Fcra

The requirement for having foreign contribution regulation act was actually realized in the late sixties when international firms including CIA were suspected of having relation to numerous trade unions, student bodies, youth companies, political companies etc. The home minister in 1969 raised this problem in both the houses of parliament that they should regulate foreign financing and it was discussed threadbare. It was chosen that the government would not permit foreigners of foreign cash to affect the performance or determine of the Government, political celebrations and other institutions of India especially non government organizations who are doing charitable activities for the welfare of poor and needy. Fcra Act of 1976 was actually enacted in the year 1976 with the prime objective of regulating the acceptance and usage of foreign contribution and foreign hospitality by associations and persons working in the important areas of national life. The focus of this Act is to make sure that the foreign contribution and foreign hospitality are not used to influence electoral politics, public servants, judges and individuals working in the important locations of nationwide life such as reporters, printers and publishers of newspapers and so on. The assortment looking for remote commitments for unmistakable social, monetary, useful or religious programs could either acquire enlistment or earlier authorization to appropriate remote dedication from Ministry of Home Affairs by making requisition in the suggested organization and outfitting products of the exercises and inspected records. The enrollment has allowed just to such association, which has actually demonstrated track record of working in the chosen field of work throughout the majority of current three years and after registration, such conglomeration has actually enabled to get outdoors dedication from any outside hotspot for revealed locations.

What is the reason for enactment of fcra

The Foreign Contribution Regulation Act or fcra in India is not just a regulatory mechanism to control foreign contributions to Indian organisations, infact, it is an embodiment of the country’s sovereignty. The Act is, in essence, a safeguard that protects the democratic fabric of the nation from external influence through the conduit of foreign donations. The FCRA delineates legitimate foreign patronage and philanthropic endeavours from the potential misuse of such resources to influence domestic politics, public opinion and policy-making. The Indian Government is revising and updating the rules for fcra registration and regulations time to time. With the advent of the digital age and social media, the real challenge of regulating NGOs and civil society organizations has become evident as many of them are using online platforms to raise funds. The government is not against regulating online fundraising but FCRA shall not become a tool that hampers the genuine initiatives and purposeful causes done by civil society organizations. The amendment to the FCRA has, in fact, provided ample room for the government to overreach. By putting in place stringent regulations on civil society organizations, the government is often more likely to suppress the very vibrancy of civil society that it is supposed to protect. Engagement with the FCRA has always been about compliance. This cannot be the only narrative. In the context of India’s development journey, the FCRA presents an opportunity to assume that international funding should be about building trust with stakeholders, about being ethical in every way and about contributing to a stronger and more resilient civil society. As the contours of the FCRA continue to change, one shall not fall into the trap of thinking that governance is about restrictions, and rules are about limitations. One shall use this opportunity to have a constructive conversation on what governance can be about for all of the citizens and stakeholders in our democracy.

What is the eligibility criteria for fcra registration

Any society, trust or charitable company, carrying on educational, charitable, religious, economic, cultural or social welfare activities and desirous of receiving any foreign funds from international is required to obtain registration under section 6(1) of the Act. Any such association which is not registered or which has been denied registration can receive foreign contribution only after obtaining prior permission or fcra registration. An organization cannot receive project grants from foreign countries through another organisation registered under foreign contribution regulation act, unless the former organisation has obtained either registration or prior permission. The association cannot receive funds on mere filing an application for registration or prior permission, foreign contribution can be received only after the registration or prior permission is actually obtained. However, to be on safer side, the organisation should obtain confirmation about the grant or refusal of permission from the department. The designated bank account should not be operated until the permission is obtained. Earlier the time limit for disposing of the application was ninety days from the date of filing of the application. Nowadays, after the change of government, lot of rules have changed, registration of fcra is taking time subject to intelligence bureau inspection report and monitoring unit report of the board members of the ngo. If the report is positive, then only, fcra approval of the application is done. Else, application of fcra registration or fcra renewal is denied. Lot of non government organizations were doing malpractice under the roof of ngos like religion conversion, anti national activities etc. In order to stop and prevent happening of such activities, the government has instructed the officials to do strict verification of the background of the activities of the ngo and of the board members of the ngo. If any of the board members of the ngo or the non government organization had accepted foreign donation in their accounts directly or indirectly, that ngo is liable to pay penalty and interest as per the latest provisions of fcra act. Moreover, the fcra application of that ngo is likely to be rejected. The Ministry of Home Affairs instructs the Intelligence Bureau for a detailed report of the association. Some authorities from the IB may visit the office and the project area of the organisation and inspect the books of account and other records which are available. On the basis of the reports submitted by the Intelligence Bureau, the fcra department decides whether to accept or reject the application. If the report is ok, the department issues a registration certificate and provides a permanent registration number. Further, the fcra registration has to be renewed in every five years. This registration number is essential to be quoted in all future correspondences and filing of returns and forms. The organisation should maintain a separate set of books of accounts exclusively for international contribution received and utilized. A cash Book and ledger must be maintained in the double entry system of books keeping. It is done in order to ensure that every transaction has equal credit and debit entries which enhances accuracy and financial transparency. The cash book is maintained for recording all sorts of cash and bank transactions whereas ledger book contains classified accounts like assets, liabilities, equity, income and expenses. Cash book and Ledger book balance the accounting equation where assets is equal to sum up of liabilities and equities. The accounts for foreign donation shall be maintained financial year wise both for cash and contributions in kind.

When an ngo can apply for fcra renewal

An ngo can apply for fcra renewal even 1 year before the expiry of fcra license.

For obtaining fcra registration, the applicant association should preferably be registered under any of the following Acts :-

1. Societies Registration Act, 1860
2. Indian Trusts Act 1882
3. Charitable and religious Trusts Act 1920
4. Companies Act 1956 (Section 8)

For Permanent Registration Click here to Download form and for Prior Permission Click here to Download form.

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