiple Receipt
/ Donations
One time
Receipt /
Donations
Foreign
Contribution
more than
Rs. 50 Lakhs

14. 14
REGISTRATION
Conditions
The application for registration can only be made
by associations having definite cultural, economic,
educational, religious or social programme.
Registered Organisation
- Submit Registration Certificate
- Memorandum & Articles of Association/Trust
Deed
Activity Report & Audited Accounts
- Submit copy of activity report for the last 3 years.
- Submit audited statement of accounts for the last
3 years. Should normally have spent at least Rs
10,00,000/- over the last three years on its activities

15. 15
PRIOR PERMISSION
Registered
- Submit Registration Certificate
- Submit Memorandum & Articles of Association/Trust Deed
Commitment Letter
- Submit a specific commitment letter from the donor and
agreement indicating the amount of foreign contribution
and the purpose for which it is proposed to be utilized.
Project Plan
- Submit copy of a reasonable project plan for the benefit of
the public, for which the foreign contribution will be
received.
Proposed Foreign Contribution of more than Rs. 50,00,000
- Enclose Audited statements of accounts for the last 3 years
from the date of submission of application.
- Enclose Activity Report for the last 3 years from the date of
submission of application.

16. 16
Renewal

17. • Registration Certificate renewal due after
every five years from the date of registration /
earlier renewal.
• An application to renew should be made six
months before the expiry of the certificate of
registration.
• The registration certificate of Association under
the statute of incorporation.
• Charter Documents – Memorandum & Articles
of Association/ Trust Deed
• Copy of FCRA Registration Certificate which is
being sought to be renewed.
17
RENEWAL OF REGISTRATION
RENEWAL DOCUMENTS

18. 18
Compliances - Returns

19. 19
COMPLIANCES - RETURNS
Particulars FC Form Time Limit
Intimation of receipt of foreign contribution by way of : -
- Gift from Relative (if exceeds Rs. One Lakh in FY
- Articles / Securities
- Receipt of FC by candidate for Election
FC – 1
Part A
Part B
Part C
Within 30 days of receipt
Within 30 days of receipt
Within 45 days of being nominated.
Application for prior permission to accept Foreign Hospitality FC – 2 2 weeks before the proposed onward journey.
Application for FCRA Registration FC – 3A
No time limit as such. FCRA Office to grant the
Registration or communicate the discrepancies
within 90 days.
Application for Prior Permission FC – 3B
No time limit as such. FCRA Office to grant the
prior permission or communicate the
discrepancies within 90 days.
Application for Renewal of Registration FC – 3C 6 months before expiry of the FCRA Certificate
Annual Return of Foreign Contribution FC – 4
Within 9 months from the closure of the FY
(normally 31st December)
Application for seeking permission for transfer of foreign
contribution to other un-registered persons
FC – 5 Before transferring such contribution
Intimation of Quarterly Receipt of FC by Associations Online
Within 15 days following the last day of the
quarter in which FC has been received.

20. 20
COMPLIANCES - RETURNS
Particulars FC Form Time Limit
Intimation for Change of Association Name/ Address within the
state for which registration / prior permission has been granted
FC – 6 A Within 15 days from the date of change.
Intimation for Change in its nature, aims and objects and
registration with local and relevant authorities.
FC – 6 B Within 15 days from the date of change
Intimation of change in designated FC bank and/or branch of
the bank and/or designated Foreign contribution account
number
FC – 6 C Within 15 days from the date of change
Intimation of change in the bank or branch of the bank for the
purpose of utilizing the foreign contribution after it has been
received in case of organizations granted registration/prior
permission under FCRA. (Opening of additional FC-utilization
account )
FC – 6 D Within 15 days from the date of change
Intimation of Change in Key Members of the association if at any
point such change causes replacement of 50% or more of the
original key members as reported in the application for grant of
registration/prior permission/ renewal of registration under the
Act.
FC – 6 E Within 15 days from the date of change

21. 21
Do’s & Don'ts

22. 22
DO’S & DON'TS - Do’s
o Do have a definite cultural, economic, educational, religious or social
programme. Have undertaken reasonable activity in its chosen field for the
benefit of the society for which the foreign contribution is proposed to be
utilized
o Do maintain a separate set of accounts and records, exclusively, for the
foreign contribution received and utilized and for which the registration is
sought (Sec 19).
o Do use the FC funds for the very specific purpose it has been received for.
(Sec 8)
o Do receive the foreign contribution in a single bank account only and
through such branches as specified in your FCRA application. The utilization
can be done through more than one intimated bank and or its branches.
(Sec 17).
o Do file the returns/intimations required under the act within the stipulated
time (Sec 18).
o Do preserve the accounts and records of the foreign contribution for a
period of 6 years.

23. 23
DO’S & DON'TS - Don’ts
o Don’t intermingle domestic funds with foreign contribution.
o Don’t transfer FC funds to other organizations who are not registered under
FCRA without permission. (Sec 7)
o Don’t invest FC funds in Mutual funds, shares, speculative instruments.
(Sec 8)
o Don’t use more than 50% of foreign contribution, received in a particular
financial year towards administrative expenses.
o Provided further that administrative expenses exceeding 50% of such
contribution may be defrayed with prior permission of the Central
Government. (Sec 8)
o Don’t hide amount, source and manner in which the foreign
contribution/remittance was received.

24. 24
Stringent Actions by MHA

25. 25
STRINGENT ACTIONS BY MHA

26. 26
Violation of Filing Returns
o The Infosys Foundation, Skoda Auto India, University of Rajasthan, Madras
Christian College, Shree Siddhivinayak Ganapati Temple Trust, Mumbai,
Loyola College Society, Vijayawada, Guru Harkrishan Education Society,
Chandigarh and Allahabad Agricultural Institute are among 1,775 entities
which have been served show cause notice by the home ministry for their
“failure” to submit annual income and expenditure statement on foreign
funding for up to six years.
o In its show cause notice, the home ministry said the entities or associations
have not submitted online their income & expenditure statement, receipts
& payment account, balance sheet for up to six consecutive financial year
2011-12 to 2016-17 despite repeated notices served on them.
o The ministry warned that if the entities and organizations fail to submit the
returns for the said period by December 1, 2018, “appropriate action” will
be taken under the Foreign Contribution (Regulation) Act.
o The home ministry said after scrutiny of records for the years 2011-12 to
2016-17, it has been observed that the annual report/accounts for some of
the financial years in the aforesaid period have not been found uploaded
on the FCRA portal online by the said associations despite the fact that one
final opportunity of one month was provided to all such associations to
submit the missing annual reports without paying any penalty on May 12,
2017.

27. 27
Relief for 12 NGO’s after compliance with
government directive:
o Giving relief to 12 NGOs whose foreign funding license was suspended in
December 2018 after they failed to open an account in banks integrated
with the Public Financial Management System (PFMS), the Union home
ministry has revoked such suspension after the said entities complied with
government directions and opened their accounts in PFMS-linked banks.
o The list of NGOs/associations whose suspension of FCRA registration stands
revoked with immediate effect includes Rambhau Mhalgi Prabodhini,
Banjara (ST) Development Society, Christ Church Hostel Unit, Zila Yuvak
Kalyan Kosh Samiti, Shree Gurudev Avadhut Ashram, Gram Kalyan Sewa
Samiti, Gramotharan Parishad, Rural Voluntary Services, Suchetana,
Yashwantrao Chavan Pratishthan, Nehru Yuva Samajik Samarasata Sewa
Samiti and Gram Vikas Yuva Trust.
o As per Section 17 of the Foreign Contributions (Regulation) Act, 2010, all
associations registered or having sought prior permission under the Act
must open their accounts in one or more banks that have integrated their
system with PFMS. A notice to this effect was issued on December 21,
2017, with the home ministry asking such an exercise to be completed
within one month of publication of the notice.

28. Source: Hindustan Times, Nov 19,2018, 21:43PM IST 28
Violation of Filing Returns
o Another notice was served on April 24, 2018 to these associations advising
them to submit annual report/accounts of the missing years electronically
online immediately. However, the said associations have failed to submit
annual report/accounts of the missing years electronically online till date
despite notices, the ministry said.
o “Therefore, the said associations are hereby directed to explain within a period of
15 days from the date of issue of this show cause notice as to why appropriate
action under the FCRA may not be initiated against them,” it said.

29. Source: Economic Times, Mar 10,2019, 01:08PM IST. 29
NGO crackdown has foreign fund inflows plunging
40% since Modi Government era:
o The Modi governments crackdown on foreign funding of non-profit
organizations has resulted in a massive 40 percent decline in fund flows
from external sources for social uplift in the four years to 2017-18, finds
and industry report.
o Over 13,000 non-government organizations have been acted against by the
Union home ministry by cancelling their licences, according to a report by a
foreign consultancy Bain & Co.
o The report has also found that as many as 4,800 NGOs lost their licenses in
2017 alone.
o Several of these NGOs which lost licenses are engaged in rights-based
advocacy, and the crackdown has led to an outcry from civil society
organizations who termed it as an abuse of legal procedures.
o There were also many other big names from the world of charities being
targeted. Ford Foundation and Amnesty International among others being
the most notable names.
o The Bain report says compliance with the rules can result in increase in the
social sector wallet size.

30. Registration and Compliances
Foreign Contribution (Regulation) Act, 2010 [FCRA]
Presented by:- Sunil Goel & Associates, Cas
Please Email your queries to
info@sunilgoel.com
&
Dhaval.Kodilkar@sunilgoel.com
New Delhi | Noida | Gurgaon | Mumbai - India
QUESTIONS & ANSWERS
SESSION

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