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FOREIGN CONTRIBUTION (REGULATION) ACT, 2010 Presented By: Suresh Kumar Kejriwal Go.

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Presentation on theme: "FOREIGN CONTRIBUTION (REGULATION) ACT, 2010 Presented By: Suresh Kumar Kejriwal Go."— Presentation transcript:

1 FOREIGN CONTRIBUTION (REGULATION) ACT, 2010 Presented By: Suresh Kumar Kejriwal Go

2 1. HAS BECOME EFFECTIVE FROM 1 ST MAY, COMPARATIVE STATUS : Next Previous FOREIGN CONTRIBUTION REGULATION ACT, 2010 FCRA, 1976FCRA, 2010 SECTION3254 RULE924 FORM910

3 DEFINITION & APPLICABILTY PROHIBITION REGISTRATION OPERATIONAL REQUIREMENTS RESTRICTIONS CONSEQUENCES ISSUES NEED CLARITY IMMEDIATE ACTION POINTS Next PreviousCOVERAGE

4 Next Previous DEFINITION & COVERAGE

5 FOREIGN CONTRIBUTION Means the donation, delivery or transfer, made by any foreign source of :- a) currency, whether Indian or foreign Inclusions : a) Interest accrued on foreign contribution. b) Any other income derived from foreign contribution. Exclusions : a) Amount received by way of fees or towards cost in lieu of goods & service rendered in the ordinary course of business. Next PreviousDEFINITION

6 DEFINITION FOREIGN SOURCE includes : a) government of any foreign country or territory b) international agency c) foreign company d) citizen of a foreign country e) Company with more than 50 % foreign shareholding. f) some of the sources appear to be foreign but are exempted from the definition of foreign source, e.g. Agencies of the from the definition of foreign source, e.g. Agencies of the United Nations, World Bank and other International United Nations, World Bank and other International agencies as may be specified agencies as may be specified Next Previous

7 DEFINITION IMPORTANT INDICATORS – a) Source is important and not the currency. b) Contribution from NRI through normal banking channels are not foreign contribution. However it is advisable to obtain the foreign contribution. However it is advisable to obtain the passport details to establish that the person sending the passport details to establish that the person sending the remittance is an Indian citizen. remittance is an Indian citizen. c) Foreign citizen making donation in Indian currency is covered under foreign sources. under foreign sources. Next Previous

8 COVERAGE a) Earlier only Association was covered b) But now the Act is applicable to :- i) Association i) Association ii) Individual ii) Individual iii) HUF iii) HUF iv) Section 25 Companies iv) Section 25 Companies Next Previous

9 Next PreviousPROHIBITION

10 PROHIBITION SECTION -3 There is a prohibition on certain category of person to receive foreign contribution. These categories include – a) Member of legislature b) Correspondent, editor, columnist of an association/company engaged in production or broad-cast of association/company engaged in production or broad-cast of audiovisual news or current affairs program through any audiovisual news or current affairs program through any electrical media or through any mode of mass communication. electrical media or through any mode of mass communication. c)Organisation of a political nature as may be specified. The member of legislature shall include the Panchayat member. However the payment in ordinary course of business towards rendering of goods & services or in the form of salary & wages are allowed. Next Previous

11 PROHIBITION Organisation of political in nature : As per Rule 3 the Central Govt. may specify an organisation as a political in nature if it falls under following situations – a) Organisation having political objectives in its Memorandum of Association or bylaws; Memorandum of Association or bylaws; b) Any voluntary action group with objectives of a political nature or which participates in political activities. nature or which participates in political activities. Next Previous

12 PROHIBITION c) Organisation which is not directly aligned to any political party, but whose objectives, as stated in the Memorandum party, but whose objectives, as stated in the Memorandum of Association, or activities gathered through other material of Association, or activities gathered through other material evidence, include steps towards advancement of political evidence, include steps towards advancement of political interests of such groups; interests of such groups; d) Any organisation, by whatever name called, which habitually engages itself in or employs common methods of political action engages itself in or employs common methods of political action like `bandh or `hartal, `rasta roko or `jail bharo in support like `bandh or `hartal, `rasta roko or `jail bharo in support of public causes. of public causes. Next Previous

13 Next PreviousREGISTRATION

14 REGISTRATION WHO CAN RECEIVE FOREIGN CONTRIBUTION? A) A person having a definite cultural, economic, educational, religious or social program can receive foreign contribution religious or social program can receive foreign contribution after it – after it – a) obtains the prior permission of the Central Government (FC – 4) a) obtains the prior permission of the Central Government (FC – 4) or, or, b) gets itself registered with the Central Government. ( FC – 3) b) gets itself registered with the Central Government. ( FC – 3) B) Application for registration or prior permission, under the previous Act : To furnishes the prescribed fees of Rs.1,000/- for prior permission & Rs.2,000/- for permanent registration. previous Act : To furnishes the prescribed fees of Rs.1,000/- for prior permission & Rs.2,000/- for permanent registration. Next Previous

15 REGISTRATION KEY ISSUES : a) The permanent registration is valid for 5 years from the date of issue of registration. the date of issue of registration. b) For existing registered NGOs the date of 5-year shall be calculated from 1 st May, calculated from 1 st May, c) Prior permission shall be valid for the specific amount of contribution proposed to be received. of contribution proposed to be received. d) No deemed approval of prior permission within 90 days from the date of receipt of application. date of receipt of application. Next Previous

16 RENEWAL OF REGISTRATION a) Application for renewal is to be made in Form FC-5 latest by six months before the date of expiry of the certificate. six months before the date of expiry of the certificate. b) The person implementing multi year projects shall apply for renewal latest by 12 months before the date of expiry of for renewal latest by 12 months before the date of expiry of the certificate. the certificate. c) If an organisation fails to renew within the due date, the department may condone the delay. However such delay department may condone the delay. However such delay should not be more than 4 months after the expiry of the should not be more than 4 months after the expiry of the original certificate. original certificate. Next Previous

17 RENEWAL OF REGISTRATION d) The Central Govt. may renew the certificate within 90 days or reject the application communicating the reasons thereof. reject the application communicating the reasons thereof. e) In case of rejection the aggrieved NGO has a right to file an appeal within 60 days from the date of such order or an appeal within 60 days from the date of such order or may apply for revision of order. may apply for revision of order. Next Previous

18 Next Previous OPERATIONAL REQUIREMENTS

19 A) BANK ACCOUNT : a) All foreign contribution should be received through a) All foreign contribution should be received through one designated bank account one designated bank account b) Now multiple bank account are allowed for utilisation b) Now multiple bank account are allowed for utilisation purposes provided it is intimated to the Ministry within 15 purposes provided it is intimated to the Ministry within 15 days of the opening of the account. days of the opening of the account. Next Previous

20 OPERATIONAL REQUIREMENTS B) BOOKS OF ACCOUNTS : a) Rule 11 : a separate set of Books of Accounts & a) Rule 11 : a separate set of Books of Accounts & records shall be maintained, exclusively for foreign records shall be maintained, exclusively for foreign contribution received & utilised. contribution received & utilised. b) If the foreign contribution is received in kind then the b) If the foreign contribution is received in kind then the details should be preserved as mentioned in Form FC-7 details should be preserved as mentioned in Form FC-7 c) Books of accounts should be preserved for a period of c) Books of accounts should be preserved for a period of six years [As per Rule 17 (7)] six years [As per Rule 17 (7)] Next Previous

21 OPERATIONAL REQUIREMENTS C) SUBMISSION OF RETURNS : a) Annual Return : a) Annual Return : 1. Yearly Return in form FC-6 (earlier FC-3) accompanies 1. Yearly Return in form FC-6 (earlier FC-3) accompanies by Receipt & Payment A/c, Income & Expenditure A/c by Receipt & Payment A/c, Income & Expenditure A/c & Balance Sheet within nine months. & Balance Sheet within nine months. 2. Form FC-6 should reflect the foreign contribution 2. Form FC-6 should reflect the foreign contribution received in the exclusive bank account & include received in the exclusive bank account & include the details of fund transfer to other bank a/c for the details of fund transfer to other bank a/c for utilisation. utilisation. Next Previous

22 OPERATIONAL REQUIREMENTS C) SUBMISSION OF RETURNS : 3. FC-6 form is more or less same except requirement of 3. FC-6 form is more or less same except requirement of furnishing purpose wise expenditures on the basis of furnishing purpose wise expenditures on the basis of location /place with address of each of specific location /place with address of each of specific activities activities 4. FC-6 shall also be accompanied with a statement of A/c 4. FC-6 shall also be accompanied with a statement of A/c from the bank through which FC money is received from the bank through which FC money is received duly certified by the officer of the bank. duly certified by the officer of the bank. 5. Nil return shall be furnished if no receipt during 5. Nil return shall be furnished if no receipt during the financial year. the financial year. Next Previous

23 OPERATIONAL REQUIREMENTS D) INTIMATION : a) Rule 15 : The bank should report to the FCRA a) Rule 15 : The bank should report to the FCRA department within 30 days under two circumstances : department within 30 days under two circumstances : 1) if any foreign contribution is received without 1) if any foreign contribution is received without registration or prior permission, registration or prior permission, 2) if foreign contribution is receive in excess of 2) if foreign contribution is receive in excess of Rs.One Crore during a period of 30 days, Rs.One Crore during a period of 30 days, b) Public Domain : Intimation for receipt of foreign contribution b) Public Domain : Intimation for receipt of foreign contribution is in excess of Rs.1.00 Crore in a Financial Year : is in excess of Rs.1.00 Crore in a Financial Year : Organisation should place the data on receipt & utilisation Organisation should place the data on receipt & utilisation pertaining to the year of receipt as well as for one year pertaining to the year of receipt as well as for one year thereafter in public domain. thereafter in public domain. Next Previous

24 Next PreviousRESTRICTIONS

25 RESTRICTIONS FCRA, 2010 HAS COMPOSED FOLLOWING RESTRICTIONS : A) ADMINISTRATIVE EXPENDITURE : A) ADMINISTRATIVE EXPENDITURE : a) Admin. Exp. should not be more than 50% of the total a) Admin. Exp. should not be more than 50% of the total FC Received during a financial year. In excess of FC Received during a financial year. In excess of 50% can be incurred with prior approval of the 50% can be incurred with prior approval of the Central Govt. Central Govt. b) Rule 5 defines Admin. exp. & basically it includes :- b) Rule 5 defines Admin. exp. & basically it includes :- > Remuneration & other expenditure to Board Members > Remuneration & other expenditure to Board Members and Trustees and Trustees > Remuneration for person managing activity and other > Remuneration for person managing activity and other related expenses.. related expenses.. Next Previous

26 RESTRICTIONS FCRA, 2010 HAS COMPOSED FOLLOWING RESTRICTIONS : > Expenses at the office of the NGO. > Expenses at the office of the NGO. > Cost of accounting and administration. > Cost of accounting and administration. > Expenses towards running & maintenance of vehicle > Expenses towards running & maintenance of vehicle > Cost of writing and filing reports > Cost of writing and filing reports > Legal and professional charges > Legal and professional charges > Rent and repairs to premises > Rent and repairs to premises The rule further provides that any type of expenditure expended The rule further provides that any type of expenditure expended directly on program activities shall not be considered as directly on program activities shall not be considered as administrative in nature. administrative in nature. Next Previous

27 RESTRICTIONS B) Foreign Contribution shall be utilised for the purpose for which the contribution has been received [Sec. 8(1)(a)]. which the contribution has been received [Sec. 8(1)(a)]. C) Utilisation of FC for speculative purpose : FC or income arising therefrom shall not be used for FC or income arising therefrom shall not be used for speculative purpose. speculative purpose. Rule 4 defines speculative activities : Rule 4 defines speculative activities : > As per the Rule in investment in equity market even through > As per the Rule in investment in equity market even through mutual fund shall be considered as sepculative activities. mutual fund shall be considered as sepculative activities. > The Rule basically prohibits investment into risk > The Rule basically prohibits investment into risk bearing instruments or assets. bearing instruments or assets. Next Previous

28 RESTRICTIONS D) Transfer of FC fund to other FC registered organisation : FC fund can be transferred to other FC registered organisation FC fund can be transferred to other FC registered organisation provided the recipient organisation has not been proceeded provided the recipient organisation has not been proceeded against under any of the provision of the act. against under any of the provision of the act. E) Transfer of FC fund to Non-FC registered organisation : a) Can be made under prior approval. a) Can be made under prior approval. b) The application shall be made in form FC-10. b) The application shall be made in form FC-10. c) As per Rule 24 the total transfer to non-FC registered c) As per Rule 24 the total transfer to non-FC registered organisation shall not exceed 10% of the total organisation shall not exceed 10% of the total contribution received. contribution received. Next Previous

29 Next PreviousCONSEQUENCES

30 CONSEQUENCES A) CANCELLATION OF CERTIFICATE : Sec. 14(1) : FCRA certificate can be cancelled if : Sec. 14(1) : FCRA certificate can be cancelled if : a) the holder of the certificate has made a statement in, or a) the holder of the certificate has made a statement in, or in relation to, the application for the grant of registration in relation to, the application for the grant of registration or renewal thereof, which is incorrect or false; or or renewal thereof, which is incorrect or false; or b) the holder of the certificate has violated any of the terms b) the holder of the certificate has violated any of the terms and conditions of the certificate or renewal thereof; or and conditions of the certificate or renewal thereof; or c) if the holder of the certificate has not been engaged in c) if the holder of the certificate has not been engaged in any reasonable activity in its chosen field for the benefit any reasonable activity in its chosen field for the benefit of the society for two consecutive years or has become of the society for two consecutive years or has become defunct. defunct. Next Previous

31 CONSEQUENCES A) CANCELLATION OF CERTIFICATE : d) in the opinion of the Central Government, it is necessary d) in the opinion of the Central Government, it is necessary in the public interest to cancel the certificate. in the public interest to cancel the certificate. e) No order of cancellation shall be made unless the person e) No order of cancellation shall be made unless the person concerned has been given a reasonable opportunity of concerned has been given a reasonable opportunity of being heard. being heard. f) Once the certificate is cancelled, eligibility of registration f) Once the certificate is cancelled, eligibility of registration or prior permission only after a period of three or prior permission only after a period of three years from the date of cancellation. years from the date of cancellation. Next Previous

32 CONSEQUENCES B) SUSPENSION OF CERTIFICATE : a) During the period of cancellation of certificate :- a) During the period of cancellation of certificate :- > The new act allows the power to suspend the > The new act allows the power to suspend the registration for a period upto 180 days. registration for a period upto 180 days. > FC can be received only with prior approval. > FC can be received only with prior approval. > the organisation can utilise existing foreign fund > the organisation can utilise existing foreign fund upto 25% that too with prior approval. upto 25% that too with prior approval. b) Before suspending any organisation the department shall b) Before suspending any organisation the department shall record the reason in writing. However provision of record the reason in writing. However provision of opportunity of being heard is not provided. opportunity of being heard is not provided. Next Previous

33 CONSEQUENCES C) CUSTODY OF FUNDS & ASSETS IN THE EVENT OF CANCELLATION : EVENT OF CANCELLATION : a) In case of available bank balances, the respective banking a) In case of available bank balances, the respective banking authority will become the custodian till the Central Govt. authority will become the custodian till the Central Govt. issues further directions. issues further directions. b) If funds have been transferred to another NGO after b) If funds have been transferred to another NGO after cancellation, then the funds in the bank a/c of such NGO cancellation, then the funds in the bank a/c of such NGO will also go to the custody of the banking authority. will also go to the custody of the banking authority. Next Previous

34 CONSEQUENCES C) CUSTODY OF FUNDS & ASSETS IN THE EVENT OF CANCELLATION : EVENT OF CANCELLATION : c) All other assets of the organisation shall go to the interim c) All other assets of the organisation shall go to the interim custody of the District Magistrate or any other authority custody of the District Magistrate or any other authority which the Central Govt. may direct and for such period as which the Central Govt. may direct and for such period as may be prescribed. may be prescribed. d) May also sale the assets if funds are not available for running d) May also sale the assets if funds are not available for running the activity. the activity. Next Previous

35 Next Previous ISSUES NEED CLARITY

36 a) Giving of loans under Micro Credit program to individuals or groups. or groups. b) Whether transfer of fund directly to end beneficiaries is permissible? permissible? c) Will non-receipt of foreign contribution for two years results in cancellation? results in cancellation? d)How to report multiple bank accounts opened earlier? Next Previous

37 Next Previous IMMEDIATE ACTION POINTS

38 IMMDIATE ACTION POINTS IMMDIATE ACTION POINTS a) Operational bank account & intimation thereof. b) Review of investments in view of the definition of speculative activities. activities. c) Adjust the accounting framework so that the location wise expenditure can be determined. expenditure can be determined. d) Separate books of accounts for documenting & accounting of foreign contribution received in kind. of foreign contribution received in kind. e) Process of transfer of foreign fund to FC registered organisation after obtaining a certificate. organisation after obtaining a certificate. f) Process of transfer of fund to non-FC organisation with prior approval. prior approval. g) Application for prior permission and registration filed under the old act to be regularised by furnishing filing fees the old act to be regularised by furnishing filing fees Next Previous

39 Next Previous THANK YOU


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