NGOs and other organizations in India must obtain FCRA Registration to legally receive foreign contributions. It ensures they use foreign donations for genuine purposes and not against national interests. Organizations apply to the Ministry of Home Affairs (MHA), meet eligibility criteria, and follow specific guidelines to secure FCRA Certificate. Once registered, they can receive international funds to support their charitable activities while complying with government regulations.  

Understanding FCRA: Key Sections and Rules

. FCRA is reinforced by various legislative frameworks:

Companies Act, 2013: Focus on Sections 62(3) and 73, along with Rule 2 from the Companies (Acceptance of Deposits) Rules 2014.

.Foreign Exchange Management Act, 1999: Key rules include the Foreign Exchange Management (Non-debt Instruments) Rules 2019.

.Income Tax Act, 1961: Covers the tax obligations related to foreign contributions.

Objective of FCRA 2010

FCRA 2010 was enacted to:

1. Control Foreign Donations: Impose restrictions on foreign donations from certain businesses or individuals.
2. Safeguard National Interests: Prohibit the use of foreign funds for activities that might undermine national interests.

Eligibility Criteria for Opening a Trust FCRA Account:-

For a trust to open an FCRA account it must meet the following criteria:

1. Registered Trust: Must be registered under the Indian Trusts Act 1882 or relevant laws.
2. FCRA Registration: Requires prior permission from the MHA to receive foreign contributions.
3. Permanent Account Number (PAN): Must possess a valid PAN.
4. Existing Bank Account: Should have an active bank account with any scheduled commercial bank in India.

Documentation Requirements:-

Following documents are necessary to open an FCRA account,

1. Trust Deed: A registered copy of the trust deed under the Indian Trusts Act 1882 or relevant laws.
2. FCRA Registration Certificate: Issued by the Ministry of Home Affairs (MHA).
3. PAN Card: A copy of the trust’s PAN card.
4. Bank Account Details: Information about the current bank account, including account number, branch name, and IFSC code.
5. List of Trustees: Names, addresses, and PAN numbers of trustees.
6. Affidavit of Trustees: A declaration from trustees confirming compliance with FCRA rules.
7. Audited Financial Statements: Financial reports from the last three years.
8. Project Proposal: Detailed description of activities that will use foreign contributions.

FCRA Account Opening Procedure for Trusts:-

1. Obtain FCRA Registration: Ensure your trust is registered with the FCRA by applying to the MHA. The FCRA portal provides necessary application forms and guidelines.
2. Assemble Required Documents: Collect all necessary paperwork including the FCRA registration certificate, trust deed, PAN card, and address proof. Ensure all documents are a verified in accordance with the bank’s compliance standards.
3. Approach a Designated Bank: FCRA accounts must be opened with banks designated by the Indian government. Contact the chosen bank to understand their specific procedures.
4. Submit Application: File your application with the designated bank along with all required documentation. The bank will verify the documents and may request additional information if necessary.
5. Await Activation: After submission, the bank will process your application. The activation of the account may take some time, so patience is essential. Once activated, the trust can accept international donations and operate within FCRA guidelines.

Application Process Snapshot:-

Here’s a quick overview of the FCRA account opening process:

1. Online Registration: Consult an expert if needed.
2. Fill Out FC-3A Form: Complete the FC-3A form for FCRA registration.
3. Upload Documents: Submit the required documents.
4. Payment of Fees: Pay the necessary application fee.
5. Submit Application: Finalize the submission of your application and documents.

Compliance and Reporting:-

• Bank Compliance: Ensure the designated FCRA account adheres to both FCRA guidelines and bank reporting requirements.
• Utilization of Funds: Foreign contributions must be used strictly for the purposes outlined in the FCRA registration certificate and project proposal.
• Annual Filing: File the FC-4 form annually with the MHA, detailing the foreign contributions received and utilized.

Validity and Renewal:-

FCRA registration is valid for five years. You must submit renewal applications at least six months before the current registration expires to continue receiving foreign contributions.

.NGOs must set up an FCRA trust account to receive foreign funds and make a bigger difference in their communities.

Conclusion:-

Securing FCRA registration is key for NGOs in India to receive foreign funding and support charitable activities. It ensures compliance with legal requirements and safeguards the use of funds for genuine causes. By obtaining FCRA registration, NGOs can access international resources and expand their impact. PSR Compliance provides professional assistance throughout the FCRA registration process, helping you navigate every step and secure foreign funding for your NGO. Connect with us to get started today!