FCRA

The Foreign Contribution (Regulation) Act, 2010 (FCRA) is an Indian law that regulates the receipt and utilization of foreign contributions by individuals, associations, and companies in India.

Key Provisions:

1. Registration: Entities receiving foreign contributions must register with the Central Government.

2. Permission: Prior permission is required for receiving foreign contributions.

3. Prohibited Activities: Foreign contributions cannot be used for activities detrimental to national interest, such as:

- Political activities

- Religious conversions

- Activities harmful to sovereignty and integrity

4. Reporting: Registered entities must submit annual returns and reports.

5. FCRA Bank account must be open in SBI Bank.

5. Audit: Accounts must be audited annually.

Eligible Entities:

1. Voluntary organizations

2. Charitable institutions

3. Educational institutions

4. Research institutions

5. Hospitals and healthcare organizations

Ineligible Entities:

1. Political parties

2. Government officials

3. Media organizations

4. Individuals (except with prior permission)

FCRA Registration Types:

1. Permanent Registration: For entities regularly receiving foreign contributions.

2. Prior Permission: For one-time or occasional foreign contributions.

Eligibility Criteria

Normal Registration

In order to be eligible for the normal registration, there are a few prerequisites:-

The applicant must be registered under the Societies Registration Act, 1860 or the Indian Trusts Act, 1882 or registered as Section 8 Company as per the Companies Act, 2013 or any such Act as may be required.

Must have made reasonable contributions by undertaking activities in its chosen field for the benefit of society.

Must have spent a minimum of Rs. 10,00,000 in the last 3 years towards achieving its objectives (Excludes administrative expenditure).

Must submit the copies of the financial statements of the last 3 years that are duly audited by qualified Chartered Accountants.

If a newly registered entity likes to get foreign contributions, then an approval for a specific purpose, specific activity, and from a specific source can be made to the Ministry of Home Affairs via the Prior Permission (PP) method.

Penalties for Non-Compliance:

1. Fine: Up to ?1 lakh (approximately $1,375 USD)

2. Imprisonment: Up to 3 years

3. Cancellation of registration

Amendments:

The FCRA has undergone several amendments, including:

1. FCRA Amendment Act, 2020: Strengthened regulatory provisions.

2. FCRA Rules, 2011: Clarified registration and reporting requirements.

Benefits:

1. Transparency and accountability in foreign funding.

2. Prevention of misuse of foreign contributions.

3. Protection of national interest.

Challenges:

1. Stringent regulations.

2. Difficulty in obtaining registration.

3. Complexity in reporting and compliance.

The FCRA aims to ensure that foreign contributions are utilized for legitimate purposes, promoting transparency and accountability in the non-profit sector.