Prominent organizations that work for social causes need consistent funds to fuel their social campaigns. To serve this purpose, they often receive overseas funds via different modes, including wire transfers. This lays the ground for the illicit trade as well since most of these transactions remain undercover and seek minimal approval. The Foreign Contribution Regulation Act, 2010 targets this severe loophole through various regulations. The said legislation mandates registered charitable avenues and trusts to secure FCRA registration. This write-up shall brief the legalities around FCRA registration for Trust and other allied establishments.
Role of Foreign Contribution Regulation Act, 2010
The advent of digitization and the evolution of information technology have completely revolutionized how we connect. Every day millions of transactions take place at a brisk pace in and out of every nation. Cross border transactions have become a commonality today.
The increasing number of transactions has made it difficult for the government to keep track of foreign currency. This is where Foreign Contribution Regulation Act, 2010 comes into the picture. The said legislation aims at curbing the cross-border transaction that occurs in the form of donations.
Underlying objectives of FCRA 2010
Government enacts the Foreign Contribution Regulation Act, 2010 with the following objectives in mind:
- Keeps the tap on foreign contribution or foreign hospitality coming from certain companies or individuals?
- Prohibit the acceptance and utilization of overseas contribution for any undertakings which is against the nation’s interest or matters related thereto.
Eligibility Criteria norms around FCRA Registration for Trust and other establishments
The following section discusses the eligibility criteria norms around FCRA registration for Trust and other establishments
Following are the legal prerequisites to qualify for normal registration under FCRA 2010:
- The applicant must be registered under one of the following legislations
- Societies Registration Act, 1860
- Indian Trusts Act, 1882
- Section 8 Company as per the Companies Act, 2013
- Applicant must have made enough contribution by pursuing undertakings in its selected field for society’s benefit.
- Applicant must have invested a minimum of ten lakh rupees in the last three years for goals’ fulfilment (Excludes expenditure relating to administration)
- Applicant must have a copy of financial statements of the last three years audited by practising CA
- If a new establishment seeks to procure foreign contributions, then a request for consent for a specific purpose, activity and from a source can be made to the MHA, i.e. Ministry of Home Affairs, through the Prior Permission (PP) method.
Prior Permission Registration
The Prior Permission route is ideal for the newly registered entities seeking to receive foreign contributions.
This is issued to receive a particular sum from a specific donor for performing specific undertakings/projects. The association must:
- have registered under the Companies Act, 2013 or the Indian Trusts Act, 1882, or Societies Registration Act, 1860 or any such Act as may be required
- furnish a declaration from the donor to the MHA, i.e. Ministry of Home Affairs, which reflects:-
- Contributions’ sum provided
- Purpose of such contribution
Where the Indian recipient company and overseas donor entity have common members, the given norms need to be met:
- The Chief Functionary of the India-based entity can be a part of the donor entity.
- At least 51 per cent of the members of the governing body of the recipient entity should not be members/employees of the overseas donor entity.
Where the foreign donor acting as an individual:
- He cannot serve the position of Chief Functionary of the Indian entity.
- At least 51 per cent of members of the organization’s governing body should not be the donor’s family members.
Application Procedure for obtaining FCRA registration for Trust
To apply for FCRA registration for trust, make sure they follow the given steps:
- Visit FCRA portal
- Click on form FC – 3A or Form FC – 3B based on the requirement. Note: Form FC – 3A refers to an application for FCRA Registration, and Form FC – 3B serves as the application for FCRA Prior Permission
- On the next window, tap on the option called “Apply Online”. Create your login credential here.
- After account creation, login to the account.
- Head over to the dropdown menu called “I am applying for” and select the FCRA Registration.
- Next, opt for “Apply Online” followed by “Proceed Registration.”
- Click the FC-3 menu located in the title bar to initiate the e-based registration procedure.
- In the e-form, the applicant needs to fill out the following details;
- Darpan ID (not mandatory)
- Association Address
- Registration Number
- Registration Date
- Nature of the Association
- The main object of the association
9. Tap on the Submit tab once you are done with the above requirement.
10. Next, head over to the menu bar and select “Executive Committee”. This is a form that needs to be filled in accordingly.
The option called “Add details of Key Functionary” shall enable the applicant to add/delete/edit the said form.
11. Once done, tap on the Save” button.
12. Further, fill up the bank related details such as IFSC code, bank name, account number, and bank address.
13. Next, upload the necessary documents in the standard format and fill place and date.
14. Next, tap on the submission button to proceed further.
The next step is fee submission. Visit the payment window for this purpose.
Note: The Form becomes non-editable after the form submission. Henceforth, double-check the steps you have taken to avoid difficulties.
Validity of FCRA registration for Trust
FCRA registration comes with a standard validity of five years, and it must be renewed within six months of the expiration date.
Having FCRA registration in place means that an establishment is committed to fair practices for transacting funds or donations from abroad. It helps build Trust among foreign contributors and keeps illicit transactions out of the equation. FCRA registration for Trust is a fundamental legal requirement for securing overseas donations.
Read our Article:What is the process to get FCRA registration?