Introduction
Update(24 March 2023)
According to a Public notice issued by the Ministry of Home Affairs on March 24, 2023, there has been an extension to the validity of the FCRA registration certificate.
For entities whose validity was extended until March 31, 2023, and whose renewal application is still pending, their validity will now be extended until September 30, 2023, or until the renewal application is disposed of, whichever comes first.
Additionally, for entities whose FCRA registration validity is expiring between April 1, 2023, and September 30, 2023, and who have applied or will apply for renewal before the expiry date, their validity will also be extended until September 30, 2023, or until the renewal application is disposed of, whichever comes first.
However, if a renewal application is rejected, the validity of their FCRA registration will be considered expired on the date of rejection and the organization will not be permitted to receive or utilize foreign contributions.
The Foreign Contribution (Regulation) Amendment Act, 2020[1] was passed in Lok Sabha on 21 September, 2020 which amends the Foreign Contribution (Regulation) Act, 2010[2]. This amendment came into force from 29 September 2020[5]. Following is a list of the main amendments in simple words:
FCRA 2010 enables non-profit organisations in India to accept and use donations from outside India. India has a total of 49,949 FCRA organisations out of which 22,605 are active [3].
Changes to FCRA - Application process
- Minimum spend for eligibility, increased to 15 Lakh:
- The organization should have spent alteast Rs. 15 Lakh on its core activities for the benefit of society, in the last 3 financial years, to be eligible to apply for FCRA registration (S.No. 6 (f)(i), Page 34, FCRA Rules[8] ).
- Minimum spend limit for FCRA eligibility was Rs. 10 Lakh, prior to this amendment. .If capital investment in assets (like land, building, vehicleetc.) needs to be considered for expenses incurred in the last three years, then the chief functionary needs to give an undertaking that the assets shall be vested henceforth with the person till the validity of the certificate and they shall be utilised only for the activities covered under the Act and the rules made thereunder and shall not be diverted for any other purpose till the validity of its certificate of registration remains valid (S. No. 6 (i)(D)(f)(ii), Pg 34, FCRA Rules 2020) [8].
- Darpan ID mandatory to apply for/renew FCRA:
- It is mandatory to get a Darpan ID from the NITI Aayog portal (https://ngodarpan.gov.in/) before applying for/renewing an FCRA certificate or seeking a prior permission to accept foreign contributions[8][12]. This Darpan ID needs to be input in Form FC-3A/FC-3B/FC-3C as the case may be.
- Prior to this amendment, Darpan ID was optional to obtain for FCRA purpose [13].
- FCRA bank account to be opened at State Bank of India (SBI), New Delhi:
- All foreign contributions can only be received in an account opened at State Bank of India, New Delhi Main Branch, 11, Sansad Marg, New Delhi - 110001 (NDMB) designated as "FCRA Account" (Notification S.O. 3479(E)[6] ).
- The applicant does not need to visit the above branch in New Delhi to open the account. Any SBI Branch in the country can be visited to open the account in the above branch at New Delhi[7].
- Last date for opening the FCRA Account at State Bank of India, New Delhi Main Branch (NDMB) is specified as 31 March, 2021 after which, existing FCRA certified organisations will not be eligible to receive foreign contributions in any other account. However, fresh (or renewing) applicants of FCRA will have to open the "FCRA Account" at NDMB only to receive any foreign contributions after they are granted the certificate[7].
- For FCRA new registration or renewal applications, the FCRA account needs to be opened before applying and the account details need to be provided in the application itself (FCRA Rules 2020) [8].
- One or more accounts in other scheduled banks could also be used to transfer and utilize the funds received in the above branch at SBI, Main Branch New Delhi (NDMB). NDMB will not levy any transfer charges or fees for transferring the foreign contribution from one FCRA Account to another FCRA account[7].
- None of these accounts should receive or deposit any funds other than foreign contributions (Section 12, Pg 3, FCRA Amendment 2020[1] ).
- Prior to this mendment, foreign contribution funds could be received in any bank account as specified in the application for the grant of FCRA Certificate (Section 17, Pg 11, FCRA 2010 [2] ). As of the writing of this article, 62 different banks are integrated with FCRA [3].
- Application fee increased for registration, prior permission and renewal:
- Application fee for FCRA registration has been increased to Rs. 10,000/- and application fee for prior permission is increased to Rs. 5000/- (S.NO. 6, Pg. 35, FCRA Rules 2020[8] )
- Application fee for FCRA renewal has been increased to Rs. 5,000/- (S.NO. 9 (iii), Pg. 36, FCRA Rules 2020[8] ).
- Prior to this amendment, application fee for registration, prior permission and renewal was Rs. 5000/-, Rs. 3000/- and Rs. 1500/- respectively [9].Application fee for compounding of an offense under section 41 was also increased to Rs. 3000/- [8] from Rs. 1000/- earlier [11].
- Aadhar Card or Passport/OCI mandatory to apply for/renew FCRA:
- Any person or organisation seeking to apply for/renew an FCRA certificate or seeking a prior permission to accept foreign contributions, will need to submit Aadhar cards of all the office bearers and key functionaries of the organisation or Passport/Overseas Citizen of India (OCI) Card(s) , if functionaries are foreigners (Section 7, Pg 2, FCRA Amendment 2020[1] ).
- Section 12A is the new section inserted in the Principal Act describing the requirement above. .
- Public Servants prohibited from accepting foreign contribution:
- Adds that a 'public servant' (Section 21, Pg 16, Indian Penal Code[4] ) cannot accept any foreign contributions (Section 2, Pg 1, FCRA Amendment 2020[1] ).
- This adds to the list that already mentions a set of organizations/people/groups/functionaries like Judges, Government servants, employees of any corporation or any body owned or controlled by the Government that cannot receive foreign contributions (Section 3, Pg 5, FCRA 2010[2] ).
- Inquiry before FCRA renewal:
- Before renewing an FCRA certificate, the Government may make an inquiry to ensure that all conditions of the certification are being fulfilled such as it is not benami, has not been prosecuted and all other conditions that are already a part of the Act under Section 12(4) (Section 11, Pg 3, FCRA Amendment 2020[1] ).
- Prior to this amendment, there was no provision of conducting an inquiry before renewal (Section 16, Pg 11, FCRA 2010) [2].
- Additional rules for seeking prior permission for receipt of a specific amount from a specific donor:
- Commitment letter from the donor : The recipient needs to submit a commitment letter from the donor indicating the amount and the purpose (S. No 6 (iii)(C), Pg. 35, FCRA Rules 2020[8] ).
- Common members in donor and donee organisations : The chief functionary of the recipient organisation can not be a part of the donor organisation (or be the donor, if individual). Also, 75% of the members of the governing body of the recipient organisation can not be members/employees of the donor organisation (or family members/close relatives in case of single donor). (S. No 6 (iii)(C), Pg. 35, FCRA Rules 2020[8] )
- Large amount in installments : If the amount seeked is more than Rs. 1 crore, the Central Government may allow it only in installments with subsequent installments released after showing proof of utilisation of 75% of previous installment (alongwith a field inquiry) (S.No.7, Pg. 35, FCRA Rules 2020[8] ).
- Changes to FCRA - Usage of Funds
- Administrative cost limited to 20%:
- Part of the foreign contributions that can be used for administrative costs is now reduced to 20% . Any administrative cost exceeding 20% will need prior approval from the Central Government (Section 4, Pg 2, FCRA Amendment 2020[1] ).
- Prior to this amendment, the administrative costs were allowed upto 50% of the total foreign contribution (Section 8, Pg 7, The FCRA 2010) [2].
- Transfer of foreign contribution to another entity is not allowed:
- The Amendment does not allow transfer of funds received under FCRA to another person or organisation irrespective of the receiver's FCRA certification status (Section 3, Pg 2, FCRA Amendment 2020[1] ).
- Prior to this amendment, foreign contribution funds could be transferred to another FCRA certified organisation/person without restriction. Transfer of foreign contribution funds to a non-FCRA certified organisation/person required prior approval from the Central government (Section 7, Pg 7, FCRA 2010) [2].
- Restriction to receive or utilize foreign contribution if contravened:
- If the Central Government, after holding a summary inquiry, has reasons to believe that the organisation or person has contravened the Act, it can direct the organisation or person to not receive or utilize the foreign contribution already received without prior approval of the Central Government, even while any further inquiry may be pending (Section 5, Pg 2, FCRA Amendment 2020[1] ).
- Earlier, an FCRA certified organisation or person was prohibited from utilizing the foreign contribution only when found "guilty" (Section 11(2), Pg 9, FCRA 2010). [2].
- Restriction to receive or utilize foreign contribution after expiry of registration:
- If the registraion has expired, the organization cannot receive or utilise the foreign contribution until the certificate is renewed. (S.No. 9, Pg. 36, FCRA Rules 2020[8])
- Changes to FCRA - Termination
- Surrendering of FCRA permitted:
- The government now permits surrendering of the FCRA certification if the authority is satisfied that the organisation or person has not contravened any of the provisions of the Act. In such a case, the management of foreign contribution & any asset created out of it will be vested with the authority as prescribed by the Government (Section 9-10, Pg 3, FCRA Amendment 2020[1] ).
- Suspension of registration:
- If the Central Government decides to suspend the FCRA certificate (pending consideration of cancelling the certificate) for 180 days, the suspension can now be further extended by up to additional 180 days (Section 8, Pg 2, FCRA Amendment 2020[1] ).
Prior to this amendment, the suspension was limited to a period of 180 days (Section 13, Pg 10, FCRA 2010 ) [2].
References:
Disclaimer:
This article has been published by Give Discover which is an information platform providing browsable and searchable information about social impact in India. The purpose of the article is to simplify information from the Foreign Contribution (Regulation) Amendment Act, 2020 and Foreign Contribution (Regulation) (Amendment) Rules, 2020 for NGOs and persons registered under Foreign Contribution (Regulation) Act. The above article is no substitute for legal interpretation of the Bill or Act. A legal advice on these matters is advised and recommended. Give Discover does not take any responsibility for any loss or damage caused to any organization or individual in any manner, due to any step taken, directly or indirectly, on the basis of the above article.
