FCRA or the Foreign Contribution Regulation Act was enacted in 1976. This has currently been replaced with the Foreign Contribution Regulation Act, 2010. The Act relates to the receipt of foreign money by organisations, formed for benefit of the society in general or for charitable purposes. This money received from foreign sources is termed by the Act as Foreign Contribution.
In the recent past, news articles have appeared about several organisations whose FCRA registrations were cancelled, for non-compliance of the Act or for violating the provisions of the Act. Listed below is information relating to the basics of the Act which you may find useful in case your registration has been cancelled or in case you wish to understand the rules and regulations of FCRA better.
Which organisations does the FCRA Act seek to cover?
The Act defines person as:
- An individual,
- A Hindu Undivided Family,
- An Association, or
- A company registered under Section 8 of the Companies Act, 2013
If you notice carefully, private limited companies, partnership firms and other business entities are left out from the definition of persons by FCRA.
However, this does not mean that private limited companies and partnership firms cannot obtain FCRA approval.
In case such persons are carrying out a social, religious, cultural, economic or educational programme, for the benefit of society, the Act seeks to cover foreign receipts, for such people.
Who cannot receive foreign contribution?
The following persons cannot receive foreign contribution:
- Candidate for election,
- Correspondent, columnist, cartoonist, editor, owner, printer or publisher of a registered newspaper,
- Judge, Government servant or employee of any corporation or any other body controlled or owned by the Government,
- Member of any legislature,
- Political party or office bearer thereof,
- Organization of a political nature as may be specified under sub-section (1) of Section 5 by the Central Government,
- Association or company engaged in the production or broadcast of audio news or audio visual news or current affairs programmes through any electronic mode, or any other electronic form as defined in clause (r) of sub-section (1) of Section 2 of the Information Technology Act, 2000 or any other mode of mass communication,
- Correspondent or columnist, cartoonist, editor, owner of the association or company referred to above in point 7,
- Individuals or associations who have been prohibited from receiving foreign contribution.
Will donations from Non Resident Indians (NRI) also be considered as foreign contribution?
No. Receipts from Indian Citizens, through the normal banking channels, will not be treated as foreign contribution.
Will donations from Persons of Indian Origin or Indians having foreign citizenship be treated as foreign contribution?
Yes. Contribution from Indians having foreign citizenship or having PIO/ OCI card, shall be treated as foreign contribution.
What does the organisation have to do in case it wishes to receive funds from abroad, for social or cultural or similar activities conducted by it?
In case an organisation wishes to receive foreign funds, it shall have to obtain a FCRA registration to carry out its activities. Another alternative is to obtain an approval from the Ministry specifically for receipt of the funds.
What is the validity of the FCRA registration/ approval?
FCRA registration is valid for a period of 5 years from the date of approval.
FCRA approval on a case to case basis is valid only for receipt and utilisation of the foreign funds, for the purpose for which it was approved.
Can any transfers be made from the FCRA account, once funds are received?
Transfers can be made from one utilisation account to another. That is, interbank transfers are allowed between the bank accounts mentioned on the application. However, such funds cannot be transferred to another bank account.
Feel free to discuss any query you may have below. Thanks for reading!
 is a complex issue, but compliance has to be ensured by all organisations. Know more here.){kind=link}