NGO's FCRA Registration in India

Overview of FCRA Registration

The Ministry of Home Affairs issues an FCRA registration to Non-Profit Organizations in India so they can regulate and observe the foreign donations received by NGOs in India. Moreover, FCRA stands for Foreign Contribution Regulation Act. To accept gifts from overseas, registered charities, charitable trusts, and Section 8 companies are required to register under the Foreign Contribution Regulation Act (FCRA).

When NGOs and charity trusts register with the FCRA, it facilitates the transfer of funds from outside sources into their FCRA account. Donations from foreign funding agencies are available to Indian nonprofits that help particular populations on a significant scale and are deemed necessary.

Understanding FCRA Registration

The Ministry of Home Affairs is in charge of the FCRA Department. For an NGO, trust, or Section 8 company, FCRA registration is optional.

The government has integrated all the rules and regulations pertaining to foreign contributions and hospitality that any individual, association, or business may accept. The Foreign Contribution (Regulation) Act of 2010 was passed with this goal in mind. This was done in order to use e-governance of FCRA-related operations to develop a transparent framework for people and organizations. This open system was developed to deter any harmful actions that would go against the interests of the country.

Requirements of FCRA Registration

There are two types of FCRA registrations, one is the normal or proper registration, and another is prior permission registration. Therefore, there are different eligibility criteria?s for both the types of registration:

There are a few requirements to meet in order to be qualified for the normal registration:

• The application must be registered as a Section 8 company under the Companies Act of 2013 or under the Societies Registration Act of 1860, the Indian Trusts Act of 1882, or any other Act that may be required.
• Must have undertaken activities in its chosen field to help society and made fair contributions.
• Must have invested a minimum of Rs. 10,000,000 over the last three years to accomplish its goals (excluding administrative costs).
• Copy of the financial statements from the previous three years that have been properly audited by licensed chartered accountants must be submitted.
• A newly established entity may use the Prior Permission (PP) approach to request clearance from the Ministry of Home Affairs for a specific activity, purpose, and source if it would want to accept donations from foreign countries.

The Prior Permission type is best suited for recently registered organizations that wish to accept contributions from outside. This is given in exchange for receiving a certain sum from a specified donor to carry out specified tasks or initiatives. The organization needs to:

• Send a detailed commitment letter detailing the donor's amount of payment to the Ministry of Home Affairs.
• The following requirements must be satisfied in cases when the foreign donor organization and the Indian receiving organization have a few common members:
• The donor organization is not allowed to include the Chief Functionary of the Indian organization.
• The foreign donor organization's employees or members shall not make up more than 51% of the governing body members or office bearers of the Indian receiving organization.
• In the case of an individual foreign contributor:
• He cannot be the chief functionary of the Indian organisation.
• At least 51% of the office staff and members of the beneficiary organization's governing body should not be the donor's family or close relatives.

What are the advantages of FCRA registration?

The advantages of FCRA registration are mentioned below:

Accept Donations from Abroad

An association's ability to accept foreign donations for specific cultural, economic, educational, religious, or social projects is facilitated by FCRA registration, which removes all legal barriers.

Offer Transparency

Additionally, it aims to encourage more transparency in the ways that non-governmental organizations and other trusts supporting social causes raise and use foreign donations.

Provide Legal Protection

The government offers the NGOs that are registered under the FCRA substantial support with donations, capital gains, and income taxes waived.

Assists social workers

Social workers can more accurately assess and determine the source of the money their clients receive due to the FCRA registration. It provides freedom to promote the well-being of society autonomy.

Prevents financial abuse

The government can stop the misappropriation of foreign funds with the use of FCRA registration. This aids in their ability to determine the actual nature of the donations that the organization has received and how it is being used to fulfill its stated purpose.

What are the documents required for FCRA Registration?

The documents listed below are necessary for FCRA registration.

• A copy of the trust deed, incorporation certificate, or any other certificate that the entity holds must be self-attested.
• Information about Non-Profit Organizations and the PAN.
• AOA and MOA copies of the company.
• Chief Judiciary's impression (which will be in JPG format).
• An in-depth report covering the previous three years' activity.
• An audited version of the financial statements, P&L account, information on income and expenses, and cash flow statement for the three years prior.
• Certified accurate copies of the resolution adopted by a body corporate that has been granted permission by a nonprofit.
• A certificate issued in accordance with Section 12 AB of the Income Tax Act.

What is the process of FCRA Registration?

The FCRA registration process is quite complex and it requires that the applicant possess thorough knowledge of the whole process. The following process is followed for getting the FCRA registration:

Step 1: Go to the FCRA website

The first step is to visit the official webpage of the FCRA registration through the ministry of home affairs.

Step 2: Generate your Login ID and Password

Make a password and ID for your login. You must use your ID and password to access the FCRA web site. Click on the new registration button to initiate the registration process of FCRA registration.

Step 3: Complete the FC-3 Form

As required by your FCRA registration requirements, you will be required to fill the FC-3 form while mentioning the correct and complete details.

Step 4: Upload Necessary Documents

Upload the necessary documents in the format specified to complete the FCRA registration process. Verify that the submitted documents meet the specifications for size listed on the MHA portal. The application may be canceled if the format is improper.

Step 5: Making a payment

Lastly, in order to register online for the FCRA, you must pay the requisite fees. Depending on the type of FCRA registration you wish to take, different government costs apply.

After everything is in order, you'll become registered under the FCRA and can receive donations from foreign countries.

Annual Return Filing under FCRA

You must submit an annual report to the Ministry of Home Affairs if you are a registered NGO or trust that accepts donations from foreign countries. If your total income from foreign sources during a financial year exceeds Rs. 1 crore, you will be required to file a return under FCRA.

For every fiscal year (April 1 till March 31), a return needs to be filed by December 31st or within nine months of the end of the year. The return, shall be filed in Form FC - 4, along with the statement of receipts and payments, and a certified balance sheet that must be prepared by a chartered accountant. You can easily file your annual returns using the online website of FCRA. The site is simple to use and navigate. You can also pay the requisite fees online while using the same site.

Why PSR Compliance for FCRA Registration?

PSR Compliance can be your ideal partner for FCRA registration as we are committed to make the complex process of FCRA registration easy for you. Moreover, our team is able to do this, due to our experience in the same field, and we have served several clients till date. We make sure that the process gets completed on time and application procedure and accurate. For more details, get in touch with us today.

Frequently Asked Questions

Is it mandatory to get FCRA registration?

Yes, getting an FCRA registration is mandatory to receive foreign donations. Section 11 of the FCRA, 2010 states, that except as expressly specified in the Act, no person may collect foreign contributions, unless they first get a certificate of registration or prior authorization from the Central Government.

Are there any consequences for not getting FCRA Registration?

Receiving foreign donations without first registering with the FCRA is an offence. If you are found to violate any of the provisions outlined in the Foreign Contribution Registration Act, you might face a fine, and up to three years of imprisonment, or both.

What is the validity of FCRA Registration?

The FCRA registration is valid for a limited period of five years. In accordance with the regulations, the renewal application must be filed no later than six months before to the certificate of registration's expiration date.

How long does it take to obtain FCRA Registration?

This is a time taking process, and generally take around 4 to 5 months to complete.

How do I renew my FCRA registration?

The renewal application must be filed in FC-3 six months before the FCRA certificate expires, along with the Rs. 500 filing fees. The form and all of the attachments must be submitted online.