FOREIGN CONTRIBUTION (REGULATION) ACT, 1976
INTRODUCTION
Foreign Contribution (Regulation) Act, 1976 (FCRA) was enacted in the year 1976 with the prime objective of regulating the acceptance and utilization of foreign contribution and foreign hospitality by persons and associations working in the important areas of national life. The focus of this Act is to ensure that the foreign contribution and foreign hospitality is not utilized to affect or influence
electoral politics, public servants, judges and other people working the important areas of national life like journalists, printers and publishers of newspapers, etc. The Act also seeks to regulate flow
of foreign funds to voluntary organizations with objective of preventing any possible diversion of such funds towards activities detrimental to the national interest and to ensure that such individuals and organizations may function in a manner consistent with the values of sovereign democratic republic.
The organizations seeking foreign contributions for definite
cultural, social, economic, educational or religious programmes may either obtain registration or prior permission to receive foreign contribution from Ministry of Home Affairs by making application in the prescribed format and furnishing details of the activities and audited accounts. The registration is granted only to such association, which has proven track record of functioning in the chosen field
of work during last three years, and after registration, such organization is free to receive foreign contribution from any foreign source for stated objectives. Registration is granted only after thorough security vetting of the activities and antecedents of the organization and office
bearers thereof. However, such organizations
which are newly established and do not have proven track record of functioning may also receive foreign contribution for specific
activities, for a specific
purpose and from a specific
source after seeking project based prior permission (PP) from the Ministry of Home Affairs.
In order to bring in transparency in the administration of the Foreign Contribution (Regulation) Act, 1976 and the Rules framed there under, improve the functioning, disseminate the information and enhance user friendliness of the various procedures the web-site is uploaded with all the FCRA forms, Citizens’ Charter, list of registered associations, State-wise status of application for registration/ prior permission, etc. In our efforts to bring in further improvements in the system, the following additional charters/ materials are uploaded for information and guidance of all concerned:
• Charter for NGO/Associations
applying for grant of Prior permission/
Registration under the FCRA.
• Charter for NGOs/Associations granted Prior permission/Registration under the FCRA.
• Charter for the Chartered Accountants.
• Charter for the Banks.
• Dealing offcers
Citizens Charter
Receipt of Foreign Contribution
The provisions of the Foreign Contribution (Regulation) Act, 1976 regulate the receipt of foreign contribution in the country. The Foreign
Contribution (Regulation) Rules 1976 contain the various forms prescribed for this purpose.
What is Foreign Contribution
Foreign contribution means the donation, delivery or transfer, made by any foreign source of any,
- Article, not given to a person as a gifit
,
for personal use, if the market value, in India, of such article exceeds one thousand rupees;
- Currency, whether Indian or foreign; or,
- Foreign security as defined
in clause 2(i) of the Foreign Exchange Regulation Act, 1973.
NOTE: Contributions made by a citizen of India living in another country, from his personal savings, through the normal banking channels, is not treated as foreign contribution. It is advisable to obtain the passport details of the concerned citizen of India before accepting such contributions.
What is a Foreign Source
Foreign source means the government of any foreign country or territory or its agency; international agency; a foreign company; citizen of a foreign country. For more details see section 2(1)(e) of the Foreign Contribution (Regulation) Act, 1976.
Who cannot Receive Foreign Contribution
Foreign contribution cannot be accepted by a candidate for election; correspondent, columnist, cartoonist, editor, owner, printer or publisher of a registered newspaper; judge, government servant or employee of any corporation; member of any legislature; political party or office
bearer thereof.
Who can Receive Foreign Contribution
An association having a definite
cultural, economic, educational, religious or social programme can receive foreign contribution after it obtains the prior permission of the Central Government, or gets itself registered with the Central Government.
Forms Prescribed for this Purpose
An application for seeking prior permission to accept foreign contribution is to be made in Form FC – 1A and for grant of registration in Form FC – 8 respectively.
Designated Bank Account
An association granted prior permission or registration under the Act can receive the foreign contribution and subsequently utilise it using a single designated bank account, as intimated in the application form. Do not deposit any local funds in this bank account.
Maintenance of Accounts
An association granted prior permission or registration under the Act must maintain a separate set of accounts and records exclusively for the foreign contribution received and utilised in the prescribed manner. For more details see rule 8 of the Foreign Contribution (Regulation) Rules, 1976.
Receipt of Scholarships etc
A citizen of India receiving any scholarship, stipend or any payment of a like nature from any foreign source is required to give, within thirty days of such a receipt, an intimation to the Central Government as to the amount of the scholarship, stipend or other payment received; the foreign source from which and the purpose for which, such scholarship, stipend or other payment has been, or is being received. The intimation is to be given in Form FC – 5.
Time Taken to Dispose Application
An application for registration is normally disposed within six months. An application seeking prior permission is disposed within 90/120 days. It is advisable to obtain a certificate
, in the format incorporated at the end of the application form, from any of the competent authority mentioned therein viz., Any concerned Collector of District; Department of the State Government; Ministry / Department of the Government of India.
Where should the Application be Sent
An application (one copy only) for seeking prior permission or registration is to be sent by registered post to the Secretary, Ministry of Home Affairs, Foreigners Division, Jaisalmer House, 26 Man Singh Road, New Delhi 110011.
Proper Filing of Application
Please familiarise yourself with the provisions of the Foreign Contribution (Regulation) Act, 1976 and the Foreign Contribution (Regulation) Rules, 1976 before making an application. Please fill
the relevant application form with due care. Ensure that you furnish information exactly in the manner stated in the form. An incomplete application will be summarily rejected.
Filing of Returns
An association permitted to accept foreign contribution is required to submit an annual return, duly certifed by a Chartered Accountant, giving details of the receipt and purpose-wise utilization of the foreign contribution. The return is to be filed
for every year (1st April to 31st March) within a period of four months from the closure of the year i.e. by 31st July of each year. The return is to be submitted, in duplicate, in Form FC–3. It is to be accompanied with the balance sheet and statement of receipt and payment, duly certifed by a Chartered Accountant, also in duplicate.
Availability of Forms
Please use the correct and current form. The forms can be obtained, free of cost, from the above-mentioned address. The forms are also available on the Ministry of Home Affairs’ web site – http://mha.nic.in/fore.htm
Penalties for Violation
Whoever accepts, or assists any person, political party or organisation in accepting any foreign contribution or any currency from a foreign source, in contravention of the provisions of the Foreign Contribution (Regulation) Act, 1976, or the rules made thereunder, shall be punished with imprisonment for a term, which may extend to five
years, or with fne or with both. “All the above services & commitments will be honoured without the citizens having to pay any bribe.”
Charter for Ngos/Associations Applying For Grant of Prior Permission /Registration under the Foreign Contribution (Regulation) Act, 1976.
• Any NGO wishing to receive Foreign
Contribution (FC) must have a definite
cultural, economic, educational, religious
or social programme.
• It shall neither receive nor utilise any
FC without obtaining either prior
permission or registration from the
Central Government.
• Details of FC received prior to obtaining
either prior permission or registration
should be mentioned clearly at the time
of applying for prior permission or
registration, as the case may be.
• An application for seeking prior
permission to accept foreign
contribution is to be made in Form
FC– 1A, and for grant of registration in
Form FC–8, respectively. The forms can
be downloaded from Ministry of Home
Affairs Web Site at http:// mha.nic.in/
fcra.htm
• The application should be complete in
all respects and no column should be
lefit
blank.
• Each Prior permission application
should be sent for receiving a specific
amount, for a specific
purpose and
from a specific
donor. The donor’s
commitment letter specifying the
amount of FC and copy of project for
which FC is solicited should invariably
be sent along with the FC-1A form.
• Copies of following documents are
required to be sent along with FC-1A
and FC-8 form.
- Copy of certificate
of registration issued under the Societies Registration Act, 1860 or Trust deed,
as the case may be;
- Details of activities during the last three years;
- Copies of audited statement of
accounts for the past three years (Asset and Liabilities, Receipt and Payment, Income and Expenditure);
- If any printed work is brought
out by the association, a certificate
from the Press Registrar that the publication is not a newspaper in
terms of section 1(1) of the Press Registration of Books Act, 1867.
Charter for Ngos / Associations Granted Prior Permission or Registration Under the Foreign Contribution (Regulation) Act, 1976.
• An association granted prior permission
or registration under the Foreign
Contribution (Regulation) Act, 1976
(FCRA) should receive the FC and
subsequently utilise it using an exclusive
designated bank account, as intimated
in the application form. Do not deposit
any local funds in this bank account.
• An association granted prior permission
or registration under FCRA is required
to carry out the activities, for which FC
is received, in India only and the amount
should not be utilised for purposes other
than for which it is received.
• Any fixed
asset acquired out of the FC
and any article received in kind from the
foreign source should be in the name of
the association and not in the name of
any individual in the association.
• Not more than 30% of the FC shall be
defrayed to meet administrative expenses
of the association.
• An association granted prior permission
or registration under FCRA should maintain a separate set of accounts and records, exclusively for foreign contribution received and utilised.
i. In Form FC-6, where the FC relates only to articles;
ii. In the cash book and ledger account on double entry basis, where the FC relates to currency received and utilised.
iii. In Form FC-7, where the FC relates to foreign securities.
• Every account giving details of the receipt
and purpose-wise utilisation of the FC,
including the interest earned on the FC
amount, should be maintained on an
yearly basis, commencing on the 1st day
of April each year and every such yearly
account, duly certifed by a hartered
accountant in Form FC-3 along with a
balance sheet and statement of receipt
and payment should be furnished in
duplicate, within four months of the
closure of the year i.e. before 31st July.
Even if no FC is received during a year,
a ‘Nil’ return is required to be filed
with
the Ministry of Home Affairs within the
prescribed time limit.
• No FC should be transferred to an
association, which has not obtained
either prior permission or registration
under FCRA or to any person or
association, prohibited under FCRA
from receiving any FC.
• Change of name, address, registration,
nature of activities or aims and objectives
of an association should be intimated to
the Ministry of Home Affairs within 30
days of effecting the change, alongwith
the documentary evidence effecting the
change.
• Prior permission of Ministry of Home
Affairs should be obtained for replacing
50% or more of the office
bearers.
• Prior permission of Ministry of Home
Affairs should be obtained for changing
bank account for valid and convincing
reasons.
• The forms can be downloaded from
Ministry of Home Affairs Web Site at http//mha.nic.in/fcra.htm.
Charter for the Chartered Accountants
Since the FCRA Act, 1976 is national security legislation; NGOs are required to exercise extreme care and caution in dealing with foreign contribution from the time of its receipt to its final
utilization. As the Chartered Accountants (CA’s) audit the accounts of the NGOs and they certify the accounts before being submitted to the FCRA division, CA’s are required to provide meaningful guidance to the NGOs.
• To verify whether the associations are
eligible to receive foreign contribution
• To guide the applicant organization to
apply to the Home Ministry for necessary
registration / prior permission;
• To assist in the proper maintenance of
prescribed books of accounts;
• To furnish the required certificate
in the
prescribed format after careful scrutiny
of the accounts of the NGO;
• Before certifying the accounts of an
association in FC-3 returns, the CA
concerned must ensure that they have
been prepared in accordance with the
provisions of FC(R) Act, 1976 and
Rules framed thereunder.
Charter for the Banks
• No bank should credit any foreign
contribution to the account of an
association/NGO unless it produces
documentary evidence of having
obtained registration/prior permission
from the Central Government for the
same.
• In case any foreign contribution
is credited to the account of an
NGO/ Association/Trust directly,
the bank should not allow utilization
of such fund and inform the NGO/
Association/ Trust concerned to obtain
necessary permission/registration from
the Central Government for the same.
Simultaneously, the bank should inform
the Deputy Secretary (FCRA), Ministry
of Home Affairs, Govt. of India, New
Delhi about such receipt.
• Non-compliance of the above by the
bank will constitute a violation and will
render the defaulting bank liable for
appropriate action by the Reserve Bank
of India.
Checklist for Ensuring Proper Submission of Applications, Under the Provisions of the Foreign Contribution (Regulation) Act, 1976, for Acceptance of Foreign Contribution
Eligible Category
An association with a definite
cultural, economic, educational, religious or social programme.
Types of Permission
(i) Registration under section 6(1)(a); and,
(ii) Prior permission under section 6 (1A).
Application Form
(i) For grant of registration in form FC– 8 and,
(ii) For grant of prior permission in form FC-1A.
Essential Requirements
(A) Bank Account
Open a separate bank account for the receipt and utilisation of foreign contribution in a bank of your choice and furnish particulars of the same at the appropriate place.
Note: Do not deposit any local funds, other than the essential initial deposit specified
by the bank for opening an account, in this account.
(B) Documents
Remember to enclose copies of the following documents with your application –
- Certifed copy of registration certificate
or Trust deed, as the case may be;
- Details of activities during the last three
years;
- Copies of audited statement of
accounts for the past three years (Asset
and Liabilities, Receipt and Payment,
Income and Expenditure);
- Commitment letter from foreign donor
specifying the amount of foreign
contribution (only with prior permission
application);
- Copy of project for which foreign
contribution was solicited is being
offered (only with prior permission
application);
- If functioning as editor, owner, printer
or publisher of a publication registered
under the Press and Registration of
Books Act, 1867, a certificate
from the
Press Registrar that the publication is
not a newspaper in terms of section
1(1) of the said Act.
Miscellaneous
Furnish information exactly in the manner asked for in the form, especially the names and addresses of the members of the Executive Committee/Governing Council etc. The forms can be downloaded from Ministry of Home Affairs Web Site at http:/ /mha.nic.in/fcra/ intro/forms.htm
Chartered Accountants / Banks
Chartered Accountants, before certifying the accounts of an association in form FC – 3, must ensure that they have been prepared in accordance with the provisions of the Foreign Contribution (Regulation) Act, 1976 and the Rules framed thereunder.
No bank should credit any foreign contribution to the account of an association/ organisation unless it produces documentary proof of having obtained registration/prior permission from the Central Government for the same. Crediting of foreign contribution by a bank to the account of an association / organisation that has not obtained registration or prior permission from the Central Government constitutes a violation and will render the defaulting bank liable for action by the Reserve Bank of India.
Common Ground for Rejection of Application Under FCRA
To remove certain lacunae noticed during administration of the FCRA and the Rules made there under, certain guidelines were laid down for considering applications for grant of prior permission /registration under the Act. Some of the common grounds for rejection of applications are enlisted below as illustrations to bring in transparency and benefit
the applicants in taking due care and caution:
• If the association is not registered under
the Societies Registration Act, 1860 or
Indian Trusts Act, 1882 or section 25 of
the Companies Act, 1956.
• If any of the office
bearers/trustees,
including the chief functionary is a
foreign national, other than of Indian
origin.
• If the association has a single office
bearer/member.
• If the association is found to have been
formed for personal gain or for diversion
of the funds for undesirable purposes.
• If the association is found to be fictitious
or ‘benami’ in nature.
• If the credibility of any member of the
governing body is in doubt.
• If the association has close links with
another association which has been
refused registration under FCRA or
prohibited under FCRA or violated the
provisions of FCRA.
• If the association has links with any
banned organization.
• If the principal office
bearers of the
association have been convicted by
any court of law under any act or if a
prosecution for any offence is pending
against them.
• If the principal office
bearers of the
association have been found guilty of
diversion or misutilisation of funds
of the said association or any other
association in the past.
• If the activities of the association are
found to be aimed at conversion through
inducement or force, either directly or
indirectly, from one religious faith to
another.
• If the association is found to be
propagate sedition or to advocate violent
methods to achieve its ends.
• If the association is found to be creating
communal tensions or disharmony.
• If the office
bearers of the association
are also office
bearers of another
association and one of these association
has come to adverse notice.
• If the association’s printed work is not
certifed by the Press registrar of India
not to be a newspaper in terms of
section 1(1) of the Press Registration of
Books Act, 1867.
• If the source of foreign contribution is
found to be adverse to the interests of
the country.
• If the acceptance of foreign contribution
by the association is likely to be prejudicial
to (a) the sovereignty and integrity of
India; (b) free and fair election to any
Legislature or House of Parliament; (c)
public interest; (d) friendly relations with
a foreign state; or (e) harmony between
any religious, social, linguistic, regional
groups, caste or community.
• If the association has not filed
its annual
FC-3 returns, of receipt and utilization
of foreign contribution received with
prior permission, within the stipulated
period.
• If the association has violated any
provisions of the Act or Rules in the
preceding three years and the said
violation has not been remedied or
rectifed.
Additional Grounds for Rejection of Applications for Registration
• If the association is not in existence for
three years at least.
• If the association has not carried on any
activity in chosen field
during the last
three years.
• If the association has not received foreign
contribution with prior permission,
during the preceding three years.
• If the association has not made any
substantial contribution, excluding
expenditure on administration,
(Rs.6,00,000 over a period of three years
or Rs.2,00,000 per year) in its field
of
interest.
Additional Grounds for Rejection of Applications for Prior Permission
• If the application is not accompanied by
the ‘commitment letter’ of the donor.
• If the application is not accompanied
by the copy of project for which foreign
contribution was solicited/is being
offered.
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