1. Foreign Contribution (Regulation) Act, 2010 SEPTEMBER 10, 2011 CA Hiren D. Shah KANDIVALI CPE STUDY CIRCLE OF WIRC OF ICAI

2. Preamble Foreign Contribution ( Regulation) Act,2010 came into effect from May 1,2011 Foreign Contribution ( Regulation) Act,2010 came into effect from May 1,2011 Foreign Contribution Regulation Rules, 2011 have come into force from May 1,2011 Foreign Contribution Regulation Rules, 2011 have come into force from May 1,2011 In exercise of the power conferred by section 48 of the FCRA, the Central Government makes the rules Foreign Contribution Regulation Rules. In exercise of the power conferred by section 48 of the FCRA, the Central Government makes the rules Foreign Contribution Regulation Rules.

3. In Layman Understanding… Object Any Foreign Contribution Foreign Hospitality Illegitimate Foreign Source or With unknown source Which will weaken national Security Needs Close Scrutiny by Home Ministry being Security Issues Concern is Threat to Economy This is all about FCRA…..

4. FCRA Moves around…. Objects : Foreign Contribution Foreign Source Foreign Hospitality

5. Why FCRA Regulation???? As per website of Ministry of Home Affairs, purpose of FCRA is to facilitate receipt of foreign contribution for genuine purposes, without compromising national security concerns. As per website of Ministry of Home Affairs, purpose of FCRA is to facilitate receipt of foreign contribution for genuine purposes, without compromising national security concerns. Focus of FCRA has shifted to internal security Focus of FCRA has shifted to internal security It is doubtful that destructive elements will use FCRA route to fund their supporters in India It is doubtful that destructive elements will use FCRA route to fund their supporters in India

6. Why FCRA Regulation???? Aimed at regulating the acceptance and utilization of foreign contributions and acceptance of foreign hospitality by certain individuals or associations or companies Aimed at regulating the acceptance and utilization of foreign contributions and acceptance of foreign hospitality by certain individuals or associations or companies To Prevent mis-utilisation of the foreign To Prevent mis-utilisation of the foreign contribution received by the Associations

7. FCRA Applicability FCRA 2010 extends to whole of India and also applies to citizens of India outside India and associates/ branches and subsidiaries outside India of Companies or bodies registered or incorporated in India FCRA 2010 extends to whole of India and also applies to citizens of India outside India and associates/ branches and subsidiaries outside India of Companies or bodies registered or incorporated in India The Act is applicable to any citizen of India whether he is in India or outside India. However Act is not applicable to a foreigner while outside India The Act is applicable to any citizen of India whether he is in India or outside India. However Act is not applicable to a foreigner while outside India Applies to Citizen of India or Entity Registered in India

8. FCRA Override FEMA or other General Acts Since the Act is a special Act, its provisions will prevail over provisions of FEMA. Thus even if there is permission for certain transactions ( like donation, gift etc..) under FEMA, restrictions under FCRA will be applicable if the transaction is covered under provisions of the FCRA Since the Act is a special Act, its provisions will prevail over provisions of FEMA. Thus even if there is permission for certain transactions ( like donation, gift etc..) under FEMA, restrictions under FCRA will be applicable if the transaction is covered under provisions of the FCRA

9. Who Administrate FCRA?? Ministry of Home Affairs, FCRA wing/Foreign Division, Government of India administrate FCRA Ministry of Home Affairs, FCRA wing/Foreign Division, Government of India administrate FCRA

10. Where to Apply & How to Apply?? The Department has taken initiative of e- governance. The Department has taken initiative of e- governance. Application for registration and permission can be downloaded from the website i.e. http://mha.nic.in/fcra.htm Application for registration and permission can be downloaded from the website i.e. http://mha.nic.in/fcra.htm http://mha.nic.in/fcra.htm Returns to be filed under the FCRA can be filed online Returns to be filed under the FCRA can be filed online

11. Some Key Feature of FCRA The concept of “permanent” registration has been done away The concept of “permanent” registration has been done away a five-year registration is provided so that dormant organizations do not continue a five-year registration is provided so that dormant organizations do not continue All existing registered organizations are deemed to be on a five year validity from the date of enforceability of the Act All existing registered organizations are deemed to be on a five year validity from the date of enforceability of the Act Organizations of a “ political nature” cannot receive foreign funds Organizations of a “ political nature” cannot receive foreign funds A person granted prior permission to receive foreign contribution shall utilize it for the purposes for which it has been received. It cannot be used for speculative business; A person granted prior permission to receive foreign contribution shall utilize it for the purposes for which it has been received. It cannot be used for speculative business; Organization cannot use more than 50 per cent of its received for administration purposes. Organization cannot use more than 50 per cent of its received for administration purposes.

12. Some Key Feature of FCRA..Contd.. A procedure for suspension and cancellation of registration has also been prescribed A procedure for suspension and cancellation of registration has also been prescribed A statutory role provided for the banking sector in regulation A statutory role provided for the banking sector in regulation Time limits have been provided for accountability on the part of officials Time limits have been provided for accountability on the part of officials A provision has been made for Compounding Offence A provision has been made for Compounding Offence

13. Some Key Feature of FCRA..Contd.. No person who receives foreign contribution as per provisions of this Act shall transfer to other person unless that person is also authorized to receive foreign contribution as per rules made by the Central Government No person who receives foreign contribution as per provisions of this Act shall transfer to other person unless that person is also authorized to receive foreign contribution as per rules made by the Central Government NGO and individuals will have to submit their accounts in time failing which actions would be taken against them NGO and individuals will have to submit their accounts in time failing which actions would be taken against them

14. Important Provisions of FCRA Transfer of Foreign Contribution to other Registered or Unregistered person Transfer of Foreign Contribution to other Registered or Unregistered person Foreign Contribution received can be transferred to other registered or unregistered person with permission of Central Government. Application should be made in form FC-10 Foreign Contribution received can be transferred to other registered or unregistered person with permission of Central Government. Application should be made in form FC-10 Transfer up to 10% of foreign contribution can be made even to person who has not been granted registration or prior permission, with approval of Central Government Transfer up to 10% of foreign contribution can be made even to person who has not been granted registration or prior permission, with approval of Central Government Such transfer should be reported in forms FC-6 and FC-10 by the transferor and the recipient Such transfer should be reported in forms FC-6 and FC-10 by the transferor and the recipient

15. Changes in the 2010 Act Vis-à-vis 1976 Act Scholarship/ stipend kept out of provisions of FCRA Scholarship/ stipend kept out of provisions of FCRA Foreign contribution received from relative is now outside FCRA Foreign contribution received from relative is now outside FCRA Only subsidiaries of foreign companies will be covered within the definition of “ foreign source”( presently, all companies with shareholding exceeding 50% are covered in the definition) Only subsidiaries of foreign companies will be covered within the definition of “ foreign source”( presently, all companies with shareholding exceeding 50% are covered in the definition) Electronics media brought within list of persons who cannot accept foreign collaboration Electronics media brought within list of persons who cannot accept foreign collaboration

16. Changes in the 2010 Act Vis-à-vis 1976 Act Provisions of the repealed FCRA 1976 have been retained, the FCRA 2010 is an improvement over the repealed Act as more stringent provisions have been made in order to prevent mis-utilisation of the foreign contribution received by the association Provisions of the repealed FCRA 1976 have been retained, the FCRA 2010 is an improvement over the repealed Act as more stringent provisions have been made in order to prevent mis-utilisation of the foreign contribution received by the association Provisions have been made for suspension as well as cancellation of registration granted for violation of the provisions of the Act. Provisions have been made for suspension as well as cancellation of registration granted for violation of the provisions of the Act.

17. Changes in the 2010 Act Vis-à-vis 1976 Act Interest received on foreign contribution will also fall within the meaning of “ foreign contribution” Interest received on foreign contribution will also fall within the meaning of “ foreign contribution” Provision made to permit transfer of foreign contribution to other person Provision made to permit transfer of foreign contribution to other person Restriction to utilize foreign contribution for administrative purpose to 50% Restriction to utilize foreign contribution for administrative purpose to 50% Prohibition on use of foreign contribution for speculative purposes Prohibition on use of foreign contribution for speculative purposes

18. Changes in the 2010 Act Vis-à-vis 1976 Act Time limit of 90 days for giving decision on registration or prior permission to obtain foreign contribution Time limit of 90 days for giving decision on registration or prior permission to obtain foreign contribution Management of foreign contribution and assets created out of such contribution of persons whose certificates have been cancelled Management of foreign contribution and assets created out of such contribution of persons whose certificates have been cancelled Disposal of assets created out of foreign contribution if the person becomes defunct or ceases to exist Disposal of assets created out of foreign contribution if the person becomes defunct or ceases to exist Revision by Central Government of orders passed by it Revision by Central Government of orders passed by it Penalty for making false statement, declaration or delivering false account Penalty for making false statement, declaration or delivering false account

19. Unsolved Problems… No lower limit for applicability of FCRA provisions ( even small donations attracts FCRA provisions) No lower limit for applicability of FCRA provisions ( even small donations attracts FCRA provisions) Liberalization announced under FEMA are not extended under FCRA Liberalization announced under FEMA are not extended under FCRA Gifts are permitted under FEMA, but gifts falling under FCRA will be still governed by provisions of FCRA Gifts are permitted under FEMA, but gifts falling under FCRA will be still governed by provisions of FCRA FCRA will override FEMA and other Allied Laws FCRA will override FEMA and other Allied Laws

20. Definition of “ Foreign Contribution” Means the donation, delivery or transfer made by any foreign source Means the donation, delivery or transfer made by any foreign source Includes : Includes : Article, not given to a person as a gift for personal use, if the market value, in India, of such exceeds Rs 1,000/- Article, not given to a person as a gift for personal use, if the market value, in India, of such exceeds Rs 1,000/- Any Currency, whether Indian or foreign Any Currency, whether Indian or foreign Any securities defined under Section 2(h) of the Securities Contracts (regulation) Act,1956 Any securities defined under Section 2(h) of the Securities Contracts (regulation) Act,1956 Any foreign securities as defined in Section2(o) of the Foreign Exchange Management Act,1999 Any foreign securities as defined in Section2(o) of the Foreign Exchange Management Act,1999 This excludes earning from foreign client by an NGO/ association in lieu of goods sold or services rendered by it as this is a transaction of commercial nature This excludes earning from foreign client by an NGO/ association in lieu of goods sold or services rendered by it as this is a transaction of commercial nature

21. Meaning of Security under Securities Contracts (Regulation) Act,1956 Securities include – Securities include – (i). Shares, Scripts, Stocks, Bonds, debentures, debenture stock or other marketable securities of a like nature in or of any incorporated company or other body corporate (i). Shares, Scripts, Stocks, Bonds, debentures, debenture stock or other marketable securities of a like nature in or of any incorporated company or other body corporate (ii). Derivatives (ii). Derivatives (iii). Units or any other instruments issued by any collective investment scheme to the investors in such schemes (iii). Units or any other instruments issued by any collective investment scheme to the investors in such schemes (iv). Security Receipt issued by Securitization Company (iv). Security Receipt issued by Securitization Company

22. Meaning of Security under Securities Contracts (Regulation) Act,1956 Units or other instruments issued to investors under any mutual funds scheme Units or other instruments issued to investors under any mutual funds scheme Any certificate or instrument issued to an investor by any issuer being a special purpose distintict entity, which possesses any debt or receivable, including mortgage debt, as the case may be Any certificate or instrument issued to an investor by any issuer being a special purpose distintict entity, which possesses any debt or receivable, including mortgage debt, as the case may be Government securities Government securities Such other instruments as may be declared by the Central Government to be securities Such other instruments as may be declared by the Central Government to be securities Rights or interest in securities Rights or interest in securities

23. Meaning of Foreign Security under Foreign Exchange Management Act “ Foreign Security” means any security in the form of shares, stocks, bonds, debentures or any other instrument denominated or expressed in foreign currency “ Foreign Security” means any security in the form of shares, stocks, bonds, debentures or any other instrument denominated or expressed in foreign currency It includes securities expressed in foreign currency, but where redemption or any form of return such as interest or dividend is payable in Indian currency It includes securities expressed in foreign currency, but where redemption or any form of return such as interest or dividend is payable in Indian currency

24. Who cannot accept foreign Contribution … No foreign contribution shall be accepted by any – No foreign contribution shall be accepted by any – Candidate for election Candidate for election Correspondent, columnist, cartoonist, editor, owner, printer or publisher of a registered newspaper Correspondent, columnist, cartoonist, editor, owner, printer or publisher of a registered newspaper Judge, Government Servant or employee of any corporation or any other body controlled or owned by the Government Judge, Government Servant or employee of any corporation or any other body controlled or owned by the Government Member of any legislature Member of any legislature Political party or office-bearer thereof, Political party or office-bearer thereof,

25. Who cannot accept foreign Contribution… Organization of a political nature as may be specified by Central Government Organization of a political nature as may be specified by Central Government Association or Company engaged in the production or broadcast of audio news or audio-visual news or current affairs programmes through any electronic mode, or any other electronic form as defined U/s 2 of the Information Technology Act,2000 Association or Company engaged in the production or broadcast of audio news or audio-visual news or current affairs programmes through any electronic mode, or any other electronic form as defined U/s 2 of the Information Technology Act,2000 Correspondent or columnist, cartoonist, editor, owner of the association or company Correspondent or columnist, cartoonist, editor, owner of the association or company

26. Who cannot accept foreign contribution on behalf of other person No person, resident in India, and no citizen of India resident outside India, shall accept any foreign contribution, or acquire or agree to acquire any currency from a foreign source, on behalf of any political party, or any person referred under FCRA No person, resident in India, and no citizen of India resident outside India, shall accept any foreign contribution, or acquire or agree to acquire any currency from a foreign source, on behalf of any political party, or any person referred under FCRA

27. Prohibited Organization to accept foreign contribution Organization with fictitious or benami accounts, have indulged in conversation directly or indirectly, created communal tension, supported sedition or have diverted funds earlier would be barred from receiving foreign contributions

28. Exception to foreign contribution Contribution made by citizen of India living in another country ( i.e. Non Resident Indian), from his personal savings, through the normal banking channels is not treated as foreign contribution. However, while accepting any donations from such NRI, it is advisable to obtain his passport details to ascertain that he/she is an Indian passport holder. Contribution made by citizen of India living in another country ( i.e. Non Resident Indian), from his personal savings, through the normal banking channels is not treated as foreign contribution. However, while accepting any donations from such NRI, it is advisable to obtain his passport details to ascertain that he/she is an Indian passport holder.

29. Not to be Considered as Foreign Contribution Gift or Presentation made to Indian delegation accepted in accordance with the rules made by the Central Government Gift or Presentation made to Indian delegation accepted in accordance with the rules made by the Central Government From relative From relative By way of remittance received in the ordinary course of business through any official channel, post office, or any authorized person in FEMA By way of remittance received in the ordinary course of business through any official channel, post office, or any authorized person in FEMA By way of scholarship, stipend or any payment of like nature By way of scholarship, stipend or any payment of like nature

30. Not to be Considered as Foreign Contribution Foreign Contribution accepted: Foreign Contribution accepted: By way of salary, wages or other remuneration due from any foreign source or by way of payment in the ordinary course of business transacted in India by such foreign source By way of salary, wages or other remuneration due from any foreign source or by way of payment in the ordinary course of business transacted in India by such foreign source By way of payment, in the course of international trade or commerce, or in the ordinary course of business transacted outside India By way of payment, in the course of international trade or commerce, or in the ordinary course of business transacted outside India As an agent of foreign source in relation to any transaction made by such foreign source with the Central Government or State Government As an agent of foreign source in relation to any transaction made by such foreign source with the Central Government or State Government

31. Who cannot deliver any currency to other person….. No person, resident in India, shall deliver any currency, whether Indian or foreign, which ahs been accepted from any foreign source, to any person if he knows or has reasonable cause to believe that such other person intends, or is likely, to deliver such currency to any political party or any person as defined under FCRA No person, resident in India, shall deliver any currency, whether Indian or foreign, which ahs been accepted from any foreign source, to any person if he knows or has reasonable cause to believe that such other person intends, or is likely, to deliver such currency to any political party or any person as defined under FCRA

32. Public Disclosure of receipt If foreign contribution received in a year exceeds Rs 1 crore, summary of receipts and utilization shall be kept in public domain for the year and one year thereafter. Central Government will also display the data on its website for information of general public If foreign contribution received in a year exceeds Rs 1 crore, summary of receipts and utilization shall be kept in public domain for the year and one year thereafter. Central Government will also display the data on its website for information of general public

33. Foreign Source…. Includes: Includes: Foreign Government, International agency ( but not UN or its agencies, World Bank, IMF etc..) – list of agencies exempted on the website http://mha.nic.in/fcra/intro/FCRA- exempted AgenciesUN.pdf Foreign Government, International agency ( but not UN or its agencies, World Bank, IMF etc..) – list of agencies exempted on the website http://mha.nic.in/fcra/intro/FCRA- exempted AgenciesUN.pdfhttp://mha.nic.in/fcra/intro/FCRA- Foreign Company Foreign Company Multi-national corporation Multi-national corporation Company where more than 50% capital is held by foreigner or foreign company, foreign trust, foreign citizen etc.. Company where more than 50% capital is held by foreigner or foreign company, foreign trust, foreign citizen etc..

34. Interesting FAQs Whether donations by PIO cardholder or PIO who holds passports or registered OCI or dual Citizen would be considered “ foreign source”? Whether donations by PIO cardholder or PIO who holds passports or registered OCI or dual Citizen would be considered “ foreign source”? Yes, because under all these three categories are foreign nationals and hold passports of the country of their nationality Yes, because under all these three categories are foreign nationals and hold passports of the country of their nationality Foreign nationality is the Important criteria

35. Interesting FAQs Can foreign Contribution be received in Rupees? Yes. Any amount received from “ foreign source” in rupees or foreign currency is construed as “ foreign contribution “ under law. Such transactions even in rupees terms is considered foreign contribution.

36. Would donations by PIO / OCI considered as “ foreign Source” Would donations by PIO / OCI considered as “ foreign Source” The donations by Persons of Indian Origin (PIO) Card holder or Persons of Indian Origin (PIO) who hold other country’s passports or registered Overseas Citizens of India (OCI) would be considered “ foreign source” The donations by Persons of Indian Origin (PIO) Card holder or Persons of Indian Origin (PIO) who hold other country’s passports or registered Overseas Citizens of India (OCI) would be considered “ foreign source”

37. Meaning of Speculation activities… Investment including investment in mutual funds or in shares linked to market force as regards to appreciation or depreciation of the original investment Investment including investment in mutual funds or in shares linked to market force as regards to appreciation or depreciation of the original investment

38. Speculative Activities…. Any activity or investment that has an element of risk of appreciation or depreciation of the original investment, linked to market forces, including investment in mutual funds or in shares Any activity or investment that has an element of risk of appreciation or depreciation of the original investment, linked to market forces, including investment in mutual funds or in shares Participation in any scheme that promises high returns like investment in chits or land or similar assets not directly linked to the declared aims and objectives of the organization or association Participation in any scheme that promises high returns like investment in chits or land or similar assets not directly linked to the declared aims and objectives of the organization or association Debt based secured investment shall not be treated as speculative Investment Debt based secured investment shall not be treated as speculative Investment

39. Intimation about Investment in Speculative Activities… Intimation or Information about speculative activities of any organization shall be furnished to Secretary to Government of India, Ministry of Home Affairs, New Delhi by registered post Intimation or Information about speculative activities of any organization shall be furnished to Secretary to Government of India, Ministry of Home Affairs, New Delhi by registered post

40. Administrative Expenses….. Salaries, wages, travel expenses or any remuneration realized by the Members of the executive Committee or Governing Council of the person Salaries, wages, travel expenses or any remuneration realized by the Members of the executive Committee or Governing Council of the person The expenditure incurred on salaries or remuneration of personnel engaged in training or for collection or analysis of field data of an association primarily engaged in research or training shall not be counted towards administration expenses. The expenditure incurred on salaries or remuneration of personnel engaged in training or for collection or analysis of field data of an association primarily engaged in research or training shall not be counted towards administration expenses.

41. Administrative Expenses….Contd.. All expenses towards hiring of personnel for management of the activities of the person and salaries, wages or any kind of remuneration paid, including cost of travel, to such personnel All expenses towards hiring of personnel for management of the activities of the person and salaries, wages or any kind of remuneration paid, including cost of travel, to such personnel All expenses related to consumables like electricity and water charges, telephone charges, postal charges, repairs to premises from where the organization or Association is functioning, stationery and printing charges, transport charges by the Members of the Executive Committee or Governing Council and expenditure on office equipment All expenses related to consumables like electricity and water charges, telephone charges, postal charges, repairs to premises from where the organization or Association is functioning, stationery and printing charges, transport charges by the Members of the Executive Committee or Governing Council and expenditure on office equipment

42. Administrative Expenses….Contd.. Cost of accounting for and administering funds Cost of accounting for and administering funds Expenses towards running and maintenance of vehicles Expenses towards running and maintenance of vehicles Cost of writing and filing reports Cost of writing and filing reports Legal and professional charges Legal and professional charges Rent of premises, repairs to premises and expenses on other utilities Rent of premises, repairs to premises and expenses on other utilities Expenses directly related to the stated objective of the Welfare oriented organization shall be excluded

43. Registration for Acceptance of Foreign Contribution Any Association ( except political nature) having a definite cultural, economic, educational, religious or social Programme can accept foreign contribution Any Association ( except political nature) having a definite cultural, economic, educational, religious or social Programme can accept foreign contribution Prior Permission vis-à-vis Registration Prior Permission vis-à-vis Registration Prior Permission is for specific Donor and Specific Project Prior Permission is for specific Donor and Specific Project Registration is for General Donor and Association object Registration is for General Donor and Association object

44. Registration On line Application On line Application Hard Copy to be sent within 30 days of submitting Online Application Hard Copy to be sent within 30 days of submitting Online Application If the application is rejected, further application can be made only after six months If the application is rejected, further application can be made only after six months Application can not be made within 6 months after submitting application for prior permission for same project Application can not be made within 6 months after submitting application for prior permission for same project Registration shall be granted within 90 days. If not granted, reasons will be communicated within 90 days unless protected under RTI Registration shall be granted within 90 days. If not granted, reasons will be communicated within 90 days unless protected under RTI

45. Validity of Registration Registration is granted for a period of 5 years. Registration is granted for a period of 5 years. It can be renewed by making application by applying six month before expiry of registration It can be renewed by making application by applying six month before expiry of registration If the application for renewal is not made, the registration will lapse at the end of 5 years. In such case, fresh application has to be made If the application for renewal is not made, the registration will lapse at the end of 5 years. In such case, fresh application has to be made Application for renewal shall be made in Form FC-5 with fees of Rs 500/-. Application for renewal shall be made in Form FC-5 with fees of Rs 500/-.

46. Suspension or Cancellation of Registration Central Government can suspend registration for 180 days by order in writing. Central Government can suspend registration for 180 days by order in writing. During this period, foreign contribution cannot be accepted or utilized or can be accepted or utilized only as per terms and conditions specified by Central Government During this period, foreign contribution cannot be accepted or utilized or can be accepted or utilized only as per terms and conditions specified by Central Government Reason should be given and principles of natural justice has to be followed. Such action cannot be arbitrary Reason should be given and principles of natural justice has to be followed. Such action cannot be arbitrary If such order of suspension is passed, up to 25% of unutilized amount can be spent with prior approval of Central Government for declared aims and objects. Balance amount can be spent only after suspension is revoked If such order of suspension is passed, up to 25% of unutilized amount can be spent with prior approval of Central Government for declared aims and objects. Balance amount can be spent only after suspension is revoked No appeal is provided against the order of suspension, but writ petition can be filed

47. Suspension or Cancellation of Registration Central Government can suspend registration for 180 days by order in writing. Central Government can suspend registration for 180 days by order in writing. During this period, foreign contribution cannot be accepted or utilized or can be accepted or utilized only as per terms and conditions specified by Central Government During this period, foreign contribution cannot be accepted or utilized or can be accepted or utilized only as per terms and conditions specified by Central Government Reason should be given and principles of natural justice has to be followed. Such action cannot be arbitrary Reason should be given and principles of natural justice has to be followed. Such action cannot be arbitrary If such order of suspension is passed, up to 25% of unutilized amount can be spent with prior approval of Central Government for declared aims and objects. Balance amount can be spent only after suspension is revoked If such order of suspension is passed, up to 25% of unutilized amount can be spent with prior approval of Central Government for declared aims and objects. Balance amount can be spent only after suspension is revoked No appeal is provided against the order of suspension, but writ petition can be filed

48. Prior Permission vis-à-vis Registration Prior Permission Registration Prior Permission is for Specific Donor and Specific Project Registration is for all types of Donation within the object of the Association and for any Donor Prior Permission is one time Registration shall be granted for 5 years Prior Permission do not registration Registration includes Prior Permission No reasons for denial shall be communicated Reasons for denial shall be communicated unless protected under RTI Application shall be made in Form FC – 4 electronically Application shall be made in Form FC – 3 electronically Prescribed Fees Rs 1000/- Prescribed Fees Rs. 2,000/- Policy for Permission or registration is that Organization in existence for 3 years and have spent at least 6 lakhs over its activities excluding Admn expenses

49. Adjudication If adverse order is passed by Competent authority, application on plain paper for revision can be made to Secretary, Ministry of Home Affairs, Government of India, New Delhi. The prescribed fee shall be RS 1,000/-. If adverse order is passed by Competent authority, application on plain paper for revision can be made to Secretary, Ministry of Home Affairs, Government of India, New Delhi. The prescribed fee shall be RS 1,000/-. Appeal against the order of refusing registration or permission lies with High Court Appeal against the order of refusing registration or permission lies with High Court

50. Important Provisions of FCRA Bank Account Bank Account Foreign Contribution should be received only in the branch of Bank as specified in the application for grant of registration certificate Foreign Contribution should be received only in the branch of Bank as specified in the application for grant of registration certificate Held in State v. M Kurian 2011 AIR SCW 3540, it was held that if permission is obtained to receive foreign contribution in a designated account, depositing the same in other account is an offence. It was held that breach of undertaking given while submitting an application is an offence. For utilization of the funds, one or more banks are permissible For utilization of the funds, one or more banks are permissible

51. Mandatory Reporting by Banks The banks also have been brought under the ambit of the act and every bank or authorized person in foreign exchange shall report to such authority prescribed amount of foreign remittance and the source and manner in which the foreign remittance was received The banks also have been brought under the ambit of the act and every bank or authorized person in foreign exchange shall report to such authority prescribed amount of foreign remittance and the source and manner in which the foreign remittance was received Any organization receiving funds over Rs 10 lakh, the bank will immediately inform the government to enable the agencies to “ track” the funds. Any organization receiving funds over Rs 10 lakh, the bank will immediately inform the government to enable the agencies to “ track” the funds.

52. Why Immediate Intimation by Banks… Government Estimates…. 40,000 organizations receiving foreign contribution in the country out of which only 18,000 report the inflow of funds and submit their accounts Government Estimates…. 40,000 organizations receiving foreign contribution in the country out of which only 18,000 report the inflow of funds and submit their accounts

53. Audit & Accounts Separate set of accounts and records, exclusively for the foreign contribution received and utilized Separate set of accounts and records, exclusively for the foreign contribution received and utilized Every person who receives foreign contribution shall submit a report, duly certified by a Chartered Accountant in the prescribed form accompanied by an Income and expenditure statement, receipt and payment and balance sheet for every financial year to the secretary to the Government of India, Every person who receives foreign contribution shall submit a report, duly certified by a Chartered Accountant in the prescribed form accompanied by an Income and expenditure statement, receipt and payment and balance sheet for every financial year to the secretary to the Government of India, Foreign contribution received by a candidate for election shall be furnished in the prescribed form within forty-five days from the date on which he is duly nominated as a candidate for election Foreign contribution received by a candidate for election shall be furnished in the prescribed form within forty-five days from the date on which he is duly nominated as a candidate for election

54. Description of Forms to be filed… Form No Description FC- 1 Information to the Central Government of receipt of foreign contribution by way of gift from relative FC – 2 Application for seeking prior permission of the Central Government to accept foreign hospitality FC – 3 Application for “ registration “ U/S 11 of the FCRA for acceptance of foreign contribution by an Association having definite cultural, economic, educational, religious or social programme FC -4 Application for “ prior permission” U/S 11(2) of FCRA for the acceptance of foreign contribution by an Association having definite cultural, economic, educational, religious or social programme FC – 5 Application for seeking of “ registration certificate “ U/S 13 of the FCRA ( To be submitted within six month before the date of expiry of the certificate of registration FC - 6 Account of Foreign Contribution for the year ending on the 31 st March FC - 7 Information about Foreign Contribution( Articles) Account FC - 8 Intimation about foreign Contribution ( securities) Account FC – 9 Intimation to the Central Govt. of Receipt of foreign contribution received by a candidate for Election FC -10 Application for seeking permission for transfer of foreign contribution to other registered/ unregistered persons

55. What Foreign Hospitality?? Means any offer not being casual one, made in cash or kind by a foreign source for providing a person with the costs of travel to any foreign country or territory or with free boarding, lodging, transport or medical treatment. Thus casual hospitality is not “ foreign hospitality” Means any offer not being casual one, made in cash or kind by a foreign source for providing a person with the costs of travel to any foreign country or territory or with free boarding, lodging, transport or medical treatment. Thus casual hospitality is not “ foreign hospitality” ( e.g. offering meals or casual lift in vehicle)

56. Restriction on Acceptance of Foreign Hospitality A member of Legislature, Office bearer of political party, judge, Government servant or employee of any corporation or any body owned or controlled by Central Government cannot accept foreign hospitality without prior permission of Central Government A member of Legislature, Office bearer of political party, judge, Government servant or employee of any corporation or any body owned or controlled by Central Government cannot accept foreign hospitality without prior permission of Central Government Such person shall apply in form FC-6 for prior permission to accept foreign hospitality. Application should be with administrative clearance of concerned ministry and invitation letter from host country. Application should be made preferably two weeks prior to proposed date of onward journey Such person shall apply in form FC-6 for prior permission to accept foreign hospitality. Application should be with administrative clearance of concerned ministry and invitation letter from host country. Application should be made preferably two weeks prior to proposed date of onward journey

57. Exception in case of urgent medical treatment The only exception is in case of emergent medical aid on account of sudden illness contacted during a visit out of India. In such case, report within one month from the date of receiving hospitality giving details of hospitality received The only exception is in case of emergent medical aid on account of sudden illness contacted during a visit out of India. In such case, report within one month from the date of receiving hospitality giving details of hospitality received In such case, intimation of foreign hospitality shall be made within 60 days of such receipt giving prescribed details, only if the value of such hospitality in emergent medical aid is Rs 1 lacs or more In such case, intimation of foreign hospitality shall be made within 60 days of such receipt giving prescribed details, only if the value of such hospitality in emergent medical aid is Rs 1 lacs or more

58. Interesting FAQs Whether Donation given by Non-Resident Indians (NRIs) is treated as “ foreign contribution”? Whether Donation given by Non-Resident Indians (NRIs) is treated as “ foreign contribution”? Contribution made by a citizen of India living in another Country from his personal savings through the normal banking channels, is not treated as foreign contribution. However, while accepting any donations from such NRI, it is advisable to obtain his passport details to ascertain that he/she is an Indian passport holder. Contribution made by a citizen of India living in another Country from his personal savings through the normal banking channels, is not treated as foreign contribution. However, while accepting any donations from such NRI, it is advisable to obtain his passport details to ascertain that he/she is an Indian passport holder.

59. Interesting FAQs Whether donations by PIO cardholder or PIO who holds passports or registered OCI or dual Citizen would be considered “ foreign source”? Whether donations by PIO cardholder or PIO who holds passports or registered OCI or dual Citizen would be considered “ foreign source”? Yes, because under all these three categories are foreign nationals and hold passports of the country of their nationality Yes, because under all these three categories are foreign nationals and hold passports of the country of their nationality Can foreign Contribution be received in Rupees? Yes. Any amount received from “ foreign source” in rupees or foreign currency is construed as “ foreign contribution “ under law. Such transactions even in rupees terms is considered foreign contribution.

60. Interesting FAQs What is the procedure for change of designated Bank Account? What is the procedure for change of designated Bank Account? For Change of the bank account, an application in prescribed form mentioning the details of the old account and the proposed new bank account along with justification for change may be submitted to Ministry of Home Affairs along with copy of resolution of the executive committee for such change. For Change of the bank account, an application in prescribed form mentioning the details of the old account and the proposed new bank account along with justification for change may be submitted to Ministry of Home Affairs along with copy of resolution of the executive committee for such change.

61. Interesting FAQs What is the procedure for seeking change in the name /address of the association ? What is the procedure for seeking change in the name /address of the association ? For seeking change in the name / address of the association, one should use the prescribed form available on Ministry of Home Affairs For seeking change in the name / address of the association, one should use the prescribed form available on Ministry of Home Affairs website http://mha.nic.in/fore.htm

62. Interesting FAQs Whether foreigners can be appointed as Executive Committee members? Whether foreigners can be appointed as Executive Committee members? Foreign nationals are generally discouraged from being appointed as member of Executive Committee by an association. However, Foreign nationals, fulfilling the following conditions, may be appointed as Executive Committee members, after obtaining prior permission of the Central Government: (i).The foreigner is married to an Indian citizen; (i).The foreigner is married to an Indian citizen; (ii).The foreigner has been living and working in India for at least five years (ii).The foreigner has been living and working in India for at least five years (iii).The foreigner has made available his/her specialized knowledge, especially in the medical and health related field on a voluntary basis in India, in the past (iii).The foreigner has made available his/her specialized knowledge, especially in the medical and health related field on a voluntary basis in India, in the past (iv).The foreigner is part of the Board of Trustees/ Executive Committee in terms of the provisions in an inter-governmental agreement; (iv).The foreigner is part of the Board of Trustees/ Executive Committee in terms of the provisions in an inter-governmental agreement; (v).The foreigner is a part of the Board of Trustee/ Executive Committee in an ex-officio capacity representing a multilateral body which is exempted from the definition of foreign source. The need for such an appointment should, however, be adequately justified (v).The foreigner is a part of the Board of Trustee/ Executive Committee in an ex-officio capacity representing a multilateral body which is exempted from the definition of foreign source. The need for such an appointment should, however, be adequately justified

63. Can NGO use the foreign contributions for Investment in Mutual Funds and other speculative investments Investment cannot be made into Mutual fund or any speculative activities. Speculative activity is defined in Rule 4 of FCRP 2011 which is summaries as under: Investment cannot be made into Mutual fund or any speculative activities. Speculative activity is defined in Rule 4 of FCRP 2011 which is summaries as under: Any activity or investment with the element of risk of appreciation or depreciation Any activity or investment with the element of risk of appreciation or depreciation Participation in any scheme which promises high returns Participation in any scheme which promises high returns Debt based secured Investment Debt based secured Investment

64. Can the fee paid by the foreign delegates/participants fees termed as foreign contribution Foreign delegates/participants paying “ delegate/participation Fees” in foreign currency for participation in a conference/ seminar which is utilized for the purpose of meeting the expenditure of hosting the conference/seminar and is not treated as foreign contribution and as such no permission under FCRA is required Foreign delegates/participants paying “ delegate/participation Fees” in foreign currency for participation in a conference/ seminar which is utilized for the purpose of meeting the expenditure of hosting the conference/seminar and is not treated as foreign contribution and as such no permission under FCRA is required

65. Can Capital assets purchased in the name of the Office bearer Every asset purchased with foreign contribution should be acquired and possessed in the name of the association since association has a separate legal entity distinct from its members Every asset purchased with foreign contribution should be acquired and possessed in the name of the association since association has a separate legal entity distinct from its members

66. What are Opportunity for CA?? Assist for obtaining application for prior permission or registration Assist for obtaining application for prior permission or registration Certificate for Accounts for foreign contribution for the year on 31 st March. ( i.e. Brought forward foreign contribution, receipt of foreign contribution, balance of unutilized foreign contribution at the end of the year Certificate for Accounts for foreign contribution for the year on 31 st March. ( i.e. Brought forward foreign contribution, receipt of foreign contribution, balance of unutilized foreign contribution at the end of the year Certificate for Accounts for foreign contribution in kind for the year on 31 st March. ( i.e. Brought forward foreign contribution, receipt of foreign contribution, balance of unutilized foreign contribution at the end of the year Certificate for Accounts for foreign contribution in kind for the year on 31 st March. ( i.e. Brought forward foreign contribution, receipt of foreign contribution, balance of unutilized foreign contribution at the end of the year Assisting banks to file annual return in the prescribed form as regards to foreign contribution received Assisting banks to file annual return in the prescribed form as regards to foreign contribution received