FCRA Registration Rules And Regulation

FCRA – 2010 & Foreign Contribution Regulation Rule – 2011
Q. 1 What is foreign contribution?
Ans. Foreign contribution has been defined in Section 2(1)(h) of FCRA, 2010. However, foreign contribution excludes earnings from foreign client(s) by an association in lieu of goods sold or services rendered by it as this is a transaction of commercial nature.
Q. 2 Section 2(c)(i) of repealed FCRA, 1976 inter alia defined foreign contribution as the donation, delivery or transfer made by any foreign source of any article, not given to a person as a gift for personal use, if the market value, in India, of such article exceeds one thousand rupees. What limit has been prescribed in FCRA, 2000 in respect of such article?
Ans. Till any limit is fixed in the Rules, foreign contribution has to be understood without any limit.
Q. 3 What is a foreign source?
Ans. Foreign source, as defined in Section 2(1) (j) of FCRA, 2010 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, specify in this behalf;
(iii) a foreign company;
(iv) a corporation, not being a foreign company, incorporated in a foreign country or territory;
(v) a multi-national corporation referred to in sub-clause (iv) of clause (g);
(vi) a company within the meaning of the Companies Act, 1956, and 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) the Government of a foreign country or territory; (B) the 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;
(E) Foreign company;
(vii) a trade union in any foreign country or territory, whether or not registered in such foreign country or territory;
(viii) a foreign trust or a foreign foundation, by whatever name called, or such trust or foundation mainly financed by a foreign or territory;
(ix) a society, club or other association or individuals formed or registered outside India;
(x) a citizen of a foreign country;”
List of agencies of the United Nations, World Bank and some other International agencies/multilateral organisations, which are exempted from the definition of ‘foreign source’, are available on the website http://mha.nic.in/fcra/intro/FCRA-exemptedAgenciesUN.pdf
Q. 4 Whether donation given by Non-Resident Indians (NRIs) is treated as ‘foreign contribution’?
Ans. Contributions made by a citizen of India living in another country (i.e. Non-Resident Indian), from his personal savings, through the normal banking channels, is not treated as foreign contribution. However, while accepting any donations from such NRI, it is advisable to obtain his passport details to ascertain that he/she is an Indian passport holder.
Q. 5 Whether a Company incorporated in India under the Companies Act, 1956 having its operations in 2 or more countries is to be treated as an MNC under FCRA, 2010?
Ans. No. However, the definition of ‘foreign source’ under section 2(j)(vi) may be seen as explained above as answer to Question 3.
Q. 6 Whether foreigners can be appointed as Executive Committee members?
Ans. Organisations having foreign nationals as members of their executive committees or governing bodies are generally not permitted to receive foreign contribution. However, foreign nationals, fulfilling the following conditions, may be appointed as Executive Committee members, after obtaining prior permission of the Central Government:
(i) the foreigner is married to an Indian citizen;
(ii) the foreigner has been living and working in India for at least five years;
(iii) the foreigner has made available his/her specialized knowledge, especially in the medical and health related fields on a voluntary basis in India, in the past;
(iv) the foreigner is part of the Board of Trustees/Executive Committee in terms of the provisions in an inter-governmental agreement;
(v) the foreigner is part of the Board of Trustee/Executive Committee, in an ex-officio capacity representing a multilateral body which is exempted from the definition of foreign source. The need for such an appointment should, however, be adequately justified.
Q. 7 Whether Government servants, Judges and employees of a Government owned/controlled company/body can be on the executive committees/boards of an association?
Ans. Yes. The legal entity of a ‘person’ under FCRA, 2010 is distinct from am individual person. Therefore, individuals who cannot receive foreign contribution may happen to be on the executive committees/boards of such an association.
Q. 8 Who can receive foreign contribution?
Your browser may not support display of this image. Ans. A ‘person’, as defined in Section 2(1)(m) with the exclusion of those mentioned in Section 3 of FCRA, 2010, 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. Illustrative but not exhaustive lists of activities which are permissible and may be carried out by associations of different nature are available on the website http://mha.nic.in/fcra/intro/permitted_programs.htm It may also be noted that as per Explanation 3 of section 2(h) of FCRA, 2010, the following is not covered in the definition of foreign contribution:
“Any amount received, by any person from any foreign source in India, by way of fee (including fees charged by an educational institution in India from foreign student) or towards the cost in lieu of goods or services rendered by such person in the ordinary course of his business, trade or commerce whether within India or outside India or any contribution received from an agent of a foreign source towards such fee or cost shall be excluded from the definition of foreign contribution within the meaning of this clause.”
Q. 9 Who cannot receive foreign contribution?
Ans. As defined in Section 3(1) of FCRA, 2010, foreign contribution cannot be accepted by any :
(a) a candidate for election;
(b) correspondent, columnist, cartoonist, editor, owner, printer or publisher of a registered newspaper;
(c) Judge, government servant or employee of any Corporation or any other body controlled on owned by the Government;
(d) member of any legislature;
(e) political party or office bearer thereof;
(f) organization of a political nature as may be specified under sub- section (1) of Section 5 by the Central Government.
(g) association or company engaged in the production or broadcast of audio news or audio visuals or current affairs programmes through any electronic mode, or any other electronic form as defined in clause (r) of sub-
section (i) of Section 2 of the Information Technology Act, 2000 or any other mode of mass communication;
(h) correspondent or communist, cartoonist, editor, owner of the association or company referred to in clause (g).
Explanation – In clause (c) and section 6, the expression “corporation’
means a corporation owned or controlled by the Government and includes a
Government company as defined in section 617 of the Companies Act, 1956. (i) Individuals or associations who have been prohibited from receiving foreign contribution.
Q. 10 Whether foreign remittances received from a relative are to be treated as foreign contribution as per FCRA, 2010?
Ans. The position in this regard as given in Section 4(e) of FCRA, 2010 and Rule 6 of FCRR, 2011 are as under:
Subject to the provisions of section 10 of the FCRA, 2010, nothing contained in section 3 of the Act shall apply to the acceptance, by any person specified in that section, of any foreign contribution where such contribution is accepted by him from his relative. However, in terms of Rule 6 of FCRR, 2011, any person receiving foreign contribution in excess of one lakh rupees or equivalent thereto in a financial year from any of his relatives shall inform the Central Government in Form FC-1 within thirty days from the date of receipt of such contribution. Available on the website http://mha.nic.in/fcra/forms/fc-1.pdf
Q. 11 Can foreign contribution be received in and utilised from multiple Bank Accounts?
Ans. All foreign contribution should be received in the same single Bank Account mentioned in the order for registration or prior permission granted by MHA. This account number would be the same as has been intimated by the organisation in their application for registration/prior permission. One or more accounts in one or more scheduled banks may be opened for utilizing the foreign contribution provided that no funds other than foreign contribution shall be received or deposited in such account or accounts. Section 17 of the FCRA, 2010 may please be referred.
Q. 12 Can foreign contribution be mixed with local receipts?
Ans. No. Foreign contribution can not be deposited or utilised from the bank account being used for domestic funds.
Q. 13 Can foreign contribution be received in rupees?
Ans. Yes. Any amount received from ‘foreign source’ in rupees or foreign currency is construed as ‘foreign contribution’ under law. Such transactions even in rupees term are considered foreign contribution.
Q. 14 Will interest earned from foreign contribution be considered foreign contribution?
Ans. Yes.
Q. 15 What is the procedure for change of designated Bank Account?
Ans. For change of the bank account, an application in prescribed form mentioning the details of the old bank account and the proposed new bank account alongwith justification for change of designated bank, name/ address of the society, copy of registration under FCRA, copy of fresh resolution of the executive committee ( in English or Hindi) for change of designated back account, certificate from the proposed bank (copy of Bank Pass Book is not acceptable) that the account is being opened exclusively for FCRA, may be submitted to MHA. This form is available on website http://mha.nic.in/fcra/forms/chng_name_addr.pdf
Q. 16 What are the eligibility criteria for registration?
Ans. For grant of registration, the association should:
(i) be registered under the Societies Registration Act, 1860 or the Indian Trusts Act, 1882 or section 25 of the Companies Act, 1956; (ii) normally be in existence for at least three years and has undertaken
reasonable activity in its chosen field for the benefit of the society for which the foreign contribution is proposed to be utilised. For this purpose, the association should have spent at least Rs. 6,00,000 over last three years on its activities, excluding administrative expenditure. Statement of Income & Expenditure duly audited by Chartered Accountant for last three years may be enclosed to substantiate that it meets the financial parameter.
(iii) meet the following conditions:-
(a) The person making an application for registration or grant of prior permission under sub-section (1),- Sec.12 (4) (a)
(1) is not fictitious or benami;
(2) has not been prosecuted or convicted for indulging in activities aimed at conversion through inducement or force, either directly or indirectly, from one religious faith to another;
(3) has not been prosecuted or convicted for creating communal
tension or disharmony in any specified district or any other part of the country;
(4) has not been found guilty of diversion or mis-utilisation of its funds;
(5) is not engaged or likely to engage in propagation of sedition or advocate violent methods to achieve its ends;
(6) is not likely to use the foreign contribution for personal gains or divert it for undesirable purposes;
(7) has not contravened any of the provisions of this Act;
(8) has not been prohibited from accepting foreign contribution; (9) the person and/or any of its directors or office bearers has neither been convicted under any law for the time being in force nor any prosecution for any offence is pending against him.
(iv) the acceptance of foreign contribution by the association/ person is not likely to affect prejudicially –
(1) the sovereignty and integrity of India; or
(2) the security, strategic, scientific or economic interest of the State; or
(3) the public interest; or
(4) freedom or fairness of election to any Legislature; or
(5) friendly relation with any foreign State; or
(6) harmony between religious, racial, social, linguistic, regional groups, castes or communities.
(v) the acceptance of foreign contribution-
(1) shall not lead to incitement of an offence;
(2) shall not endanger the life or physical safety of any person.
Q. 17 What are the eligibility criteria for grant of prior permission?
Ans. An organisation in formative stage is not eligible for registration. Such organisation may apply for grant of prior permission under the law.
Prior permission is granted for receipt of specific amount from specific donor for carrying out specific activities/projects. For this purpose, the association should:
(i) be registered under the Societies Registration Act, 1860 or the Indian Trusts Act, 1882 or section 25 of the Companies Act, 1956; (ii) submit a specific commitment letter from the donor; and
(iii) submit copy of a reasonable project for the benefit of the society for which the foreign contribution is proposed to be utilised.
(iv) should meet all the conditions for the grant of registration.