The Foreign Contribution (Regulation) Act, 2010 (for brevity ‘FC(R)A’) has been introduced with an objective to regulate the acceptance and utilization of foreign contribution or foreign hospitality by certain individuals or associations or companies and to prohibit the acceptance and utilization of foreign contribution or foreign hospitality for activities detrimental to the national interest. FC(R)A is administered by Ministry of Home Affairs (for brevity ‘MHA’) under Government of India (for brevity ‘GoI’). The FC(R)A has replaced the earlier Foreign Contribution (Regulation) Act, 1976 and is effective from 1st May, 2011
The recent amendments carried on to the FC(R)A clearly suggest that MHA is closely scrutinizing the receipts and utilization of foreign contributions particularly which are detrimental to national interest. Further, as per the information available on www.fcraonline.nic.in a total of 14,000 entities registration has been cancelled by MHA for violating the provisions of FC(R)A. Hence, in light of the tough regulations, it is very important for individuals, associations or companies who are in receipt of foreign contribution to be updated with the changes made to FC(R)A, more specifically areas pertaining to the registrations and filing of returns.
The aim of this article is to dwell upon the registration (initial and renewal) and filing requirements under FC(R)A so the trade can be abreast of the procedures.
Registration & Related Matters:
Section 11 to Section 16 of FC(R)A read with Rules made thereunder deals with registration and related matters under the Act.
Persons required to obtain registration under FC(R)A:
Every person having a definite cultural, economic, educational, religious or social programme shall not accept foreign contribution unless such person is registered with central government. The term ‘person’ is defined vide Section 2(m) of the Act which includes individual, association, Hindu undivided family and a company registered under Section 8 of the Companies Act, 2013 (Corresponding Section 25 of Companies Act, 1956). It is to be noted that the definition of ‘person’ is laid in an inclusive manner, which make the definition of ‘person’ wider in scope. Hence, apart from what is stated above as ‘person’ all other general meaning of ‘person’ shall be falling under the ambit of the Act.
Status of the registrations under Foreign Contribution (Regulation) Act, 1976:
It is known that till the FC(R)A, 2010 was enforced, the FC(R), 1976 was operative. Associations which have obtained registration under 1976 Act, will also be treated as registered under the 2010 Act and such registration shall be valid till 5 years from the date on which Section 11 was made effective. Hence, all persons who has obtained registration under the old act shall apply for renewal on or before 31.10.2015 (6 months prior to the lapse of registration in case of One year projects).
History of past operations for applying for registration:
FC(R)A has not specified any time limit for applying for registration under Section 11. Even the rules has not provided for the same. As per Q2 of FAQs hosted on the https://fcraonline.nic.in website, it is required that any person having existence for atleast three years can apply for registration under Section 11 despite of the fact that the law nowhere states the same.
Procedure for obtaining registration:
- Person intending to obtain registration shall make an online application vide Form FC-3 by filling all the required information;
- The applicant shall upload the singed or digitally signed application along with all the documents specified vide FC-3;
- The applicant shall pay a fee of Rs 2,000/- for obtaining registration under the Act.
- The applicant shall open an exclusive bank account for receipt and utilization of the foreign contribution.
- Though not specifically mentioned, it is also advisable to send a hard copy of the application and other related documents to the central government apart from the online application.
Grant of Certificate of Registration:
Section 12 of the Act deals with provisions relating to grant of the registration. The central government if it deems that the application for registration is not in conformity with the rules made thereunder, may reject the application. In case the application for grant of registrations is rejected for any reason, the applicant shall wait for six months from the date of rejection and apply freshly for registrations vide Form FC-3 and by complying with the rules made thereunder.
If the application is found to be good in all aspects, the central government after making such inquiry shall grant the certificate of registration within 90 days from the date of receipt of the application. If the central government fails to grant the registration within 90 days, it shall communicate the reasons to the applicant. Further, any person shall not be eligible for grant of certificate, if his certificate is suspended as on the date of making application. Also if there is any non-compliance of the provisions of FC(R)A, then such person is not eligible for grant of registration.
Validity of Certificate of Registration:
The certificate of registration is not a permanent one as it used to be under the 1976 Act. As per the 2010 Act, the certificate of registration is valid only for a period of 5 years from the date of its issue.
Renewal of Certificate of Registration:
The certificate of registration shall be renewed after the expiry of 5 years from the date of issue. Every person applying for such renewal has to make an application vide Form FC-3 , six months before the date of expiry of certificate of registration. Every applicant has to pay a fee of Rs 500/- for renewal of certificate of registration.
If any person fails to renew his certificate of registration, the registration granted under Section 11 shall cease from the date of completion of 5 years and an application for fresh registration has to be made in terms of Section 11 read with Rule 9 of the FC(R)A Rules, 2011.
However, if the person can prove sufficient grounds that failure to renew the registration within stipulated time, the central government can accept such application but not later than 4 months from the date of expiry of the original registration.
The central government normally renews the certificate within 90 days from the date of receipt of application for renewal. If the central government does not renew within such time period, it shall communicate the reasons to the applicant. The central government is empowered to refuse the renewal application, if it thinks such person has violated the provisions of the act or rules. It is to be specifically understood that in case of not granting such registration within 90 days or there is no communication for rejection of the application, it cannot be deemed that the registrations is granted.
Further, the registrations for which renewal is sought on the ground that 5 years has been exhausted from the date of certificate of registration, the renewal date has been extended to 15.03.2016 in terms of F. No II 21022/23(76)/2015- FCRA III dated 14. 12.2015.
Suspension of Certificate of Registration:
Section 13 deals with provisions relating to suspension of certificate of registration issued under Section 12 of the Act. The central government while considering cancellation of registration under Section 14, may after recording the reasons in writing, suspend the certificate of registration for a period not exceeding 180 days. The reasons for such suspension shall be issued by way of order in writing to the registration holder. However, a prior notice to registration holder regarding the suspension is not necessary.
A person whose certificate has been suspended shall not be eligible to receive foreign contribution during the said period of suspension. In cases of hardship, the central government may allow the receipt of foreign contribution subject to such terms and conditions.
Further, the person whose certificate has been suspended can only utilize only 25% of the unspent foreign contribution subject to prior permission from the central government on a plain paper. The remaining 75% of unspent money can only be spent post revocation of suspension order.
Cancellation of Certificate of Registration:
The central government may cancel the certificate of registration after making necessary inquiry and deems that any of the conditions mentioned under Section 14 are fit it to the case. However, the central government has to record its reasons in writing and grant an opportunity for hearing for the registration holder before the order for cancellation is made.
Any person whose certificate of registration is cancelled under Section 14 of the Act, cannot apply for registration or for grant of prior permission for a period of 3 years from the date of cancellation of certificate.
Intimation to Central Government vide Returns:
Filing of Annual Returns:
Every person registered under Section 12 of the Act, shall intimate central government or such authority prescribed by central government, the amount of foreign contribution received by it, the source from which foreign contribution is received and the manner and purposes for which such foreign contribution
Documents and Forms to be filed with FC-4:
Rule 17 of the FC(R)A Rules prescribe the details to be furnished along with FC-4, which are detailed as under:
Ø Income and Expenditure Statement, Receipt and Payment Account and Balance sheet for the
stst
period starting from 1 April to 31 March of succeeding year.
Ø FC-4 should also reflect the foreign contribution received in the exclusive bank account and shall
also include the details in respect of funds transferred to another bank accounts for utilization.
Ø If the foreign contribution relates to only articles, the intimation shall be submitted in Form FC-1;
Ø If the foreign contribution relates to only foreign securities, the intimation shall be submitted in
Form FC-1;
Ø FC-4 or FC-1, as the case may be, shall be duly certified by a chartered accountant;
Ø FC-4 shall be accompanied by the bank statement of the exclusive account maintained, duly certified by an officer of such bank;
Ø The accounting statements referred above shall be preserved for a period of 6 years.
Ø If the person has not received any foreign contribution in such financial year, even then a Nil report
has to be submitted. Further, if the person has not received or utilized any foreign contribution
during a financial year, it shall not be required to obtain a certificate from chartered accountant or
income and expenditure statement or receipt and payment account or balance sheet with FC-4.
Due Date for submission of FC-4:
FC-4 has to be submitted within 9 months from the closure of the financial year. That is to say, for the
st st st
period 1 April, 2014 to 31 March, 2015, the Form FC-4 shall be filed by 31 December, 2015. Now FC-4 has to mandatorily filed electronically as per the procedure laid down.
However, due to launch of the new website https://fcraonline.nic.in which facilitates filing of the Form st FC-4 online along with scanned copies of such details required,___________________ the due date has been extended from 31
th 3 th
December, 2015 to 15 March, 2016 . Hence, FC-4 for FY 14-15 can be filed till 15 March, 2016.
This article is contributed by Partners of SBS and Company LLP – Chartered Accountant Company You can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it.
