On the MHA page, a very useful link is the FAQs - http://mha1.nic.in/pdfs/ForeigD-ForeigD-FCRA_FAQs.pdf
A very good resource is available here for all FCRA related info.
(Initially copied from Asha Munich site and is kept updated based on new information)
Foreign Contribution Regulation Act (FCRA), 2010
This Document explains how to get FCRA from Ministry of Home Affairs (MHA), Government of India.
All organizations (Societies/NGO's in India) who want to receive contribution from foreign source MUST get permission from the Ministry of Home Affairs. Foreign source can be organization or individual in any country outside India (excluding NRIs).
- Organization outside India donating to ---> Organization in India ----> FCRA is MUST for organization in India.
- Individual outside India donating to ---> Organization in India ----> FCRA is MUST for organization in India.
- Organization outside India donating to --->Individual in India in rupees or foreign currency ----> FCRA not required. Individual receiving money in India has reporting requirements. (Fellowships - Please note)
- Individual (Indian Citizen) outside India donating to ---> Individual in India in rupees or foreign currency ----> FCRA not required. Individual receiving money in India has to show the money as income and pay taxes to government of India (if applicable).
- FCRA 2010 might have reporting requirements for the scenario above if the amount is more than Rs.25,000 unless given as a gift for personal use from a "foreign source". This applies to holders of PIO (Person of Indian Origin) and OCI (Overseas Citizen of India) cardholders too, even if the foreign national is a relative of the individual in India (amount limit is Rs. 1 lakh in this case). But this is not applicable if the foreign donor is an Indian Citizen (NRI).
What is "FCRA"?
Foreign Contribution Regulation Act (FCRA), 2010 (FCRA 1976 has since been repealed)
An Act to regulate the acceptance and utilization of foreign contribution or foreign hospitality by certain persons or associations, with a view to ensuring that parliamentary institutions, political associations and academic and other voluntary organizations as well as individuals working in the important areas of national life may function in a manner consistent with the values of a sovereign democratic republic, and for matters connected therewith or incidental thereto. (from MHA website)
More details are available at http://mha1.nic.in/fcra.htm
Types of FCRA permission
a) Prior Permission under section 6(1A) (or one time permission)
b) Permanent Permission under section 6(1)(a), (longer term registration - 5 years under FCRA 2010)
Organization in India can apply for full-time registration/permission only if the organization has history of utilizing prior permission towards it's stated goal. History means organization should get prior permission and use the funds over 3-4 years and prove to the MHA that funds received are spent for the purposes they were requested. The organization has to submit accounts (FC-6 form) within 9 months at the end of financial year to MHA. Failure to submit accounts might lead to NOT granting future permissions / cancellation of permanent registration number.
Pre-requisites for FCRA -
a) The organization be registered under the Societies Registration Act 1860 or the Indian Trusts Act 1882 or section 25 of the Companies Act 1956 etc.
b) Been in existence for 3 years and conducted nominal activity in their area using foreign contribution for at least Rs.10 lakhs (audited by a CA) (for full-time registration)
c) No foreigners in the 'Executive Committee' of the organization.
How to apply for FCRA:
Organization in India MUST submit the following documents to MHA
- Online application form for grant of prior permission in Form FC-4 (FC-3 for full-time FCRA)
- Signed Hard Copy of the form submitted online.
- Separate Bank Account for receipt and utilization of foreign funds (any bank in India). Submit details of the bank account with the application Note: Please do not deposit any local funds in the accounts other then the essential initial deposit specified by the bank for opening an account, in this account.
- Certified copy of registration certificate or Trust Deed.
- Details of activities of the organization during the last three years
- Copies of audited statement of accounts for the past three years.
Must include: Assets and Liabilities, Receipt and payment, Income and expenditure
Note :In case of Prior permission if the org is one year old then also they can apply for FCRA. (Three years audit report is not necessary if org is less then three years old)
- Commitment letter from foreign donor specifying the amount of foreign contribution.
(Funding agency make sure to issue the letter on letter head and properly signed - See Sample letter that can be sent from Asha for Education here - Login required)
- Copy of project proposal for which the contribution was solicited/is being offered
( Funding agency - please sign each page of project proposal for which organization is applying for the prior permission. Funding Agency to sign each page of project proposal for which organization is applying for the prior permission)
- If someone in the organization is 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.
(If organization is publishing any kind of newsletter, magazine etc. please get the certificate and submit it with application, failure to do so will delay your FCRA permission)
- Application fee (currently by Demand Draft)
Please make sure you (organization in India) submit all documents (listed above), clearly with all information in one mail. Please mention your address as clearly as possible in the application. A hard copy of the application needs to be sent AFTER the application has been made online WITHIN 30 days to the address below. If not, the application is assumed to be withdrawn. Further, the organization cannot start a new application for the next 6 months.
Where to post the application:
The Secretary to the Government of India,
Ministry of Home Affairs,
Foreigners Division (FCRA Wing), NDCC-II Building,
Jai Singh Road, New Delhi - 110001
If the organization has submitted application correctly as requested they should get acknowledgement and File Number (e.g. No. II/21022/94 (0525 -01) 2006 -FCRA ) from Ministry of Home Affairs.
After FCRA permissions:
There are a lot of responsibilities for the NGO even after they obtain the FCRA. Here are some of them -
(Useful link - http://www.fcraforngos.org/pdf/s&n-ls-v6-i2.pdf )
1. All the funds in the FCRA account need to be accounted for and reported periodically using the FC-6 form about the receipt and utilization of the funds in the FCRA account till ALL the foreign contributions have been fully utilized. A 'NIL' activity needs to be reported even if there is no new funds or utilization in a current financial year. The deadline for the filing is December 31st. The report should be accompanied by a CA audited financials of the FCRA account.
Failure to do so will make sure you will NOT be getting FCRA prior or permanent permission in future.
2. The FCRA under FCRA 2010 is valid only for 5 years. The organization must apply for renewal of the FCRA at least 6 months before the date of validity on their registration. Associations implementing an ongoing multi-year project should apply 12 months before the said date.
3. Note that any and all interest accrued on the funds in the FCRA account are considered to be foreign contributions and are subject to the same restrictions that the foreign funds are. The foreign funds cannot be used in Mutual funds or any similar speculative investments.
4. No amount from this foreign contribution can be transferred to another organization without the FCRA approval. At most 10% of received funds may be transferred after approval from the central government in form FC-10. Both the transferor and the recipient need to file form FC-6 to report utilization of these funds.
5. Permission needs to be obtained using a prescribed form on the MHA website to change the designated bank account used to receive the FCRA funds.
6. If more than 50% of the Executive Committee/Governing Council of the organization changes, the MHA needs to be intimated within 30 days. No foreign funds may be received until this change has been approved by the Government (for the purposes of FCRA)
If you are reading this paragraph, then you are unlucky one to be rejected by the Ministry of Home Affairs for FCRA
Reasons for Rejection :
a) If the application is not accompanied by the commitment letter of the donor.
b) If the application is not accompanied by the copy of project proposal for which foreign contribution was solicited/is being offered.
c) If the association has not filed its annual FC-6 returns, of receipt and utilization of foreign contribution received with prior permission, within the stipulated period.
Rejection for Permanent Registration :
a) If the association is not in existence for three years at least.
b) If the association has not carried on any activity in its chosen field during the last three years.
c) If the association has not received foreign contribution, with prior permission, during the preceding three years.
d) If the association has not made any substantial contribution, excluding expenditure on administration, (Rs.10,00,000 over a period of three years) in its field of interest.
Other reasons for rejection:
If the association is not registered under the Societies Registration Act, 1860 or the 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 organizations.
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 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 associations has come to adverse notice.
If the association’s Printed work is not certified 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 elections 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-6 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 rectified