5 Key takeaways from amended FCRA Rules

The Govt. has notified amended Foreign Contribution (Regulation) Rules, 2015 whereby access to all FCRA services has been made easier. Now everything would be done online thereby reducing human

interface to a minimum. However, the relaxation comes along with certain stringent provisions relating to disclosure requirements. The key changes in FCRA Rules are given hereunder:

1) Online platform:

E-registration: Now all applications for registration, renewal of registration and prior permission for accepting foreign contributions under FCRA shall be made online.

Earlier the applicant was required to forward the hard copy of on-line application (duly signed by the Chief Functionary of the association) to Government within 30 days of the submission of the application. Now under the amended norms, the applicant can directly upload the normally signed or digitally signed application along with scanned documents directly at online portal of FCRA.

E-payment of fees: Now the fees for various services under FCRA shall be accepted through online payment gateway. Further, the condition of applying for renewal one year before the expiry of existing registration certificate has been done away with.

2) Declaration from person receiving foreign contributions

The person receiving foreign contributions shall file declaration under Form FC - 4 containing following undertakings:

   i) The utilization of foreign contribution is not in the contravention of the provision of FCRA, and,

  ii) The receipt of foreign contribution is not likely to prejudicially affect the public interest, security, strategic, scientific or economic interest of the State, harmony between religious, racial, social, linguistic or regional group, castes or communities, freedom or fairness of election to any legislature.

3) Mandatory disclosure of foreign contributions:

Earlier, disclosure of foreign contribution was required only if aggregate receipts exceeded one Crore rupees in a financial year. Now such monetary limit has been done away with. Thus, any person who has been granted certification of registration or prior permission to receive foreign contributions shall have to place the following financial statements for every financial year on its official website or Govt.'s website within 9 months of the of closure of the financial year:

  (i) The audited statements of accounts on receipts and utilization of the foreign contribution,

 (ii) income and expenditure statement,

(iii) receipt and payment, and

(iv) balance sheet

Now quarterly submission of details are also required to be submitted by a person receiving foreign contribution on its official website or on website specified by Govt. within 15 days following the last day of quarter in which foreign contribution has been received.

4) Certain persons exempted from obtaining certificate from CAs:

The persons who do not receive or utilise foreign contribution in a financial year would not be required to submit certificate from Chartered Accountant and audited statement of accounts with annual return.

5) Relaxation on seeking Govt.'s approval on demographic change:

Seeking of prior permission for change of name, aims and objects, address of the association, change of bank or account, change in Governing Body members, etc. have now been relaxed to only intimation through FCRA online service.

Comments: NGOs working in India which generally receive funds from outside India shall receive the direct benefit of easing of the facility of online submission, taking approval, payment, etc. However, with the strict disclosure requirements under revised norms the compliance part for NGOs has been substantially increased.

In view of the above changes we can say that the amendment to FCRA rules is a mixed bag of relaxations and additional compliances. On one hand it eases the process of registration, document uploading, fee payment process. On the other side, stringent provisions have been made in respect of annual disclosure of receipt and utilization of foreign contribution within 9 months of the closure of a financial year.

Also, the requirement of undertaking in Form FC-4 from the person that "the receipt of foreign contribution is not likely to prejudicially affect the public interest, security, strategic, scientific or economic interest of the State" is a good step as it is the very basis of the Act which has been laid out in preamble that -

" An Act to consolidate the law to regulate the acceptance and utilisation of foreign contribution or foreign hospitality by certain individuals or associations or companies and to prohibit acceptance and utilisation of foreign contribution or foreign hospitality for any activities detrimental to the national interest and for matters connected therewith or incidental thereto."