Organisations dedicated to social causes depend on a steady flow of funds to sustain their impactful campaigns. To fulfil this need, they frequently receive funds from overseas through various channels, such as wire transfers. Unfortunately, this process also create the opportunities for illicit activity, given that many of these transactions operate discreetly with minimalistic scrutiny. Recognising this vulnerability, the Foreign Contribution Regulation Act, 2010 addresses the issue through a set of regulations. Under this legislation, FCRA registration for trust and other charitable societies has become a must. In this blog, we aim to provide an overviews of the legal considerations surrounding FCRA registration for trust and other charitable societies.
The Significance of the Foreign Contribution Regulation Act, 2010
In the modern age, globally connectivity have undergone a complete transformation. Daily, millions of transactions transpire swiftly, transcending national boundaries and becoming a routine aspect of contemporary life. The surging in cross-border transactions has presented a challenge for governments in monitoring and regulating foreign currency flows.
To tackle the complexity that are arising from the escalating volume of cross-border financial activities, the Foreign Contribution Regulation Act, 2010 emerges as a pivotal legal framework. This legislation is strategically designed to address the intricate nature of transactions, particularly those manifesting in the form of foreign donations. The primary aim is in regulating and controlling out of India contributions.
Objectives of the Foreign Contribution Regulation Act, 2010
The Government has bring in the Foreign Contribution Regulation Act, 2010 with a different set of objectives, with purpose in mind of safeguarding national interests and ensuring accountability in the acceptance of foreign contributions. The vital objectives include:
1. Monitoring Foreign Contributions and Hospitality
The primary goal of the Foreign Contribution Regulation Act, 2010 is to exercise control over foreign contributions and hospitality originating from specific companies or individuals. By doing so, the government seeks to regulate and scrutinise the inflow of funds and external support from identified sources.
2. Prohibition of Contributions Against National Interest
The FCRA 2010 endeavours to prevent the acceptance and utilisation of overseas contributions for activities that run contrary to the nation’s interests. It explicitly prohibited the involvement of outsider contributions in any undertakings that can or will pose a threat to national interests or are otherwise deemed detrimental to matters related thereto.
Eligibility Criteria Norms for FCRA Registration for Trust and Other Charitable Societies
In Foreign Contribution Regulation Act 2010, eligibility criteria play an crucial role, especially for entities such as trusts. The following outlines the norms governing FCRA registration for trust and other charitable societies:
1. Normal Registration:
To qualify in normal registration under FCRA 2010, entities must adhere to the following legal prerequisites:
The applicant must have to be registered under one of following legislations:
· Societies Registration Act, 1860
· Indian Trusts Act, 1882
· Section 8 Company as per the Companies Act, 2013
· The applicant should have demonstrate a commitment to society’s benefit by actively pursuing undertakings in its selected field.
· A minimum investment of ten lakh rupees in the last three years for the fulfilment of goals is required (excluding administration-related expenditures).
· The applicant must provide audited financial statements of the last three years, conducted by a practicing Chartered Accountant.
· For new establishments seeking foreign contributions, a request for consent can be made to the Ministry of Home Affairs through the Prior Permission method.
2. Prior Permission Registration:
The Prior Permission route is designed for newly registered entities seeking to receive foreign contributions for specific purposes. The criteria include:
· Registered under the Companies Act, 2013, the Indian Trusts Act, 1882, or Societies Registration Act, 1860, or any other applicable Act.
· Submission of a declaration from side of the donor to the MHA, detailing the sum of contributions and the purpose for which they are provided.
· In cases where the Indian recipient company and overseas donor entity share common members, specific norms must be met, such as the Chief Functionary’s involvement and the composition of the governing body.
· If the foreign donor is an individual, certain conditions apply, including restrictions on serving as Chief Functionary and limitations on the composition of the organisation’s governing body with regard to the donor’s family members.
Application Procedure for FCRA Registration for Trust and other Charitable Societies
Obtaining FCRA registration for trust and other charitable societies involves a systematic application process. Mentioned are the steps to ensure a smooth FCRA registration for trust and other charitable societies:
1. Visit the FCRA portal.
2. Choose the appropriate form based upon your requirement: Form FC – 3A for FCRA Registration or Form FC – 3B for FCRA Prior Permission.
3. Click on “Apply Online” and create your login credentials.
4. Log in to your account and select “I am applying for” from the dropdown menu, choosing FCRA Registration.
5. Click “Apply Online” and then “Proceed Registration.”
6. Go to the FC-3 menu in the title bar to initiate the e-based registration procedure.
7. Complete the e-form by providing details such as Darpan ID (if available), Association Address, Registration Number, Registration Date, Nature of the Association, and the main object of the association.
8. Click the “Submit” tab once the required details are filled out.
9. Proceed to the menu bar and select “Executive Committee.” Fill out the form accordingly.
10. Use the “Add details of Key Functionary” option to manage the form as needed.
11. Save the form once completed.
12. Provide bank-related details, including IFSC code, bank name, account number, and bank address.
13. Upload necessary documents in the standard format, filling in place and date.
14. Click the submission button to proceed.
15. Visit the payment window for fee submission.
Validity of FCRA Registration for Trust
FCRA registration for trust and other charitable societies is valid for five years. It is essential to renew the registration within six months of its expiration date to ensure continued compliance with regulatory requirements. Note that the form becomes non-editable after submission, so careful review of the steps taken is advised to avoid complications.
Final Thoughts
FCRA registration for trust and other charitable societies is a vital process, ensuring transparency and accountability in managing foreign contributions. The application procedure involves selecting the appropriate form, filling essential details, and adhering to document submission protocols. With a standard validity of five years, timely renewal within six months of expiration is imperative. This regulatory framework serves as a crucial mechanism to monitor and regulate foreign funds, fostering responsible utilisation for the benefit of society. Successful FCRA registration for trust and other charitable societies is not just a legal requirement but a commitment to ethical and effective utilisation of resources for the greater good.
