In the present time, the world is more focused towards social & environmental causes. Apart from their daily objective of profit-making, businesses are actively involved in activities that promote economic, social, and cultural growth & prosperity. In today’s advanced world, everyone is so well connected and linked that accessibility to any part of this world is so easy. Transactions between places, people, and countries take place on a regular basis. So, the flow of foreign currencies in and out of each nation is now completely natural. The volume of such transactions is on another level, so it is impossible to track every single transaction of foreign currency in a regular manner. Due to this, Foreign Contribution Regulation Act, 2010[1] was introduced. In this write-up, we are going to discuss different types of FCRA Registration in India.
What is FCRA Act, 2010?
Before we discuss the different types of FCRA Registration in India, lets first understand about FCRA Act, 2010. Foreign Contribution (Regulation) Act or FCRA, 2010, is an Act of the Parliament of India, by the 42nd Act of 2010. It’s a consolidating Act whose scope is to regulate the acceptance & utilisation of Foreign Contribution/Hospitality by certain individuals or companies or associations and to prohibit acceptance & utilisation of Foreign Hospitality/Foreign Contribution for any activities adverse to the national interest & for matters connected therewith/incidental there to.
Salient Features of FCRA Act, 2010
Following are some salient features of the FCRA Act, 2010:
- While the provisions of the repealed Foreign Contribution Regulation Act, 1976 have been retained, the FCRA Act, 2010 is an improvement over the repealed Act as more severe provisions have been made to prevent misutilisation of the Foreign Contributions by the association;
- Any association granted Prior Permission/registered with the Central Government of India under Section 6/under the repealed FCRA, 1976 shall be considered to have been granted Prior Permission/registered, as the case may be, under FCRA Act, 2010 and such Registration shall be valid for 5 years from the particular date on which the new Act has come into force;
- Any organisation of a political nature & any company/association involved in the production & broadcast of audio or audiovisual news/current affairs programmes have been placed in the category prohibited to accept Foreign Contribution;
- New provisions have been made for cancellation or suspension of the Registration granted for breaching the provisions of the Act and such provisions didn’t exist in the repealed Act;
- New provision has also been made for the management of Foreign Contributions & assets created out of such contributions of individuals whose Certificates have been cancelled;
- Provision has been made for accounts’ inspection if the registered person/person to whom Prior Permission (PP) has been granted fails to provide or the intimation given is not as per the Law;
- A provision has been newly introduced to the effect that any individual, who significantly gives false intimation & seeks Prior Permission or Registration by means of fraud, concealment of material fact, or representation, shall, on conviction by the Court, would be liable to imprisonment (Jail) for a term which may be further extended to 6 months or fine/with both. Now we will discuss different types of FCRA Registration in India.
Types of FCRA Registration – An Overview
There are two different types of FCRA Registration in India and you can check the same below:
- FCRA Prior Permission: Any individual, if it is not registered with the Central Government of India, can accept Foreign Contribution only after getting the Prior Permission (PP) of the Central Government & such permission shall be valid for a particular purpose for which it is obtained & from the specific source. Any association registered with the Central Government of India/granted prior permission under that Section of the FCRA Act, as it stood immediately before the commencement of this Act, shall be considered to have been granted or registered Prior Permission, as the instance may be, under this Act & such Registration shall be valid for 5 years from the specific date on which this Section comes into force.
- Normal FCRA Registration: Charitable Societies, Trusts, or Section 8 Companies that receive Foreign Contributions or donations from foreign sources need to get Normal FCRA Registration under Section 6(1) of FCRA, 2010. Such a Registration under the FCRA, 2010 is called a Normal FCRA Registration.
Eligibility Criteria for Each Types of FCRA Registration in India
Following are the criteria for Each Types of FCRA Registration in India:
- Prior Permission Registration: It is ideally suited for those organisations which are newly registered & would like to get Foreign Contributions. This is granted for receipt of a particular amount from a particular donor for carrying out specific activities/projects. The association must:
- Be registered under the Indian Trusts Act, 1882/Societies Registration Act, 1860/registered as Section 8 Company as per Companies Act, 2013/any such Act as may be needed.
- Submit a specific Commitment Letter (CL) from the donor to the MHA, which shows the amount of contribution given and the purpose for which it is intended to be given.
- Where the Indian recipient organisation & foreign donor organisation have common members, the following conditions must be fulfilled:
- The Chief Functionary of the Indian organisation can’t be part of the donor organisation.
- At least 51% of the members or office-bearers of the governing body of the Indian recipient organisation shouldn’t be employees or members of the foreign donor organisation.
- Normal Registration: To be eligible for Normal Registration, there are a few pre-requisites:
- The applicant must be registered under the Indian Trusts Act, 1882/Societies Registration Act, 1860/registered as Section 8 Company as per the Companies Act/any such Act as may be required.
- Must have spent a minimum of Rs. 10 lakhs in the past 3 years towards achieving its objectives.
- Must submit copies of the financial statements of the past 3 years that are duly audited by qualified CA.
- Must have made some reasonable contributions by undertaking activities in its selected field for the benefit of society.
- If a newly registered entity or company likes to receive Foreign Contributions, then approval for a specific purpose, activity and from a particular source can be made to the MHA through the Prior Permission method.
Conclusion
After discussing the different types of FCRA Registration, it is concluded that if an individual is not registered with the Central Government, he or she can only accept Foreign Contributions with the Prior Permission of the Central Government, which must be valid for the purpose of which it is obtained & from the particular source.
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