Types of FCRA registration, section 8 company, what is FCRA registration, Foreign Contribution Regulation Act, 2010, Ebizfiling.

What are the different types of FCRA registration in India?

Introduction

The world is now more concerned with social and environmental issues. Businesses actively engage in activities encouraging economic, social, and cultural growth and expansion along with their everyday goal of profit-making. In today’s technologically advanced society, everyone is so connected and linked that traveling to any location on earth is very simple. There is a regular exchange between individuals, groups, and countries. Therefore, the flow of foreign currency in and out of each country is quite natural. Since the volume of these transactions is so high, it is hard to trace every single foreign currency transaction properly. Due to this issue, the Foreign Contribution Regulation Act, 2010 was introduced to provide funds to charitable institutions such as trusts, section 8 company, and society. In this article, we will discuss all the types of FCRA registration in India. But before discussing that, let’s first understand FCRA registration.

What is FCRA Registration?  

The full form of FCRA is Foreign Contribution Regulation Act. When any charitable institution such as Trust, Society, and Section 8 Company, wants funds or donations from foreign entities/resources, they shall register themselves under the Foreign Contribution Regulation Act, 2010.

The purpose of the Act is to control how certain individuals, businesses, or associations accept and use foreign hospitality or contributions, as well as to forbid such acceptance and use for any activities that are harmful to the interests of the country or that are connected to such activities.

What are the benefits of FCRA Registration in India?

  • A company that has been registered under this system would be well-known in society.
  • It helps those groups that work for the benefit and improvement of the public and are actively engaged in social work.
  • It helps the group to receive lawful government aid and foreign donations.
  • The applicant may benefit from full government support as FCRA registration is a Government Registration and is prescribed by the regulatory authority.
  • A company that has applied for FCRA registration is eligible to receive investments, continuing support, and donations from foreign organizations.

Different types of FCRA registration in India

The following are the different types of FCRA registration in India:

 

A. Normal FCRA registration: It is specified under Section 6(1) of the Foreign Contribution Regulation Act, 2010, for charitable societies, trusts, and section 8 company that accept gifts or contributions from abroad. Listed below are certain conditions required for obtaining the registration and the validity of normal FCRA registration.

 

1. Conditions for obtaining normal FCRA registration in India

  • For getting this, the applicant must be registered and operating as an NGO for a minimum period of 5 years.
  • The Non-Profit Organization (NGO) must have spent a minimum of 10 Lakh rupees in the last 3 years for the furtherance of its main objectives.
  • The applicant is also required to submit the financial statements for the last 3 years. Further, a qualified practicing Chartered Accountant must audit these financial statements.
  • For FCRA registration, Form FC-3A needs to be filed.

2. Validity for normal FCRA registration

  • It is valid for a period of 5 years from the date of approval.
  • After the expiry of this period of 5 years, it is required to renew the FCRA Registration for receiving any further foreign contributions.

 

 B. Prior permission FCRA registration: Any person who is not registered with the Central Government of India can take foreign contributions with the Central Government’s prior permission (PP), which is only applicable for the specific purpose for which it was granted and from the authorized source. Listed below are certain conditions required for obtaining the registration and the validity of prior permission for FCRA registration.

 

1. Conditions of prior permissions FCRA registration  

It is best suited for recently registered organizations that want to receive contributions abroad. This is offered in exchange for receiving a certain amount of money from a specific donor to carry out particular tasks or projects. The organization needs to:

  • Be registered under the Indian Trusts Act, 1882, the Societies Registration Act, 1860, the Companies Act, 2013, or any other applicable Act.
  • Provide MHA with a particular Commitment Letter (CL) from the donor stating details of the donation’s dollar amount and its purpose.
  • The Chief Functionary of the Indian organization cannot be a member of the donor organization, and at least 51% of the members or office-holders of the governing body of the Indian recipient organization must not be employees or members of the foreign donor organization. This condition must be fulfilled when the foreign donor organization and Indian recipient organization have common members.

2. Validity for prior permission FCRA registration

  • It shall be valid for 5 years from the date of approval.
  • Till the date when the foreign contribution is fully utilized for which the prior permission was granted.

Which entities are not qualified for FCRA registration?

The following are the entities not qualified for FCRA registration:

  • The sovereignty of India.
  • Benami or fictitious applicants.
  • An entity involves in some violent activities.
  • Any entity that is debarred from accepting foreign receipts or foreign grants.
  • If an entity has used the foreign contribution or funds for personal use.
  • An applicant who is accused of any crime under any Indian law.

Conclusion

Now you know the different types of FCRA registration and their validity period which is for a period of 5 years from the date of approval. It is very important for Non-Government Organizations / Non-Profit Organizations or any other such as trusts, section 8 company, the society which are associations in India because it determines that they are eligible for foreign contributions/ funds/ donations.

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