AccountAble Handbook FCRA 2010

Foreign Contribution (Regulation) Act, 2010Foreign Contribution (Regulation) Rules, 2011

! ! !

Sanjay AgarwalB.Com. (Hons.), FCA

Context, Concepts and Practice

ACCOUNTABLE HANDBOOK

FCRA 2010

2 ACCOUNTABLE HANDBOOK I FCRA 2010 I CONTEXT, CONCEPTS AND PRACTICE

Published by AccountAid India55-B, Pocket C, Siddharth Extension, New Delhi – 110014, IndiaPhone No.: +91-11-2634 3128Email: [email protected] Edition: June 2002Reprint: April 2004Second Edition: September 2012Third Edition: June 2021Copyright © Sanjay Agarwal

All rights reserved. Without limiting the rights under copyright reserved above, no part of this publication may be reproduced, stored in or introduced into a retrieval system, or transmitted, in any form or by any means (electronic, mechanical, photocopying, recording or otherwise), without the prior written permission of the copyright owner of this book.The law in this book has been updated till 30-Jun-2021.Printed and bound in India.

Due care and diligence have been taken while editing and printing this book. Neither the author nor the publisher of the book holds any responsibility for any mistake that may have inadvertently crept in. The publisher shall not be liable for any direct, consequential, or incidental damages arising out of the use of this book.

Price: `1,400/-FCRA 2010: Context, Concepts and PracticeISBN13: 978-81-910854-2-6 (Hardback)ISBN13: 978-81-910854-3-3 (eBook)

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ACCOUNTABLE HANDBOOK I FCRA 2010 I CONTEXT, CONCEPTS AND PRACTICE 3

Dedicated to the memory of

my father, who taught me the value of

contemplation and moderation

and

my mother,who showed me how !abda can sometimes be

more reliable than anum"na.

! ! !

Contents at a Glance

Foreword 31

Preface to the Third Edition 33

Preface to the Second Edition 35

Preface to the First Edition 37

Acknowledgements 39

Guide to using this book 41

Abbreviations 43

Figures and tables 48

I. Context 49

II. Concepts 81

III. Practice 190

IV. Filing 279

V. Appendices 370

VI. Current Act and Rules 421

VII. 1976 Act and Rules 477

VIII. Selected Noti#cations, Notices, Guidelines, Charters, etc. 489

IX. Online Resources 530

X. References and Case Law 531

XI. Index 538


Detailed Table of Contents

Foreword 31Preface to the Third Edition 33Preface to the Second Edition 35Preface to the First Edition 37Acknowledgements 39Guide to Using this Book 41About Online Resources 41About Footnotes 41Looking up Author References 41Locating Case Law 41Using the Index 41Section and Rule References 42Abbreviations 43Figures & Tables 48

I. Context 491. Introduction 50Box: What is FCRA? 50Numbers and Trends 52The next Decade 52Box: Poverty and Charity 53Overview of the Chapters 54


I. Context 54II. Concepts 54III. Practice 55IV. Filing 55Appendices 55

2. The History of FCRA 56Cold War and Elections 56Box: The 1976 Act 57Passing of the 1976 Act 57Box: National Interest 58Kudal Commission 58Box: The 1984 Change 58Work in Progress 59Box: NGOs, Emergency and FCRA 59The New FCRA of 2010 60Box: The 2010 Act 60The New India and FCRA 60Box: The 2020 Changes 60Cultural Globalization 62Religious Evangelism 62International Environment 63The Globalization of FCRA 64Group A: Political Funding: Complete ban; NPO Funding: Restricted 64Group B: Political Funding: Complete ban; NPO Funding: Less restricted or unrestricted 65Group C: Political Funding: Partial ban; NPO Funding: Less restricted or unrestricted 66

3. The Politics of FCRA 67The Political in FCRA 68Box: Those who Dig Holes for Others… 70The Political in Practice 70Organizations of a Political Nature 71INSAF in Courts 71Reading the INSAF Judgment 73National Interest 74Interests of the State 74Court-side View 75NGOs and Politics 76Inquisition, FCRA and Dharma 79Box: The Nationalization of Charity 78

II. Concepts 814. The Purpose of FCRA 82


Box: The Great Wall of China 83Box: Raising the Drawbridge 84Jurisdiction 85Repeal of FCRA 1976 85

5. Foreign Contribution 87De#ning Foreign Contribution 87Commercial Receipts 88Box: Loans from Foreign Sources 88Payments to For-Pro#ts 88A. For Products 89B. For Services 89C. Subsidy 90Impact Investments 90Conclusion 91What’s Covered 92A. Articles 92Box: Awards & Prizes 92B. Currency 93C. Securities 96And What’s Not… 96Scholarships & Stipend 98A. Scholarship 98B. Stipend 99C. Payment of a like nature 99D. Fellowships 100E. Fellowship or Fees? 100

6. Donors 102Foreign Source 102Primary Foreign Source 102Box: Colors of Xenophobia 1031. Individuals 1032. Government 1063. International Agencies 1064. Non-pro#t organizations 1075. Business Organizations 110A. Foreign Company 110Box: Neither Here nor There 110B. Subsidiary 112I. Foreign Subsidiaries only? 114Box: Foreign Control, Subsidiaries and MNCs 114II. Subsidiaries Excluded by 2016 Change? 115C. Registered O$ce 116D. Corporation 116


E. Foreign MNC 116Box: Group Companies 116F. Company under Foreign Control 117Secondary Foreign Source 117Foreign Source or Not 117Interest on FCRA Bank Balance 118Other Interest 118Giving Portals 119Box: Other Income 119Non-foreign sources 119Indian Sources 120Becoming Indian 120Exempt Sources 120‘Prohibited’ Sources 120Donors in Prior Reference Category 120Due Diligence 121

7. Receivers 122A. Prohibited 123Exceptions 123Box: Identifying Journalists 124Media 124Print Media 124Electronic Media 124Social Media 126Coverage and Content 126Bureaucrats 127Public Servants 128Judiciary 130Politicians 130Legislature 130Box: Electoral Trust Donations 130Election Candidates 131Political Parties 132Quasi-political Organizations 132Identifying Quasi-political Organizations 132Restriction on the Organization 133Forms of Organization 134B. Exempt 134 Three Conditions for Exemption 1341. Set up by the Government 1342. Wholly Owned by the Government 1363. Compulsory CAG Audit 136 Who is Exempt? 137A. Autonomous Bodies or Societies 137


B. Government Companies 138C. Public Sector Undertakings 138D. Legislative Bodies 141E. Municipalities 142F. Panchayats 142G. Central Government 143Other Exempt Organizations 143Implications of FCRA Exemption 144C. Regulated 145NPOs/NGOs 146Box: Section 8 Company 146Form of NPO/NGO 146Sec. 8/25 Companies 147Associations 147Objectives of the NGO 148Other Areas 154Service Delivery, Civil Rights or Research? 155Box: Crowdfunding Platforms 156Corporate Foundations 157Electoral Trusts 158Charitable Individuals 159Charitable HUF 159Charitable Business 160D. Permitted 160Private Individuals 160Remittances from Relatives 160Businesses 163CSR, B-Corps and Social Businesses 163Cooperative Societies 164Producer Companies 164SHGs/Mahila Mandals/CBOs 166Liaison O$ce 166Branch O$ce 168Nominal Branch O$ce 168

8. Foreign Hospitality 169Universities 170Approval 170

9. Prohibitions, Penalties and Compounding 171A. Prohibitions 171i. Giving to Unregistered Persons 171ii. Regranting or Passing on FC to Others 171iii. Using for Other Purposes 172iv. Political Activities 172


v. News Media 172vi. Speculative Activities 172vii. Administrative Expenses 172Box: Salary and Other Dirty Words 173B. Penalties 174i. Unlawful acceptance of Foreign Contribution or Hospitality 174ii. Regranting of Foreign Contribution 174iii. Misuse of Foreign Contribution 174iv. Defaults in Documentation/Intimation 174v. Banking-related O%ences 174vi. Miscellaneous O%ences/Events 175C. Compounding 175Filing the Application 176D. Penal Action 177i. Suspension 177Box: Which Bank Account? 178ii. Freezing of Prior-permission 178iii. Cancellation 178Box: Coup de grâce for Charity? 179Grounds for Cancellation 179E. Surrender 180Box: Charity: Instant Relief or Slow Release? 180Complications 181F. Custody and Management 181Defunct Organizations 181Funds in FCRA Bank 182

10. Investigation, Prosecution & Appeal 183Inspection 184Asking for Information or Documents 184Powers of Investigation 184Seizure 1851. Accounts and Records 1852. Foreign Contribution 185Inventory/Disposal 186Adjudication 186Con#scation 186Jurisdiction 186Appeals 187Con#scation Orders 187Orders Appealable in High Court 187Non-appealable Orders 188Revision of Orders 188Applying for Revision 188Relief 188


III. Practice 19011. Formalities 191Darpan ID 191A. Intimations 193i. Gift from Relative: FC-1 193ii. Receipt by Election Candidate: FC-1 193iii. Emergency Medical Aid 193iv. Reports by Bank 194a. Receipt/Utilization without Permission 194b. Receipts/Utilization by a person with FCRA 194B. Registration/Permissions 194i. FCRA Registration 194ii. FCRA Prior Permission 195iii. FCRA Renewal 195iv. Foreign Hospitality 195C. Approvals 195i. Opening or Changing Designated Bank Account 195ii. Opening or Changing Another Bank Account 196iii. Opening a Utilization Account 196iv. Change in Name or Address 196v. Change in Nature, Objects or Registration 196v. Change in Board Members or Key Functionaries 197D. Annual Returns 197i. Receipt of Material/Securities: FC-1 198ii. Receipt of Foreign Contribution: FC-4 198

12. Prior-permission, Registration and Renewal 199A. FCRA Prior-Permission 199Grounds for Denial 200Copy of Order 202Time Limit 202Old Permission – FCRA 1976 202Proxy Permission: FC-10 204Secondary Transfers 204B. FCRA Registration 204Track Record 204Cooling-o% Period 206C. FCRA Renewal 206Due Date 206Extension 207Delayed Application 207No Application 207Delayed Approval 208Fees 208Box: Rebirth and Renewal 208


13. Banking, Accounts and Records 210A. Bank Accounts 210i. Designated FCRA Bank Account 210Cut-o% Date 211Using the Account 211ii. Additional Bank Accounts 212Conditions 212iii. Permitted Deposits 214RBI Purpose Code 214Bank Charges 215Exchange Rate 215iv. Cash Withdrawals 215B. Account Books 215Heads of Account 217C. Records 218i. Fixed Assets Register 218ii. Ownership of Assets 218iii. Physical Veri#cation Records 219ii. Salary Register 219iii. Investment Register 220iv. Stock Register 220v. Distribution Register 221vi. Program Registers 221

14. Public Disclosure 222A. Publishing Quarterly Details 222Contribution in Kind 222Box: Restoring Public Trust 223Own Website 223On FCRA Site 224B. Publishing FCRA Audited Financials 224i. FCRA Balance Sheet 224ii. FCRA Income & Expenditure Account 225iii. FCRA Receipts & Payments Account 225

15. CSR and FCRA 227Companies as ‘Foreign Source’ 227Box: The Politics of Change 228Confusion Compounded 229Foreign Company – Indian Source? 229CSR Foundations 229Items Covered 229Case Studies 230Precautions 230a. For NGOs 230


b. For Companies 230c. For Banks 231

16. Impact Investing & Social Stock Exchange 232a. Impact Investment Instruments 232Instruments 232For-pro#t or Not-for-pro#t? 233Business Transactions 233Pro#t or Impact? 233Caveat Investors 234b. Social Stock Exchange 235Untangling SOSTEX & FCRA 239

17. Monitoring and Enforcement 240a. Monitoring 240Intelligence Bureau 240PFMS 241Tax Returns 241Data Analysis 241Whistle-blowers and Activists 241FCRA Questionnaire 242b. Enforcement 242Scrutiny of Records 242Site Visits/Audits 242Prior Reference Category (Donor Watchlist) 242Show-cause Notice 243Compounding Fees 243Suspension 243Cancellation 244Punishment 245

18. Myths and Mysteries of FCRA 247A. Registration, Permission, Approvals 247FCRA applies only to NGOs... 247FCRA Grants to Individuals 248Businesspeople/Professionals 248Shadow-lending 248Advances 248Reimbursement 248How Much 249Unused prior-permission 249Churches and Ashrams 249Commissioned News Stories 250Advertisement Campaign 250FEMA and FCRA 250


B. Fund-raising 250Foreigners in India 250Dollar donations are foreign contribution? 250Rupee donations are not foreign contribution. 251Foreign Company can be an Indian source... 251UN Bodies 251Consultancy Contracts 251FCRA Interest 251Anonymous Donations 251Sharing Bank Account Numbers 252Online Fund-raising 252Crowdfunding 252Catalogues & Souvenirs 252Religious Books 252Souvenir Advertisements 253NRI donations 253Charity Events 253Art Sale 254Raising funds abroad 254Consultancy Income 255Income from FCRA Projects 255Sale of Publications 256Hire Charges 256Sta% Recoveries 256Guest recoveries 256Recoveries from Bene#ciaries 257C. Receipts and Utilization 257When do FC Funds become Indian 257Converting FC Funds 257Re-purposing FC Funds 257Endowment or Corpus 258Endowment Investments 258Endowment Income 258Bi-lateral funds 258Unrestricted FC funds 258Unrestricted FC funds – under Prior Permission 259Program Salaries are not administrative expenses... 259Programs Outside India 259Mixing of FC and non-FC 259D. Transfers, Sub-granting or Regranting 259Box: NGO Networks & FCRA 260Payments to For-Pro#ts 260Program vs. Services 260Service Contracts with Foreign NGOs 261Service Contracts with Domestic NGOs 261


Regranting to Exempt Entities 261Crowdfunding Platforms 262Placing Personnel in India 262Assets created out of FC 262Conversion of Organization Form 262Mergers & Takeovers 263Making Direct Disbursals 263O%-shore Banking 264O%-shore Granting 264Reimbursements 264Advances 264Direct Implementation 265Utilization by Proxy 265E. Other Issues 266Expenditure on Fixed Assets 266Personal Gifts 266Old items in FC-1 and FC-4 266Micro-Credit 266Change of Bank Account Number 267Loans between FC and Indian 268Grant Refund or Transfer 268Sale of Fixed Assets 268Separate Books 269Consolidated Accounts 269Non-cash Grants in FC-4 269Second or Subsequent Recipient 269Opening Branch Abroad 269Foreign Volunteers 270

19. Checklists 271A. Govt. Servants, Politicians, Political Parties 271B. Journalists, Public Servants 272C. Ordinary Individuals 272D. Foreigners and PIOs 272E. Donor Agencies 273F. CSR Companies 274G. NGOs/Charities 274H. For-pro#t Companies with Programs 277I. Individuals with a Program 277J. Bankers 277K. Auditors 278

IV. Filing 27920. Filing Annual Return in FC-1 280Form FC-1 for NGOs: Articles 280


Receipt of Articles 281Valuing the Articles? 281Use of Articles 281Review and Submission 281Form FC-1 for NGOs: Securities 281Receipt of Securities 282Valuing the Securities? 282Mode of Utilization/Disposal 282Review and Submission 282Form FC-1 for Indian Citizens and Resident Foreigners 282Relative 283For Remittances 283For Articles 283For Securities 284Submitting the form 284Form FC-1 for Election Candidates 284Submitting the form 285

21. Filling up form FC-2 for Foreign Hospitality 286Applicability 286Member of Legislature 286O$ce-bearer of a political party 287Judge 288Government Servant 288Employee of Government Organization 288Public Servant 289Filling up the Form 290Details of Applicant 290Forwarding Details and Status 290Saving the Form 290Details of Hospitality 290Details of Host 291Hospitality Availed 291Hospitality Denied 291Attachments 291Filing 291

22. Form FC-3A for Registration 292Old Applications 292Eligibility 292Filling the Form 293Association Details 294Details of Applicant 294Details of Registration 294Aims and Objects 294


Executive Committee 294Chief Functionary 295Relationship with Other Board Members 296Occupation 296Other details 296Nationality, Aadhaar and PAN 296Government O$cers 297Foreigners, PIOs, and NRIs 297Aadhaar and PAN 297EC Details and Others 297Conviction or Prosecution 298Misuse of Funds 298FCRA Prohibition 298Other NGOs 299Details of the Case 299Branch, Unit or Associate of Another Organization 299Adverse FCRA Orders 299Bank Details 300Other Details 300Past Prior-permissions 300Funds without Prior-permission? 300Past Applications for Registration 300Past Applications for Prior-permission 300Close Links with Other Organizations 301Cancelled Registration 301Upload Documents 301Filing the Form 302Status of Application 302Secondary Submissions 302

23. Form FC-3B for Prior Permission 303Old Applications 303Eligibility 303Filling the Form 305Association Details 305Details of Applicant 305Details of Registration 305Aims and Objects 305Executive Committee 306Chief Functionary 307Relationship with Other Board Members 307Occupation 307Other details 307Nationality, Aadhaar and PAN 308Government O$cers 308


Foreigners, PIOs, and NRIs 308Aadhaar and PAN 308EC Details and Others 308Conviction or Prosecution 309Misuse of Funds 310FCRA Prohibition 310Other NGOs 310Details of the Case 310Branch, Unit or Associate of Another Organization 310Adverse FCRA Orders 310Bank Details 311Other Details 311Past Prior-permissions 311Funds without Prior-permission? 311Past Applications for Registration 312Past Applications for Prior-permission 312Close Links with Other Organizations 312310 Registration 312Donor Commitment 312Donor Details 313Institutional Donors 313Multiple Donors 314Upload Documents 314Filing the Form 314Status of Application 315Secondary Submissions 315

24. Form FC-3C for Renewal 316Old Applications 316Due Date 316Preparatory Steps 316Delayed Filing 317Filling the Form 317Association Details 317Details of Applicant 317Details of Registration 317Aims and Objects 318Executive Committee 318Adding Members or Updating Details 319Chief Functionary 320Relationship with Other Board Members 320Occupation 320Other details 320Nationality, Aadhaar and PAN 320Government O$cers 321


Foreigners, PIOs and NRIs 321Aadhaar and PAN 321E%ective Date and Reasons 322EC Details and Others 322Conviction or Prosecution 322Misuse of Funds 322FCRA Prohibition 322Other NGOs 323Details of the Case 323Branch, Unit or Associate of Another Organization 323Adverse FCRA Orders 324Bank Details 324Designated Account with SBI 324Utilization Accounts 324Other Details 324Past Prior-permissions 324Funds without Prior-permission 325Past Applications for Registration 325Past Applications for Prior-permission 325Close Links with Other Organizations 325Upload Documents 326Filing the Form 326Status of Application 326Secondary Submissions 327

25. Filling up FC-4 328Due Date 328Unable to #le? 329Filling up the Form 329Welcome Screen 329Section 2: Details of Receipt of Foreign Contribution. 330(i): Summary of Foreign Contribution. 330(ii): Details of Foreign Contribution Received 332Section 3: Details of Utilization of Foreign Contribution. 334(a) Project-wise Utilization 334Details of Utilization of FC 335Administrative Expenses 335Number of Foreigners 336(b) Purchase of Fixed Assets 336(c) Transfers to Other NGOs 336(d) Total Utilization in the Year 338Section 4: Unutilized Foreign Contribution. 338(i) FC Invested in Term Deposits 338(i) FC in form of cash or bank balances 3385. Foreigners 338


6: Unutilized Land & Buildings 3387: Details of FCRA Bank Accounts. 3398. Questions 3399. Audited Financial Statements 340i. FCRA Financial Statements 340ii. Audit Certi#cate 341Additional Tests by Auditors 341Management Letter 342Upload Documents 342Review and Submission 342Revision 343

26. Form FC-6A for Changes in Name, Address etc. 344Due Date 344Intimation or Approval? 344Processing Time 344Filling the Form 344Association Details 344Change of Organization’s Name 344Documents Needed 344Change of Address within State 345Documents Needed 345Communication Details 345Upload Documents 345Filing the Form 345

27. Form FC-6B for Changes in Nature, Objects, etc. 346Due Date 346Intimation or Approval? 346Processing Time 346Filling the Form 346Association Details 347Nature, Aims, Objects and Registration on Record 347a. Change in Nature 347Documents Needed 347b. Change in Aims and Objects 347Documents Needed 348c. Change in Registration 348Documents Needed 348Communication Details 348Save the form 348Upload Documents 348Preview 349Filing the Form 34928. Form FC-6C for Designated/Another FCRA Account 350


I. Due Date 3511. Intimation or Approval? 3512. Processing Time 351II. Filling Up the Form 3521. Association Details 3522. Present Designated Bank Account Details 3523. Intimated Designated FCRA Account? 3524. SBI NDMB Bank Account Details 3525. Communication Details 3526. Another Bank Account Details 3527. Another Bank Account as per Records 3538. Intimate or Change Another FCRA Account? 3539. Adding Details of Another Bank Account 35310. Documents Needed 353III. Filing the Form Online 3531. Preview 3532. Common Errors 354a. Yes or No? 355b. Old Designated as SBI Designated 355c. SBI NDMB as Another Account 355d. SBI NDMB as Designated and as Another 355e. City and State in SBI Designated Account Screen 3553. Filing 3554. Resubmission 3565. Correction after Approval 356

29. Filing Form FC-6D for Utilization Account 357Due Date 357Intimation or Approval? 358Processing Time 358Filling the Form 358Association Details 358Present Utilization Bank Account Details 358Adding New Utilization Bank Account 358Closing or Changing Utilization Bank Account 358Documents Needed 358Communication Details 359Filing the Form 3594. Resubmission 3595. Correction after Approval 359

30. Form FC-6E for Key Functionaries 360Due Date 360Change in Details 360Intimation or Approval? 360


Processing Time 360Form Pending for Approval 361Corrections 361Filling the Form 361Darpan Details 361Association Details 361Existing Key Functionaries 361Change in Key Members 361Communication Details 362Changes in Key Functionaries 362Adding Members or Updating Details 362Chief Functionary 363Relationship with Other Board Members 363Occupation 363Other details 363Nationality, Aadhaar and PAN 364Government O$cers 364Foreigners, PIOs and NRIs 364Aadhaar and PAN 364E%ective Date and Reasons 364Upload Documents 364Filing the Form 365Clari#cations 365Key Functionary A$davit 365Purpose of the A$davit 365Which Violations 366Implications for Key Functionaries 366How 366Who are Covered? 366When 366Di$culties 367

31. Form FC-7 for Surrender of FCRA 368Due Date 368Intimation or Application? 368Processing Time 368The Last Temptation 368Filling the Form 369Con#rmation Screen 369Association Details 369Bank Accounts 369Upload Documents 369Filing the Form 369

V. Appendices 370


1. Change of Forms 371Current Forms (online) 3712. Intimation of Emergency Medical Aid 3723. Donor’s Commitment Letter 3734. Undertaking from Employee 3745. Undertaking from an FCRA-Exempt Entity 3756. Undertaking from Grantee 3767. Key Functionary A!davit 3778. CSR Questionnaire 3789. Calculating and Reporting Administrative Expenses 379Box: The Reason for Capping 379a. Research 380b. Training 380Box: Research: Academic or Subversive? 381c. Welfare-Oriented? 382Box: Welfare vs. Rights 383d. The Six Step Solution 383e. Disclosure in Accounts 38610. Standalone FCRA Financial Statements 387Balance Sheet 387Income and Expenditure Account 388Receipts and Payments Account 389Notes to Balance Sheet and Income & Expenditure Account 390Notes to the Financial Statements 39211. Columnar Domestic and FCRA Financial Statements 393Balance Sheet 393Income & Expenditure Account 394Receipt & Payment Account 395Schedule 1: Fixed Assets and Depreciation 396Schedule 2: Income & Expenditure Matrix 397Schedule 3: Reserves & Surplus 399Schedule 4: Unspent Grant Balances 399Schedule 4A: Unspent Grant Balances (Funder–wise) 399Schedule 5: Current Assets, Loans and Advances 399Schedule 6: Current Liabilities and Provisions 400Schedule 7: Signi#cant Accounting Policies & Notes to Accounts 40012. CA Certi"cate 40213. Management Letter 40314. FATF Compliance Checklist 405Guidelines 405Non-compliance 40715. Contacting FCRA Department 408Visiting Hours 408Postal Address 408Phone/Email 408


Organization Structure 40816. Penalties Ready Reckoner 409i. Unlawful acceptance of Foreign Contribution or Hospitality 409a. Foreign Contribution Accepted by Prohibited Person 409b. Foreign Contribution Accepted on behalf of Prohibited Person 409c. Foreign Contribution Delivered to Prohibited Person 410d. Foreign Contribution Provided to a Di%erent Person 410e. Foreign Contribution Given to Another for Delivery to Prohibited Person 410f. Delegate Accepts Gift without Following Government Rules 410g. Foreign Contribution Accepted without Registration or Permission 410h. Foreign Hospitality Accepted by Prohibited Person 412i. Foreign Contribution Delivered to Another by Prohibited Person 412j. Foreign Contribution Accepted during Suspension 412ii. Unlawful Transfer of Foreign Contribution 412a. FC-registered Organization Transfers FC to Unregistered Organization 412b. FC-registered Organization Transfers FC to Another Organization 412iii. Misuse of Foreign Contribution 413a. Inactive or Defunct 413b. Engaged in Disqualifying Activities 414c. Against Public Interest 414d. Used for Speculative Purposes 414e. Used for Other Purposes 414f. Overshooting Administrative Expenses Limit 414iv. Defaults in Documentation/Intimation 414a. False Statement for Registration/Renewal 414b. Fraud/Concealment for getting Registration/Permission 414c. False A$davit 415d. Foreign Hospitality not Reported 415e. Foreign contribution not Reported 416f. False Intimation of Foreign Contribution 416g. Not #ling FC-1 or FC-4 416h. Not applying for Renewal in Time 416j. Records or Accounts not kept Properly 416v. Banking-related O%ences 416a. Fresh Foreign Contribution not Deposited in Designated Account 416b. Foreign Contribution Deposited in non-FCRA Account 417c. Local Contribution Deposited in FCRA Account 418d. Transaction in FCRA account not Reported by Bank 418e. Receipt or Utilization by Unregistered Person not Reported by Bank 418vi. Miscellaneous O%ences/Events 418a. Violation of FCRA Provisions by Registered Person 418b. Violation of FCRA Provisions/Rules/Order/Conditions by Registered Person 418c. Contravention of FCRA Provision by Person under Prior-permission 418d. Possible Contravention of FCRA 419e. Contravention of FCRA 419


f. Violation of FCRA Provisions/Rules 419g. Surrendering FCRA Registration 420

VI. Current Act and Rules 4211. Foreign Contribution Regulation Act, 2010 422

Chapter I: Preliminary 4221. Short title, extent, application and commencement. 4222. De#nitions. 422

Chapter II: Regulation of Foreign Contribution and Foreign Hospitality 4243. Prohibition to accept foreign contribution. 4244. Persons to whom section 3 shall not apply. 4255. Procedure to notify an organization of a political nature. 4256. Restriction on acceptance of foreign hospitality. 4267. Prohibition to transfer foreign contribution to other person. 4268. Restriction to utilize foreign contribution for administrative purpose. 4269. Power of Central Government to prohibit receipt of foreign contribution, etc.,

in certain cases. 42610. Power to prohibit payment of currency received in contravention of the Act. 427

Chapter III: Registration 42711. Registration of certain persons with Central Government. 42712. Grant of certi#cate of registration. 42812A. Power of Central Government to require Aadhaar number, etc.,

as identi#cation document. 42913. Suspension of certi#cate. 42914. Cancellation of certi#cate. 42914A. Surrender of certi#cate. 43015. Management of foreign contribution of person whose certi#cate has

been cancelled [or surrendered]. 43016. Renewal of certi#cate. 430

Chapter IV: Accounts, Intimation, Audit and Disposal of Assets, etc. 43017. Foreign contribution through scheduled bank. 43018. Intimation. 43119. Maintenance of accounts. 43120. Audit of accounts. 43121. Intimation by candidate for election. 43222. Disposal of assets created out of foreign contribution. 432

Chapter V: Inspection, Search and Seizure 43223. Inspection of accounts or records. 43224. Seizure of accounts or records. 43225. Seizure of article or currency or security received in contravention of the Act. 432


26. Disposal of seized article or currency or security. 43327. Seizure to be made in accordance with Act. 433

Chapter VI: Adjudication 43328. Con#scation of article or currency or security obtained in contravention

of the Act. 43329. Adjudication of con#scation. 43330. Procedure for con#scation. 433

Chapter VII: Appeal and Revision 43331. Appeal. 43332. Revision of orders by Central Government. 434

Chapter VIII: O#ences and Penalties 43433. Making of false statement, declaration or delivering false accounts. 43434. Penalty for article or currency or security obtained in contravention

of section 10. 43435. Punishment for contravention of any provision of the Act. 43436. Power to impose additional #ne where article or currency or security is not

available for con#scation. 43537. Penalty for o%ences where no separate punishment has been provided. 43538. Prohibition of acceptance of foreign contribution. 43539. O%ences by companies. 43540. Bar on prosecution of o%ences under the Act. 43541. Composition of certain o%ences. 435

Chapter IX: Miscellaneous 43642. Power to call for information or document. 43643. Investigation into cases under the Act. 43644. Returns by prescribed authority to Central Government. 43645. Protection of action taken in good faith. 43646. Power of Central Government to give directions. 43647. Delegation of powers. 43648. Power to make rules. 43649. Orders and rules to be laid before Parliament. 43750. Power to exempt in certain cases. 43851. Act not to apply to certain Government transactions. 43852. Application of other laws not barred. 43853. Power to remove di$culties. 43854. Repeal and saving. 4382. Foreign Contribution (Regulation) Rules, 2011 4391. Short title and commencement 4392. De#nitions. 4393. Guidelines for declaration of an organization to be of a political nature,

not being a political party. 439


4. Speculative activities. 4395. Administrative expenses. 4406. Intimation of receiving foreign contribution from relatives. 4406A. When articles gifted for personal use do not amount to foreign contribution. 4407. Receiving foreign hospitality by speci#ed categories of persons. 4408. Action in respect of article, currency or security received in contravention

of the Act. 4419. Application for obtaining ‘registration’ or ‘prior permission’ to receive foreign

contribution. 4419A. Permission for receipt of foreign contribution in application for obtaining

prior permission. 44310. Validity of certi#cate. 44411. Maintenance of accounts. 44412. Renewal of registration certi#cate. 44413. Declaration of receipt of foreign contribution. 44414. Extent of amount that can be utilized in case of suspension of the certi#cate

of registration. 44515. Custody of foreign contribution in respect of a person whose certi#cate has

been cancelled. 44615A. Voluntary surrender of certi#cate. 44616. Reporting by banks of receipt of foreign contribution. 44617. Intimation of foreign contribution by the recipient. 44617A. Change of designated bank account, name, address, aims, objectives or key

members of the association 44618. Foreign contribution received by a candidate for election. 44819. Limit to which a judicial o$cer, not below the rank of an Assistant Sessions

Judge may make adjudication or order con#scation. 44820. Revision. 44821. Compounding of o%ence. 44822. Returns by the Investigating Agency to the Central Government. 44823. Authority to whom an application or intimation to be sent. 448Form FC-1 450Form FC-2 453Form FC-3A 455Form FC-3B 458Form FC-3C 461Form FC-4 465Form FC-6A 469Form FC-6B 470Form FC-6C 471Form FC-6D 472Form FC-6E 473Form FC-7 4743. Foreign Contribution (Acceptance or Retention of Gifts or Presentations)

Rules, 2012 475


VII. 1976 Act and Rules 477The Foreign Contribution (Regulation) Act, 1976 478The Foreign Contribution (Regulation) Rules, 1976 487

VIII. Selected Noti!cations, Notices, Guidelines, Charters, etc. 4891. Gazette Noti"cations 490Exemption for Government Bodies: 30-Jan-2020 490Exemption for Government Bodies: 1-Jul-2011 490Compounding Fees: 5-Jun-2018 490Modi#cation of Compounding Fees Noti#cation: 27-Jul-2018 492Compounding Fees: 16-Jun-2016 492Management of FCRA Assets: 5-Nov-2018 493Sanctioning Authorities: 27-Oct-2011 493Investigating Agencies: 27-Oct-2011 493FCRA Promulgation: 29-Apr-2011 494MHA OCI Rules: 4-March-2021 494

2. Public Notices 496Extension of Date for Opening SBI NDMB Account 496Procedure for Opening SBI NDMB Account 496Registration Validity Extended till 30-Sep-21 498Registration Validity Extended till 31-May-21 498Extension of Last Date for #ling FC-4 for FY 19-20 499Updating Board Changes 499Payments Above Rs. 20,000 500Uploading Quarterly Details 500Comments on Draft Amendment – De#nition of Foreign Source 501

3. Guidelines 502SOP for SBI NDMB Account 502FCRA Frequently Asked Questions 503Introduction to FCRA, 2010 503Key De#nitions and Concepts under FCRA, 2010 504A. Foreign Contribution 504B. Foreign Source 506C. Other Key De#nitions and Concepts 507Registration and Prior Permission 507A. Eligibility 507B. Executive Committee 509C. How to apply 509D. Filling of online form 510E. Required documents 510F. Payment of fee 511G. Status of Online Form 511Acceptance and Utilization of Foreign Contribution 511


A. Acceptance 511B. Administrative Expenses 512C. Utilization of funds 512Transfer of Foreign Contribution 513Maintenance of Accounts 513Filing of Annual Returns 513Banks and Banking related issues 513Change in Name, Address, Objectives, FC Account details etc. 514Renewal of registration. 514O%ences and Penalties and Compounding of certain o%ences. 515Suspension, Cancellation and Surrender of Registration. 516A. Suspension/Cancellation 516B. Surrender 516Foreign Hospitality 516FCRA Dos 517FCRA Don’ts 518Compliance with the Amended Act FCRA 2010 and FCRR 2011 520Approving Foreign Hospitality Applications 521

4. FCRA Charters 524A. Charter for NGOs Applying for Prior-Permission or Registration 524Annexure: Good practice Guidelines to the Non-Pro#t Organizations (NPOs) to ensure compliance with FATF requirements. 525B. Charter for NGOs with Prior-Permission or Registration 525Annexure: Good Practice Guidelines to the NPOs to ensure compliance with FATF requirements. 527C. FCRA Charter for Chartered Accountants 527D. FCRA Charter for Banks 528

IX. Online Resources 5301. Non-foreign Sources 5302. Banned Sources 5303. Organizations of a Political Nature 5304. Gazette noti#cations 5305. Public Notices 5306. Parliamentary Debates: 1967-2020 5307. Parliamentary Report: 2008 5308. Table of Contents (Searchable) 5309. Index (Searchable) 530

X. References and Case Law 531References 531Case Law 536

XI. Index 538


Foreword

Mark Sidel

Sanjay Agarwal’s books on the FCRA have long been our best guides and analyses of this complex Indian legislation and the practice surrounding it. For two decades practitioners, policymakers, activists, academics and perhaps even some regulators, in India and abroad, have relied on Sri Agarwal’s successive volumes on the FCRA to understand how the Act, the Rules under it, and implementation are changing and developing. The predecessor volumes have been widely cited around the world in analyses of the FCRA in India and this volume will continue to be relied upon and cited in many countries as NGOs, donors, policymakers, academics and many others seek to understand the FCRA.

This new edition of FCRA 2010: Context, Concepts and Practice (2021 Edition) continues to set the standard in this #eld. It is a comprehensive volume, covering the history and policy behind the FCRA, the speci#cs of the legislation and rules, and a full guide to FCRA practice and implementation. As philanthropy has changed, this volume has kept pace, now including expanded sections on FCRA and corporate social responsibility (CSR), impact investing, and other important areas.

There are some inaccuracies and myths in our understanding of the origins and history of the FCRA, and this volume seeks to correct those. There is signi#cant misunderstanding, in India and abroad, of a number of aspects of FCRA practice and implementation, and this volume helps a wide array of readers to understand what FCRA and its Rules and implementation really means, and how to comply with FCRA better.


This volume is important in another way. India was among the #rst countries to develop a broad and comprehensive Act in seeking to restrict the &ow of foreign contributions to India. Now, almost #ve decades later, India is far from the only country with such legislation in place. In the Asia-Paci#c region alone, we have recent moves to adopt legislation restricting foreign funding elsewhere in South Asia and in East and Southeast Asia as well. Among the most prominent examples is China, where the Overseas NGO Law (formally the Law of the People’s Republic of China on the Management of the Activities of Overseas NGOs within Mainland China), enacted in 2016 and e%ective in January 2017, also adopted a comprehensive, securitized approach to restricting, controlling and monitoring funding and activities by overseas NGOs, foundations, think tanks and other nonpro#ts in China.

What India began in restricting foreign funding in the 1970s has now spread across the globe, though often in di%erent forms than India enacted or has amended over the decades. Some may view being a pioneer in this area as perhaps a dubious honor, but it is a reality that we should acknowledge.

At the same time, there are some aspects of the Indian experience that are not often found in other parts of the Asia-Paci#c region, or other parts of the world, in which foreign funding laws have been enacted. For me one important example of the Indian experience that is not always found elsewhere is the continuing role of the Indian courts in reviewing the government’s practices in implementing the FCRA and, at times, the Act and its Rules themselves.

That review function, while formally available to courts in some other countries where foreign funding laws are in place, has been exercised more vigorously and robustly in India than in many other jurisdictions. That includes the recent INSAF case, which is discussed in detail in this volume. While some may have wished that courts in India might take a stronger position on aspects of FCRA and its implementation, the fact that judicial review is possible and is actually undertaken distinguishes India from some other jurisdictions, including, of course, China

I commend this exceptional volume to practitioners, policymakers, activists, analysts, academics and anyone else who seeks to understand this important area of law and its practice and implementation. I speak as someone who has studied foreign funding restrictions for many years across the Asia-Paci#c region and beyond, and who has long relied on Sri Agarwal’s #ne work as a guide to and analysis of the complexities of FCRA. We are in his debt for this #ne work.

Mark SidelDoyle-Bascom Professor of Law and Public A%airsUniversity of Wisconsin-MadisonConsultant (Asia), International Center for Not-for-Pro#t Law (ICNL)


Preface to the Third Edition

Western philanthropy is purposive at heart - it seeks to change nations across the world into better ones. Some nations happily acquiesce in this global project, while others do not. Indian society, through the agency of its government, seeks to resist this attempt at improvement. The result of this con&ict is re&ected in FCRA, which creates a refereed space where the two forces of modernity and tradition, change and resistance, can come to an understanding. The ‘regulation’ in Foreign Contribution (Regulation) Act (FCRA) is, therefore, somewhat like a gas valve. If it is tightened too much, the &ame of innovation and improvement will go out. If it is left untended, con&agration might result.

FCRA is not a new law, but it was rejuvenated in 2010, when the previous version was replaced with new one. At that time, there was trepidation about how FCRA 2010 will a%ect NGOs in India. This has been replaced by despondency. The Government is determined to bring NGOs to heel, and where better to aim than at foreign contribution, their Achilles’ heel. The focus of regulation remains on NGOs whose activities involve policy work, advocacy, human rights, or environment, though other cultural or religious issues also surface from time to time. Unfortunately, none of these terms are de#ned clearly. As a colleague once remarked, FCRA is quite ambiguous, and it is easy for people to trip up unintentionally. Therefore, NGOs need to develop a better understanding of FCRA to continue working with foreign donors while remaining within the law.

Due to the frequent changes in rules since 2015, and now major ones in the law as well, the second


edition had become quite outdated. There is also new understanding and several new developments, which called for revision. All the FCRA forms are now online, with major changes in the manner these should be #lled up. Bulk of the book has therefore been re-written. Like the ship of Theseus, there is probably very little here from the #rst edition, though signi#cant parts of the second edition still remain.

Additions include a new chapter on CSR and another on Impact Investing. Two chapters have been added on the political and enforcement aspects of FCRA. The existing treatment on Investigation and Prosecution has been expanded, largely because of a more active stance of FCRA Department. Some new issues such as crowd funding, Social Stock Exchange (SOSTEX), crypto-currencies, and grants to business entities are discussed in detail. Some of the material (such as parliamentary debates and reports) has been expanded but moved online. Also available online now are lists of exempt foreign sources, organizations noti#ed as political, and many gazette noti#cations related to FCRA. The chapter on statistics related to FCRA has been compressed into one short para.

The root cause of organized philanthropy in India appearing to be dominated by foreign money is the much more liberal taxation treatment for charitable donations in Western countries, which allows money to be spent abroad. As compared to this, the Income Tax Department restricts all spending to India. A recommendation to allow charitable spending abroad made in National Policy for Voluntary Sector 2007, was shot down by the Department, which is often at loggerheads with NPOs on this issue (Agarwal 2012). Deductions for domestic charity remain niggardly and the regime increasingly punitive. This puts organized domestic charity at a disadvantage.

The good news is that domestic philanthropy is surging despite all this, with much useful work being done by new money in IT and start-ups as well as by young Indians with disposable incomes. CSR is stabilizing as well as showing signs of maturity. A Social Stock Exchange (SOSTEX) is coming up and will allow NGOs to tap into India’s booming economy as well as experiment with new approaches. What’s more, domestic philanthropy is likely to be less problematic as it is rooted in and backed by domestic sentiments. A time may therefore come in the next decade or two when NGOs will not have to worry so much about compliance with FCRA.

30-Jun-2021 Sanjay Agarwal


Preface to the Second Edition

A law that places restraints on charity sounds like bad policy. Yet that is precisely what the FCRA does. It forces NGOs and others in India to get Government permission before accepting foreign donations. This sounds bureaucratic and [presumptive]. As a result, a large part of enforcement resources goes into frisking the innocent – while creating an illusion of great activity. Due to this, the FCRA Department is left with little time or resources to understand the sector or focus on organizations that misuse funds.

Is FCRA bad policy? A signi#cant part of the foreign donations enters India avowedly to improve Indian culture, society and religion. There is another component which attempts to promote legislation for a better society. However, as Ms. Pushpa Sundar has shown the impact of foreign contribution is mixed (even though it is bene#cial overall) (Sundar 2010). The Government, therefore, believes that it must be regulated.

This book is an attempt to understand and explain the controversial Foreign Contribution (Regulation) Act 2010. This replaces an earlier law passed in 1976. Early indications are that FCRA 2010 will be enforced more strictly than FCRA 1976. The Department is being strengthened by adding more people. Critical processes are being computerized. There is also a perceptible change in tone - FCRA is not being viewed as an enabling legislation by the Department. Another critical change is the introduction of compounding fees. This has made it simpler for the Department to penalize a larger number of o%ences, without getting into time-consuming court cases.


The #rst edition of this book was widely appreciated, partly perhaps because it was the only book available on FCRA at the time. People also liked its relatively simple language and emphasis on practical application. The present edition is markedly di%erent due to several reasons. Firstly, FCRA 2010 is more complex than FCRA 1976. Secondly, the NPO programs have evolved. Thirdly, we now understand much more about FCRA than we did earlier. As a result, the book has been completely restructured. While the #rst edition focused on formalities, this one gives considerable attention to interpretation as well. This required many section references and explanations. Most of these are technical and would tend to clutter up the book for a general reader. These have all been moved to the end.

It is, therefore, hoped that this edition will be useful both to NGOs and donor Agencies, as well as to the accounting and legal professionals. As CSR grows over the next few years, the book will also be of interest to foreign MNCs and Corporate Foundations in India – many of them will #nd FCRA to be a legal mine#eld in working with Indian NGOs.

14-Nov-2012


Preface to the First Edition

Foreign Contribution (Regulation) Act, 1976 is a curious piece of legislation. The Act has only 31 sections: a very short and simple piece of law by any standard. It has also been amended only once in the last 26 years. Very few cases have gone to court under FCRA.

The Act was essentially designed to prevent &ow of foreign funds to political parties in India. It was brought in after a big controversy erupted in 1967 over the possible use of foreign funds in parliamentary elections. By 2002, there were similar laws operating in many countries across the world, including USA, UK, France, Japan, Germany, Canada, Russia, Malaysia, and Spain.

In 1984, the law was amended to regulate &ow of funds to charitable organizations more closely, based on the Government’s perception that some of these organizations may be used to channelize funds to political parties. This has resulted in a lot of paperwork and confusion for non-pro#ts working in India. Re&ecting this confusion, one of our #rst issues on FCRA was titled ‘Mysteries of FCRA’!

With time, the mysteries have reduced somewhat. The FCRA Department has also adapted a citizen’s charter and has tried to streamline its working. However, much remains to be done.

One peculiar implication of the 1984 amendment has been that FCRA is now commonly perceived as a law focusing on the NGOs. While this was not the intention of the law, this is what may have happened, given the fact that most of the time FCRA Department is dealing with NGOs.1

1There are about 40,000 NGOs with FCRA registration. Of these at least 20,000 are active.


The present handbook is designed primarily for use by NGOs, who often #nd themselves on the receiving end, so far as FCRA is concerned (no pun intended). Similarly, consultants and auditors, who must advise NGOs on FCRA, would also #nd the book useful. Some sections would be of interest to grant-making Agencies working in India, who sometimes #nd that their programs and projects fall foul of FCRA provisions.

Many Agencies located abroad are not aware that such a law exists, and therefore, sometimes #nd it di$cult to understand why their projects are delayed. This handbook may help give them an overview.

30-Jun-2002


Acknowledgements

The third edition took several years in writing and re-writing. Several persons provided valuable support in researching the data, proo#ng the manuscript, and tracking down references.

Notable was the hard work put in by a youthful team of Bhawna Malik, Kuldeep Sharma, Rahul Talan, Roshan Yadav, Sanchit Agarwal and Samrat Bhatt who crunched the unwieldy FCRA databases, digging out numbers and nuggets of gold. Dinesh Gautam painstakingly trawled the internet, compiling FCRA data, locating Gazette noti#cations and helping build the appendices. Later Bhawna and Rahul diligently tracked down references, spelling and grammatical errors. Samrat Bhatt and Roshan Yadav meticulously read through many court judgments, helping summarize them. Chetan Agarwal, Kuldeep, Rahul and Samrat pored over the printer’s proofs for many days, relentlessly pursuing errors, both big and small. Chetan also helped build the index.

Dr. Lalit Kumar, who headed Voluntary Action Cell of the erstwhile Planning Commission for many years, was generous as ever, helping make invaluable connections and valuable corrections in the book. Despite a hectic schedule, Biraj Patnaik made time to carefully read through parts of the manuscript, o%ering thoughtful comments and encouragement. Prof. Jane Schukoske helped re#ne the three chapters in Context section, steering me away from treacherous terrain. I am particularly grateful to her for the gift of Prof. Inderjeet Parmar’s book, among many others. Tirthankar Roy also read through the tricky Context section, o%ering feedback and sensible advice.

Also in order, is a word of appreciation for Prof. Mark Sidel, who has helped improve my understanding


of NGO regulation across the world in so many unobtrusive ways over the years. He was also kind enough to share extremely perceptive comments, provide additional references on regulation of philanthropy in China and Vietnam and write a generous foreword. I am forever indebted to him for his support and encouragement. I must also acknowledge Dipankar Mazumdar (1961-2018), friend, mentor and colleague, who shared freely his learning, vision and wisdom with me, and contributed a great many of the insights about NGOs found in this book.

Aditya Agarwal patiently read through the manuscript while handling almost the entire workload of our #rm for several weeks as I struggled with the #nal version of this book. Renu Agarwal’s help in locating and reading through Parliamentary debates, references, updating citations, building the index and her encouragement as I recovered from the #rst two abortive attempts at revising this edition was invaluable. Her unstinting support in this and other book projects is like an ever-present glow of sunshine in my life.

Still, several errors probably remain, due to my ignorance or oversight. I will be grateful if my learned colleagues and practitioners point these out for correction in future editions.

Angshuman and Moushumi De designed the cover and completed the layout, working under an impossible timeline. I would also like to thank the team at PRINTWORKS for helping meet a sti% deadline despite the Covid pandemic in printing this publication.

I would also like to thank each one of the hundreds of NGO functionaries, auditors, CSR practitioners and grant-makers who have generously shared their knowledge and di$culties with me during workshops, webinars, through email, over phone and in personal meetings. Bulk of this book is made of the nectar I have gathered from them.

Finally, I must thank our client foundations, for good-naturedly bearing with delays, while I worked on this book, sometimes ignoring their pressing needs.


Guide to using this book

ABOUT ONLINE RESOURCESMany noti#cations, orders, reports and other lists have been moved online to a dedicated website www.fcra2010.in, to reduce the size and price of this volume. These can be viewed and downloaded free of cost.

ABOUT FOOTNOTESFootnotes provide additional comment or reference to sections, noti#cations, etc. Unlike the second edition, these are given on the same page for ease of reference. In some cases, footnotes contain links to additional material such as FCRA FAQ, given at the end of the book in a separate section.

LOOKING UP AUTHOR REFERENCESWhere another author or publication has been referred in the book, the reference is given in the main text itself in brackets:

(Parmar 2012, p.257, 264)

These usually provide the name of the author or title of the book or article, along with year of publication. Reference to page numbers is also given, where relevant. If you want to read more or check up on a reference, you will #nd the publication and author details in section X: References. The list is sorted alphabetically.

LOCATING CASE LAWCase law references are given in the main text in brackets:

(AVARD vs. UoI 1990)

These provide shortened title of the case along with year when the judgment was given. If you want to locate the full case reference, you will #nd it in section X: Case Law. The list is sorted alphabetically. The full judgment is usually available on the internet – IndianKanoon.org is a good resource. Alternatively, you can locate it on the particular court’s website.

USING THE INDEXThe index is designed to help locate material on particular topics or keywords. It is sorted alphabetically. Page references are given against each topic or sub-topic. Sub-topics are indented under the main entry for that topic. In some cases, keywords or topics are further sub-classi#ed a second time. These are indented a second time.


A

Aadhaar, of bene#ciaries, 406Aadhaar, recti#cation of, 309n20, 321n21accelerator grant, 236-7accounting, 215-8

chart of, 217-8computerized, 215-8cost centers, 215-8groups, 215-8manual, 215-8

address

Where the index entry refers to a footnote, the reference is to a page number followed by the footnote number. For example, 309n20 refers to footnote 20 on page 309.

If a topic or keyword is repeated on multiple pages, then all the page numbers are listed against the main topic or keyword. In some cases, there is a cross-reference to the main entry for that topic:

prior reference category. See donor watchlist

The cross-reference may be to sub-topics under the main topic:

#xed assets. See under records: #xed assets

Some topics are indexed twice (or even thrice) to help locate an issue from di%erent perspective. For example, there is an entry for ‘online fundraising’ under myths as well as directly under online fundraising.

Topics related to #lling of forms are mostly indexed under the form itself. For example ‘donors - project details’ will be found under main entry ‘form FC-4’.

SECTION AND RULE REFERENCES

Section and rule numbers refer to Foreign Contribution (Regulation) Act, 2010 and Foreign Contribution (Regulation) Rules, 2011, unless speci#ed otherwise.

advertisement, payment for, 253a$davit, 365

board members, personal liability of, 366implications of, 366notarizing, 366purpose of, 365-6stamp paper, 366violations to be reported, 366when needed, 366-7who should submit, 366worries about, 367

aid. See foreign aid


AbbreviationsAbbreviation TermA/c Account AIIMS All India Institute of Medical Science AOF Account Opening FormATM Automated Teller Machine AVARD Association of Voluntary Agencies for Rural Development

B-Corps Bene#t Corporation BJD Biju Janata DalBJP Bharatiya Janata Party

CA Chartered AccountantCAG Comptroller and Auditor General of India CASS Computer Assisted Scrutiny System CBDT Central Board of Direct TaxesCBI Central Bureau of Investigation CBO Community Based OrganizationCCD Compulsorily Convertible Debentures CCPS Compulsorily Convertible Preference Shares CDs Compact Disk CEO Chief Executive O$cer CFO Chief Financial O$cer CIA Central Intelligence Agency


CIC Chief Information Commissioner CIDA Canadian International Development Agency COO Chief Operating O$cerCPC Code of Civil Procedure 1908CPCB Central Pollution Control BoardCPSMS Central Plan Scheme Monitoring System CREES Cultural, Religious, Economic, Environmental, Social CrPC Code of Criminal Procedure CSIR Council of Scienti#c & Industrial Research CSR Corporate Social Responsibility CWT Commissioner of Wealth Tax

DFID Department for International Development DHE Department of Higher Education DOPT Department of Personnel and TrainingDWCD Department of Women and Child Development

EC Election Commission

FAQ Frequently Asked Questions FATF Financial Action Task Force FC Foreign ContributionFC-GPR Foreign Currency-Gross Provisional Return FC-TRS Foreign Currency Transfer FCDO The Foreign & Commonwealth Development O$ce FCRA Foreign Contribution Regulation ActFCRR Foreign Contribution Regulation Rules FD Fixed Deposits FDI Foreign Direct Investment FEMA Foreign Exchange Management Act FII Foreign Institutional Investors FMRRS Financial Management Research and Resource Society FRRO Foreigners Regional Registration O$cer

GB Governing BodyGDP Gross Domestic ProductGOI Government of IndiaGovt. Government GST Goods and Services Tax

HC High Court


HDFC Housing Development Finance Corporation HR Human Resource HUF Hindu Undivided Family

IB Intelligence BureauICAI Institute of Chartered Accountants of India ICICI Industrial Credit and Investment Corporation of India ID Identity Documents IFSC Indian Financial System Code IGP Income Generating ProjectIIM Indian Institutes of Management IISC Indian Institute of Science IIT Indian Institutes of Technology IMF International Monetary Fund INGO International Non-Governmental OrganizationINSAF Indian Social Action ForumIPAI Institute of Public Auditors of India IPC Indian Penal CodeIRS Internal Revenue Service ITR Income Tax Return

JJB Juvenile Justice Boards JP Jai Prakash NarayanJPG/JPEG Joint Photographic Experts Group

KYC Know Your Customer

MACS Mutually Aided Cooperative SocietiesMCA Ministry of Corporate A%airs MD Managing Director MHA Ministry of Home A%airsMHRD Ministry of Human Resource Development MLA Member of the Legislative AssemblyMNC Multi-National Companies MP Member of Parliament

NABARD National Bank for Agricultural and Rural Development NAV Net Assets Value NBFC Non-Banking Finance Companies NCPCR National Commission for Protection of Child Rights NDA National Democratic Alliance


NDDB National Dairy Development BoardNDMA National Disaster Management Authority NDMB New Delhi Main Branch NDRF National Disaster Response Force NGO Non-Government Organization(used interchangeably with NPO)NLU National Law Universities Non FCRA Non Foreign Contribution Regulation ActNon-FD Non Fixed Deposits Non-FC Non Foreign Contribution NPO Not-For-Pro#t Organization (used interchangeably with NGO)NRI Non Resident Indian NSDF National Skill Development Fund

OCI Overseas Citizens of India OECD Organization for Economic Co-operation and Development

PAN Permanent Account Number PDF Portable Documents Format PFMS Public Financial Management SystemPIN Postal Index Number PIO Persons of Indian Origin PM CARES Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund PMLA The Prevention of Money Laundering ActPMNRF Prime Minister’s National Relief Fund PRBA Press and Registration of Books Act, 1867

RBI Reserve Bank of IndiaRJD Rashtriya Janata DalRTI Right to Information

SBI State Bank of India SCPCR State Commission for Protection of Child Rights Sec. Section SHGs Self Help Groups SHO Station House O$cer SIB Social Investment BondsSIDA Swedish International Development Cooperation AgencySMS Short Message Service SOP Standard Operating Procedure SOSTEX Social Stock Exchange STD Subscriber Trunk Dialing


TISS Tata Institute of Social Sciences TRP Television Rating PointTVC Town Vending Committees

UDIN Unique Document Identi#cation Number UGC University Grants Commission UK United KingdomUN United Nations UNDP United Nations Development ProgrammeUNGA United Nations General Assembly UNO United Nations OrganizationUSA United States of America USAID United States Agency for International Development UT Union Territory VMC Vigilance & Monitoring CommitteeZCZP Zero Coupon Zero Principal Bonds


Figures and Tables

Figure 1: Key Attributes of Foreign Contribution 91Figure 2: Foreign Sources 104Figure 3: Indians - Subcategories 105Figure 4: Indian Subsidiary of Foreign Company 112Figure 5: Primary and Secondary Sources 118Figure 6: Receivers 122Figure 7: Media 123Figure 8: Exempt Entities - Attributes 137Figure 9: Associations 147Figure 10: Program Attributes 149Figure 11: Types of Education 152Figure 12: Losing FCRA Registration 182Figure 13: Formalities Tree 192Figure 14: Manual Accounting 216Figure 15: Computerized Accounting 217Figure 16: SOSTEX - Mutual Fund 236Figure 17: SOSTEX – CSR Escrow 237Figure 18: SOSTEX – Social Impact Bonds 238Figure 19: SOSTEX – Pay-for-Success Through Lending Partner 239Figure 20: O%-shore Granting 265

Table 1: SHGs, Mahila Mandals, CBO - Stages 166Table 2: Universities 170Table 3: Compoundable O%ences 175Table 4: Permitted Deposits 214Table 5: Impact Investments & FCRA 234Table 6: Charity Events 253Table 7: Income from Art Sale 254Table 8: Using Unrestricted Funds 258

I. CONTEXTThings fall apart; the centre cannot hold;

Mere anarchy is loosed upon the world, The blood-dimmed tide is loosed, and everywhere

The ceremony of innocence is drowned;The best lack all conviction, while the worst

Are full of passionate intensity.

W B Yeats, The Second Coming (1921)


1. Introduction

‘Yes, I did’, said Alice: ‘several thousand, I should think.’ ‘Four thousand two hundred and seven, that’s the exact number’, the King said, referring to his book.… —Lewis Carroll, Through the Looking Glass (1871)

The six decades from 1860s to 1920s of money-making on an industrial scale in the US were followed by the foundation-based philanthropy of the 1930s, arising perhaps out of remorse at capitalist excesses. These foundations gathered knowledge, expertise and reach to become powerful arbiters of national destinies. It has been argued that the foundations achieved this pre-eminent status by building knowledge networks, which bestowed ‘prestige on insiders’ and anointed selected approaches to development. This pattern has continued in the 21st century with tech billionaires setting up new foundations, leaving the old-money foundations dwarfed in terms of money power, even though they are unable to match the organization, dynamism and experience of the older foundations (Parmar 2012, p.257, 264).

Inter-state aid has long been accepted as a diplomatic tool to in&uence foreign policies of nations. It is always a mix of benevolence and realpolitik — sometimes the former serving merely as a patina to cover the grossness of leaden politics underneath. David Engerman has argued that Indian policies from the early 1960s to the late 1970s were deeply a%ected by the ‘Development Politics’ entrenched in American and Soviet aid, which served mainly to further the politics of the respective home governments, while claiming to advance the interests of the poorer nations. In his view, this ‘Janus-

WHAT IS FCRA?Called Foreign Contribution (Regulation) Act, this law was first passed by the Parliament in 1976. It applies to all of India and to all Indians, no matter where they live. The law is designed to make sure that foreign aid does not overly influence government policies, media, or social discourse. Accordingly, the law prohibits some from accepting any charitable contribution at all, while others are allowed to accept these only after some screening.


faced’ development politics was reborn as ‘development aid’ in the ’90s but became even ‘more corrosive than constructive of state power’, with ‘NGOs taking on tasks that were once the primary responsibility of states’. He concludes that ultimately this ‘disrupted domestic policies in relatively stable and institutionalized states like India’ (Engerman 2018).

As Western economies have grown rich on capital, innovation and trade, helped by diplomatic support from trade missions, and international travel became easier, a new source of charity emerged: institutionalized philanthropy, powered by charitable contributions of hundreds of thousands of individual donors in the West. This democratization of philanthropy has its own dynamics, feeding on stories of extreme penury and imposing unrealistic timetables of change and amelioration, to raise su$cient funds for an ever-expanding list of causes.

There’s a parallel to the transition from individual, personalized charity of past centuries to more purposive organized philanthropy. This is found in the way business has changed from individual or family-run enterprises to corporate entities which span continents. And just as the modern multinational corporations exercise enormous in&uence over the way we work and live, the modern international NGOs have come to in&uence the way we think and relate with our communities and the State. These in&uences, even with the best intentions, cannot always be aligned to the interests of the people whose lives they seek to improve through changes in thinking, cultural practices, as well as policies and politics of nations, considering especially the vast geographic and cultural distances across which the in&uence must travel. This dissonance lies at the heart of the contest between the new philanthropists and the newly philanthropized.

Be that as it may, there is evidence all-around of how modernity arising in the West, and carried overseas by philanthropic dollars, has changed our lives, often for the better. Programs such as micro-credit, watershed management, rainwater harvesting, solar energy, pollution control were all initially visualized and #nanced with foreign contribution. Ideas and institutions such as the powerful Chipko movement, the successful Dairy Cooperatives such as Amul, the idyllic Delhi University as well as the old reliable Doordarshan channel, owe part of their success to overseas support (Sundar 2010, p.115) (Staples 1992, p.31,36) (Shitak 2011, p.2). Improvements in the condition of undertrial prisoners and that of our jails as well as the clampdown on third-degree torture have also bene#ted from foreign funding. Foreign donors have also been able to build and sustain networks of NGOs working in remote and inaccessible areas where modern city dwellers would shudder to spend a night. Often these NGOs are the only brush with modernity that a villager in Chamoli or Mayurbhanj would ever have. These NGOs are an enormous source of strength to the communities which surround them, a crystallization of the romantic Bollywood staple in 1960s of a young handsome engineer or doctor who devoted his life to improving the lot of a village.

The increasingly important role of NGOs in India has led to increased demands for more regulation, since need for regulation is directly proportionate to the perceived importance of an institution. This development is not necessarily perverse — the corporate sector has bene#ted immensely from increased regulation in terms of increased public trust and access to resources. However, if regulations are not designed and implemented properly, these can create unintended consequences. This is the central challenge that FCRA must deal with.


NUMBERS AND TRENDSThere was a time not long ago when most did not even know how much foreign contribution was coming into India each year. While this has changed enormously in terms of awareness, the total #gure remains elusive for several reasons. Part of the problem lies in how the basis of calculating and reporting foreign contribution has continued changing over the years. This edition therefore does away with the micro analysis of numbers — there are other and better sources of such data.

However, four points are in order. Firstly, the total amount of fresh foreign contribution has remained essentially static over the last several years at around Rs. 17,000 crores, or just about one percent of the annual tax revenue of the Government of India. This makes it easier for the Government to deal with NGOs, unlike Bangladesh and Philippines where NGOs contribute to a large part of the national budget. Also consider the fact that the foreign exchange brought in by NGOs is just about 4% of the annual FDI &ows (Rs. 3,68,520 crore in 2019). This means that the Government has little interest in the foreign exchange that NGOs bring in.

Secondly, the number of active NGOs has remained hovering around 20,000 for more than a decade. This is based on the number of NGOs who #le their returns annually. This has been so, despite the widely publicized crackdown on NGOs. The primary reason for this is that most of the twenty thousand NGOs who lost their licenses in the last decade were already inactive and were not #ling their annual returns. However, what is less well known is that about 2,000 active NGOs could not get their FCRA licenses renewed in 2016 for a variety of reasons, including activism. This problem is likely to be repeated in the second round of renewals in 2021, probably with more devastating impact, as a deeper scrutiny is now mandated. Given that getting and holding FCRA registration is now an onerous task, it is unlikely that this number will increase signi#cantly in the next one decade. It will probably gradually decline.

Thirdly, there is no evidence that the Government is singling out faith-based groups for punitive action under FCRA, even though they receive bulk of the foreign contribution. Rather it is NGOs with a more ‘political’ voice who are facing increased scrutiny and administrative action. This includes NGOs working on human rights, environment and policy matters. This trend is also likely to continue.

Fourthly, FCRA regulates foreign contributions for organized charity but does not restrict or monitor charitable contributions made directly to bene#ciaries themselves (individual-to-individual charity or organization-to-individual charity). This segment could develop signi#cantly as crowd funding platforms grow and could emerge as a counter to the restrictions on organized social work.

THE NEXT DECADEWill FCRA regulations be eased at any time in near future? This is quite unlikely for several reasons, irrespective of the political ideology which happens to be in power.

Firstly, political parties seek an accommodation with NGOs only when they are out of power. Once a party gains power, the very NGOs which may have been sympathetic to its rise, are seen as irritants. Periods of absolute majority for a party in Parliament are also the periods when NGOs have faced the maximum number of restrictions.

INTRODUCTION


Secondly, given the overall political environment, NGOs are unlikely to garner more support among the vocal middle classes in the near future. This also means less favorable treatment by popular press and media, which is driven mainly by TRPs and thus merely reinforces our favorite prejudices.

Thirdly, NGOs are likely to remain unwilling to make new alliances or friends in the corporate sector or among religious charities. This will continue to a%ect their ability to develop new sources of strength or ideas for improved and balanced regulation.

While FCRA is unlikely to be eased, there are chances that it will be made stronger in future, especially regarding monitoring and enforcement. The stage for this has already been set. Many NGOs are likely to lose their FCRA license or surrender it. Many others are now hesitant to get into

POVERTY AND CHARITYPoverty and property have lived side-by-side in India for thousands of years, with daan and tyag serving as a footbridge between the two. According to tradition, an impoverished Sudama, hesitantly approached his batchmate, royal Sri Krishna, not knowing the kind of reception he will get. As it turned out, Sri Krishna embraced him and his gift with grace and made sure Sudama was never poor again. The story of another batchmate, the learned Dronacharya did not go so well. Pushed to despair, unable to provide even a glass of milk to his son Ashwatthama, he approached King Drupad who greeted him with scorn. Hot with shame and a burning desire for revenge, Dronacharya schooled a batch of warriors, who got him half of Drupad’s kingdom in war as guru dakshina. This in turn led to another war, the famous Mahabharat. Renunciation was the chosen path for Prince Siddhartha, better known as Mahatma Buddh, and for Emperor Ashok, who gave up lordship over South Asia for a life of frugality and meditation. In more recent times, we have Mahatma Gandhi, who gave up the robes of an English barrister to trudge around India on foot, wearing but half-a-dhoti around his middle.This juxtaposition of poverty and wealth was not always visible to the rest of the world. Europe was fascinated with the riches of the princes and kings and later the splendor of the Mughal court, giving it the oft-quoted label of ‘Golden Bird’. These travelers and merchants did not mention that these riches were mostly with a privileged few and that the rest of India lived in thatched huts, sometimes unable to get two square meals a day. This distorted perception of India is what attracted East India companies to our shores, fleecing the princes and the traders, and thus universalizing poverty within India.For India, the rise of private philanthropy after end of the Second World War (and coincidentally of colonization as well) appears to have been triggered by two factors: first was the British familiarity and empathy, as well as, hopefully, a sense of guilt; the second was arrival of the American tourist, newly enriched by the emergence of US as the predominant economic power. India, equanimous in penury and plenty, has never tried to push its poverty out of sight through vagrancy laws or dwelling permits as some cities in the West and East do. This poverty, on stark display in the capitals and megalopolises of the India, and the indi!erence with which Indians look at it, is shocking for the average Westerner, who see this as an opportunity to be good Samaritans.In general, the modern West is much accustomed to purposeful giving, as distinct from daan or giving (Daan and Other Giving Traditions in India, p.14). This propensity to ‘give with a purpose’ is what has been leveraged by modern fund-raising organizations, which roll up every penny and dollar together to deliver a huge punch at poverty and other ills -- as perceived by them.


the FCRA muddle, preferring to raise funds domestically, for less controversial causes. It is therefore quite possible that FCRA will gradually recede into the background, where it had been for most of the #rst thirty years of its life.

OVERVIEW OF THE CHAPTERSThe book is divided into four main sections: Context, Concepts, Practice, and Filing, followed by a set of appendices.

I. CONTEXTFCRA is a law di$cult to understand without a proper context. Chapter two therefore traces the history of FCRA from 1967, when parliamentary demands for this law #rst arose in response to foreign interference in Indian elections to the present times when FCRA seems to be focusing on NGOs alone.

The ambiguity of ‘political activities’ of NGOs and the ambivalence of surrounding regulation is discussed in chapter three, ‘Politics of FCRA’. Much of the grief and heat which NGOs face in India is due to the asymmetrical nature and impact of organized international philanthropy, as compared to the more fragmented giving within India.

II. CONCEPTSThe next section deals with key concepts related to foreign contribution, as de#ned in the Act, most of which cannot be grasped intuitively, but must be studied carefully. This section is aimed primarily at grant-makers, lawyers, auditors and others interested in a conceptual understanding of FCRA. The section starts with chapter #ve devoted to foreign contribution itself, including the confusion surrounding grants to for-pro#ts, impact investing, crypto currency, and the kinds of business payments that are exempt.

Chapter six deals with di%erent types of donors, and duality of tests around foreign source and non-foreign sources, by jurisdiction as well as by control. The new prohibition on regranting by FC-registered organizations is also explained here.

Chapter seven explains how receivers are classi#ed into four broad categories: the prohibited, the exempted, the regulated, and the unrestricted. By a quirk of regulation and enforcement, some of those in prohibited category (mainly political parties and media) often appear to have almost free access to foreign funds in practice, even if not in law. Chapter eight explains the regulation of foreign hospitality, which applies to politicians and people working for Government or quasi-government organizations, but not to media personnel or NGO functionaries.

Chapter nine deals with dreaded parts of FCRA relating to prohibitions and penalties. This chapter also explains the consequences of losing your FCRA registration, whether due to lapse, rejection of renewal, cancellation, suspension or the newly introduced provision for surrender. The ready reckoner with a depressing list of things that can happen to you, or your organization is now moved out of sight into appendix 12.

The last chapter in this section is ten, which describes the Government’s powers and procedures for

INTRODUCTION


investigation, prosecution and the appeal mechanism.

III. PRACTICEThe implementation of FCRA is more unpredictable and less clear than the law. There is a large body of noti#cations, notices, guidelines, charters (and whispers), which a%ect how the law is experienced by many. This section is primarily designed for persons who are tasked with compliance. An overview of these formalities is provided in chapter 11. This is followed by a discussion on FCRA registration, prior-permission and renewal in chapter 12. Chapter 13 deals with restrictions on banking and the requirements for accounts, and records. This chapter also deals with the very confusing issue of what should be deposited where. Chapter 14 explains the very important requirements of public disclosure. Many NGOs are unaware that they need to publish their audited FCRA accounts on their website, if they have one. They also do not realize that public disclosure o%ers them a window to redemption in the eyes of public.

Chapter 15 deals with the new set of issues surrounding corporate social responsibility, including the much-debated matter of whether Indian subsidiaries of foreign companies are a foreign source or not. Chapter 16 o%ers a window into the little-known world of impact investing and how it is a%ected by FCRA. This chapter also o%ers a glimpse of potential FCRA challenges of the proposed Social Stock Exchange (SOSTEX).

Chapter 17 o%ers a snapshot of how the monitoring and enforcement machinery of the FCRA Department works, and the tools and techniques that its o$cers can use. Much of this (and other aspects of FCRA) is shrouded in myth and mystery, of which a new one is created every week. These urban legends and superstitions are tabulated in chapter 18, according to their category. Chapter 19 is presented as a cross-referenced set of FCRA compliance checklists for di%erent kinds of people, such as individuals, election candidates, public #gures, NGOs, donors, fund-raising intermediaries, CSR companies, bankers, auditors, etc.

IV. FILINGImplementing NGOs and auditors will #nd this section most useful, because it o%ers step-by-step practical guidance on #lling and submitting forms. Each of the chapters in this section is stand-alone, and therefore some text will appear to be repetitive.

APPENDICESAppendix one provides a list of the changing forms. This is followed by appendices with some ready-to-use formats such as a commitment letter from donor, undertakings from employees and grantees, template for audited FCRA #nancial statements, audit certi#cate, management letter and a questionnaire meant for #guring out whether an Indian company is a foreign source or not.

Appendix nine explains in detail the confusion around Rule 5 dealing with administrative expenses. Some clarity around welfare-oriented organizations and the manner of calculating administrative expenses is o%ered, which will hopefully allow NGO accountants to sleep better.


2. The History of FCRA

“The horror of that moment,” the King went on, “I shall never forget!”“You will, though,” the Queen said, “if you don’t make a memorandum of it.”— Lewis Carroll, Through the Looking Glass (1871)

Foreign funding of elections is neither #ctional nor new.1 There had been some murmurs about in&ow of foreign funds since the beginning of the century.2 However, these did not lead to any legislation.

COLD WAR AND ELECTIONSWhen Parliamentary elections took place in India in 1967, Cold War was at its peak. India, with its stated policy of non-alignment, was an important playground for the world powers. Congress had tragically lost two popular leaders since the decade began, and was in the young hands of Smt. Indira Gandhi.3 It won a majority, but lost ground, reduced to a shadow of its former glorious self.4 Shortly thereafter, allegations surfaced in the US Press that CIA had provided funds to some of the election candidates.5 This led to a furor in the Parliament, and a debate.6 In 1969, the then Home Minister, Sh. Y.B. Chavan, promised a law to tackle this menace.7

Four years later, on 29-Dec-1973, a bill was tabled in the Rajya Sabha by the Hon. Home Minister, Sri Uma Shankar Dikshit. It was later referred to a Joint Parliamentary Committee (JPC) chaired by Sh. Manubhai Shah8, consisting of 20 MPs from Rajya Sabha9 and 40 from Lok Sabha,10 representing most of the political parties with members in the Parliament.

However, before the law could be debated properly, the nation went into a paroxysm. Sh. Jaiprakash Narayan launched the ‘Citizens for Democracy’ movement in May’74 and led a campaign to oust the Bihar government. Then he set his sights on Delhi and organized a ‘March on Parliament’ in March’75, with a charter of demands including the dissolution of the Bihar assembly, corruption


eradication, electoral reforms etc. (Guha 2007, pp.478-87). The Government panicked. A national emergency was declared on 25th June 1975 and led to a general suspension of civil rights. Most of the opposition was either arrested or went into hiding.

PASSING OF THE 1976 ACTIn this state of paralysis, the Joint Parliamentary Committee chaired by Sh. Manubhai Shah continued its review of the FCRA Bill and submitted its report on 6-Jan-1976.11 The Foreign Contribution (Regulation) Act was passed in 1976 by the Parliament, amid empty opposition benches. Rules were also proclaimed in 1976, and the Act became operational from 5-Aug-1976. The Act allowed NGOs to receive foreign contribution without any restriction.12 However, they were required to report the amount received and spent each year.

1 The reptile fund that John le Carré mentions in ‘The Honourable Schoolboy’(1977) was not as #ctional as is commonly believed. See, for instance, the following excerpt from a draft ACE Electoral Knowledge Network report (ACE n.d.):

“Secret Money Provided By Foreign Governments

Governments have traditionally used secret service funds to bribe (or, putting it di%erently, to assist) prominent foreign politicians and their election campaigns. Other political uses of secret service funds have included payments to foreign trade unions and to foreign newspapers.

Such payments have a long history. In modern times, the ‘Reptile Fund’ used by the German Chancellor, Otto von Bismarck, provided a precedent followed by subsequent German regimes… After the Second World War and at least until the 1970s, a secret ‘Chancellor Fund’ was at the disposal of successive West German Chancellors…

In the era of the Cold War, political parties in Africa and elsewhere reportedly received #nancial support from the Soviet Union and from China as well as from the United States. Some oil-rich countries such as Libya are also alleged to have been active in providing money for foreign political causes.”

2 Niyogi Committee had recommended #nancial restrictions on missionaries in 1956 (Niyogi, Vol. I, Ch. III, Para 100(1)). Similarly, Mahatma Gandhi had made numerous statements decrying proselytization by missionaries (M. K. Gandhi, Vol. XV: p.159)(XXX: 64)(LI: 178, 414)(LXVII: 48-9)(LXIX: 160). However, the genesis of FCRA 1976 is properly traced back to 1967, as the #nal law was mainly focused on restricting funding of elections, etc.

3 Sh. Jawaharlal Nehru (1947- 64) and Sh. Lal Bahadur Shastri (1964- 66)4 From 69% seats in 1962 to 54% seats in 19675 Reports in the New York Times and Newsweek. Diversion of PL-480 funds towards unknown purposes was also alleged.

(Lok Sabha debates of March 20 and 23, 1967). The KGB also appears to have been equally active in providing funds to parties of its choice. (Andrew and Mitrokhin, pp.313, 322-324, 330, 563n62-64)

6 IB report on use of foreign money in the 1967 general election and other purposes (Lok Sabha minutes of 14-May-1969) 7 14-May-1969, Lok Sabha8 As recorded in Rajya Sabha debate of 9-Mar-19769 19-Feb-1974, as recorded in Rajya Sabha debate of 9-Mar-197610 25-Mar-1974, as recorded in Rajya Sabha debate of 9-Mar-197611 As recorded in Rajya Sabha debate of 9-Mar-197612 Except that they were not to use it for political activities, etc.

THE 1976 ACTThe simpler and smaller version of FCRA passed in 1976 prohibited all politicians, political parties, legislators, and government o"cers from accepting any charitable contributions or foreign hospitality. Journalists were not barred from foreign hospitality though they were also not allowed to accept foreign contribution. Organizations of a political nature were allowed to accept foreign contribution only on a case-by-case basis. NGOs could freely accept charitable contributions from foreigners so long as they reported these to the Government.


3. The Politics of FCRA

yqCèka {kh.ka ok rifLoeq[;koLFkkiukiwo± nkusu lkèk;sr~ ॥„…॥ rRi¥~pfoèke~ & ns;folxksZ x`ghrkuqorZuekÙkçfrnkua LoæO;nkueiwo± ijLos’kq Lo;axzkgnkua p ॥„†॥— Chanakya, Arthashastra (~4th Century BCE) 1

Daan, or gift as a tool of politics has always been a staple of Indian political doctrines,2 which treat this as one of four methods of winning over an enemy kingdom, especially one which is #nancially weak (Daan and Other Giving Traditions in India 2010, p.23).

According to European tradition, in 1200 BC the warring Greeks left their infamous gift of a wooden horse on the shores of Troy. The Trojans happily dragged it inside the citadel, without realizing that soldiers were hiding inside the horse. They came out at night, opened the city gates, and Troy fell.

With this literary inheritance, modern Western democracies have continued using aid extensively to in&uence policies and politics of other nations, including India. The use of aid as a tool of modern diplomacy has been debated in and outside parliaments of both the givers and the receivers. Additionally, money has been used surreptitiously to in&uence local politics, public opinion and policy through knowledge networks privileging certain ideas and ideologies over others (Parmar 2012, p.257).

This, of course, is how any knowledge network functions, whether it is medicine, philosophy,

1 Translated as: A king who is greedy or weak can be controlled through #ve types of gifts: foregoing a claim to territory, allowing him to use what territory has been given earlier, returning territory that has been taken [by us], giving gifts that have not been given before, and handing over enemy’s plunder to him. However, this should be done only in presence of reliable sureties.(Tiwari, v. 9.6.35-27; p.422); See also (Kangle, verses. 9.6.23-25; pp. 227-29) and (Olivelle, p.364).

2 See Mahabharat: Shanti Parv, Chapter 103, verse 36. (Ved Vyas, 2001, p. V:4690), and Ramcharit Manas, Lanka Kaand, 6.37.9 (Sharan, 2001, p. 223).


sociology or accountancy. The key di%erence is that foundations work on a wide variety of socio-economic issues, and end up privileging certain ideas over others, largely due to their strategic approach to building of public opinion, and access to funding. There are some in India and elsewhere who believe that given the enormous energy, reach and credibility of the West’s publishing industry and media, these ideas (doctrines really) often end up changing policies across the World, sometimes with disastrous and irreversible consequences. One such case, some activists argue, is the declining gender ratio across India, caused by female feticide. The writer Mara Hvistendahl has argued that this was caused by a combination of the Government policy for smaller families, destigmatization of abortions, and the easy availability of sex determination tests. In her view, the #rst two were direct results of aid programs arising from the neo-Malthusian debate in the West, while the third was a random technological development which triggered an explosion of female feticide even in communities which were traditionally reluctant about killing a new-born girl (Hvistendahl 2011).

THE POLITICAL IN FCRADespite the intense debate on in&uence of foreign funding on politics, the word politics itself is not de#ned anywhere in FCRA (or outside). The only de#nition of ‘political’ given in FCRA is a circular one, like a dog chasing its own tail, and uses the word ‘political’ again and again. For example, rule 3 of FCRR 2011 goes as follows:

Guidelines for declaration of an organization to be of a political nature, not being a political party. (1) The Central Government may specify any organization as organization of political nature on one or more of the following grounds: -i. organization having avowed political objectives in its Memorandum of Association or bylaws;ii. any Trade Union whose objectives include activities for promoting political goals;iii. any voluntary action group with objectives of a political nature or which participates in

political activities;iv. front or mass organizations like Students Unions, Workers’ Unions, Youth Forums and

Women’s wing of a political party;v. organization of farmers, workers, students, youth based on caste, community, religion,

language or otherwise, which is not directly aligned to any political party, but whose objectives, as stated in the Memorandum of Association, or activities gathered through other material evidence, include steps towards advancement of political interests of such groups;

vi. any organization, by whatever name called, which habitually engages itself in or employs common methods of political action like ‘bandh’ or ‘hartal’, ‘rasta roko’, ‘rail roko’ or ‘jail bharo’ in support of public causes.

[ (2) The organizations speci#ed under clauses (v) and (vi) of sub-rule (1) shall be considered to be of political nature, if they participate in active politics or party politics, as the case may be.]3 (Emphasis added)

As can be seen, each of the clauses that de#nes political organizations, itself refers to ‘political’, making it di$cult to #gure out what ‘political’ itself might be. Further, the rule de#nes the grounds on which an organization may be declared as political in nature, not ‘political activity’ itself. Fortunately for us, this phrase is de#ned in another law, Religious Institutions (Prevention of Misuse) Act, 1988,4 also administered by MHA:5

(d) “political activity” includes any activity promoting or propagating the aims or objects of

THE POLITICS OF FCRA


II. CONCEPTSWhat man’s law shall bind you if you break your yoke but upon no man’s prison door?

What laws shall you fear if you dance but stumble against no man’s iron chains?And who is he that shall bring you to judgment if you tear o% your garment yet leave

it in no man’s path?

Kahlil Gibran, The Prophet (1923)


4. The Purpose of FCRA

‘Of course not,’ said the Mock Turtle: ‘why, if a #sh came to me, and told me he was going a journey, I should say “With what porpoise”’‘Don’t you mean “purpose”?’ said Alice.‘I mean what I say,’ the Mock Turtle replied in an o%ended tone.—Lewis Carroll, Alice’s Adventures in Wonderland (1865)

As we often look at the intent behind a human act, so must we look at the intent behind FCRA 2010.1 This has changed dramatically, as compared to FCRA 1976.2 While the old Act was focused on the functioning of democratic institutions, the new Act drops this altogether from the preamble. Instead, the emphasis is on ensuring that foreign contribution is not used ‘for any activities detrimental to the national interest’.

A breakdown of the preamble brings this out more clearly:

FCRA 1976 FCRA 2010

Activity Regulate the acceptance and utilization Regulate the acceptance and utilization

Material Foreign contribution or foreign hospitality Foreign contribution or foreign hospitality

Receivers Persons or associations Individuals or associations or companies

Players 1. Parliamentary institutions2. Political associations3. Academic and other voluntary organizations4. Individuals working in the important areas of

national lifeObjective Function in a manner consistent with the values of

sovereign democratic republic [Prevent] any activities detrimental to the national interest


This is a landmark shift, but it only re&ects what the FCRA Department has actually been doing since the mid- ‘80s. There have been few recorded instances of politicians accepting donations from foreign sources. Acceptance of foreign contribution by politicians was, in any case, a tainted activity at the best of times, and once the prohibition came into force, the &ow dried out almost totally.

However, with the general growth in civil society movement across the world and in India, the FCRA Department has spent more and more time dealing with NGOs.3 This is re&ected in the new preamble.

The best way to cut through the legalese and to understand the intent of the Government is to refer

1 Preamble to the FCRA 2010: ‘A Bill 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.’

2 Preamble to the FCRA 1976: ‘An act to regulate the acceptance and utilisation of foreign contribution or foreign hospitality by certain persons or associations, with a view to ensuring that parliamentary institutions, political associations and academic and other voluntary organizations as well as individuals working in the important areas of national life may function in a manner consistent with the values of sovereign democratic republic, and for matters connected therewith or incidental thereto.’

3 As of 9-Jun-2021, there are a total of 49,952 organizations which had FCRA status at one point of time or other, as compared to 43,033 as of 31-Dec-11(MHA 2012, p.288). Of these, 20,673 have had their FCRA registration cancelled over the last three decades. Another 6,659 registrations are deemed expired. Thus, 22,620 organizations have a valid FCRA registration as of now.

THE GREAT WALL OF CHINAAccording to a charming story by Commander Gavin Menzies, in 1421 the Chinese Admiral Zheng He built a huge flotilla of more than one hundred ships, and sailed around the world to America, stopping in India on the way (Menzies 2003). When he returned to China, the Emperor was furious at this excursion. He ordered all the ships to be burned and forbade any further adventures. Barricaded behind the Great Wall, China did not want any contact with the rest of the world.However, this isolationist sentiment was not reciprocated by the world. The British fought the Opium Wars with the Chinese Emperor in mid-19th century for the right to sell opium to his citizens. The defeat of the Chinese led to decades of turmoil and reciprocal humiliation. Though China was never colonized formally – it was ruled through adverse treaties. Article 51 of Tianjin Treaty (1858) between Britain and Chinese Emperor stated that the British shall no longer be called ‘Barbarians’ by the Chinese:

“It is agreed that, henceforward, the character « I » 夷 [barbarian], shall not be applied to the Government or subject of Her Britannic Majesty in any Chinese o"cial document issued by the Chinese Authorities either in the Capital or in the Provinces.” (Hanes and Sanello 2004, p.218) (Weigui 2001, p.112)

China finally became free of colonial powers in 1949. However, the economic and cultural isolation continued for another 30 years under Mao Tse Tung, leading to impoverishment and a nation pedaling on bicycles. Private ownership of cars was prohibited. Finally, in 1980, China opened its economy to the world. The so-called ‘Barbarians’ rushed back with their dollars and pounds. The first private car in China was imported in 1986. Today China’s economy is just a little behind USA’s which is the world’s largest economy. And it is one of the biggest markets in the world for luxury cars.


III. PRACTICE‘a hill can’t be a valley, you know. That would be nonsense —’

The Red Queen shook her head, ‘You may call it ‘nonsense’ if you like, ’ she said, ‘but I’ve heard nonsense, compared with which that would be as sensible as a dictionary!

—Lewis Carroll, Through the Looking Glass (1871)


11. Formalities

‘I’m afraid I can’t put it more clearly,’ Alice replied very politely, ‘for I can’t understand it myself to begin with; and being so many di%erent sizes in a day is very confusing.’—Lewis Carroll, Alice’s Adventures in Wonderland (1865)

FCRA 2010 is more ‘formal’ than FCRA 1976 was. It calls for various kinds of formalities. These range from a simple intimation about a transaction to submission of annual returns. Most of the formalities are for recipient NGOs, though some involve banks and individuals as well.

We look at some of the key formalities in this and the next two chapters. However, before any NGO can use complete any of the FCRA formalities online, it must register for Darpan ID.

DARPAN IDDarpan ID is a new identi#cation number used for NGOs. The database and portal for this is maintained by Niti Aayog at https://ngodarpan.gov.in/. This portal is designed essentially for tracking use of government grants. However, any NGO can register on the portal after creating a login ID and providing required documents. The process can take from two weeks to several months.

Darpan ID is now essential for any NGO which wants to get FCRA registration, permission or use any other FCRA services. After creating a Darpan pro#le, you should also keep it updated, particularly with respect to board members and #nancial data.

A chart showing an overview of the formalities under FCRA is given below:


Formalities

Intimation

From Relative: FC -1

Change in Board members/CEO: FC-6E

Hospitality: FC-2

Registration:FC-3A

Prior-Permission: FC-3B

Renewal: FC-3C

Surrender of FCRA: FC-7

Separate Accounts: Rule 11

Investment Register: Rule 4(3)

Audited FCRA Financial Statements: Rule 13

Quarterly Receipts: Rule 13

Compounding of O!ence: Rule 21

Revision of Order: Rule 20

Appeal: Sec 31

Articles: FC-1

Securities: FC-1

Cash or Kind: FC-4

Utilization Bank Account: FC-6D

Designated/Another Bank Account: FC-6C

Change in nature, objects, registration: FC-6B

Di!erent State: FC-3A

Within State: FC -6AChange in address

Change in name: FC-6A

Receipt/utilization report by bank: Rule 16

Emergency Hospitalization: Rule 7

Election Candidate: FC-1

Approval

Permission

Annual Returns

Records

Disclosure

Applications

FORMALITIES

FIGURE 13: FORMALITIES TREE


IV. FILING“Therefore nothing can be like the form, nor can the form be like anything else. Otherwise,

alongside the form another form will always make its appearance, and if that form is like anything, yet another; and if the form proves to be like what partakes of it, a fresh form will never cease

emerging.”

— Plato, Parmenides, 133 (~4th Century BCE)


20. Filing Annual Return in FC-1

Form FC-1 is #led online at https://fcraonline.nic.in. It is di%erent things for di%erent people:

1. For NGOs with FCRA registration or prior-permission, it is a form for reporting any receipt of foreign contribution in kind (as material or as securities). Such NGOs should #ll part B of the form (second or third options in online form) and #le it online by 31-December following the end of their #nancial year on 31-March.1 Value of the items included in form FC-1 is separately reported in form FC-4.

2. For ordinary Indians (residing in India or abroad), it is a form for reporting gift of money, material or securities over Rs. 1 lakh in a #nancial year from a relative (PIO or foreigner).2 Such people should #ll part A or B of the form (#rst, second or third options in online form), and #le it online within 30 days of receiving the contribution.

3. For people contesting elections to a legislature (including Panchayats and Corporations), it is a form for reporting foreign contribution received in the last 180 days.3 Such people should #ll part C of the form (fourth option in online form), and #le it online within 45 days of being nominated as a candidate for election.4

This form should be submitted only if you actually receive any foreign contribution as above. A ‘nil’ form need not be submitted.

FORM FC-1 FOR NGOS: ARTICLESIf you’ve received items or material, choose second option.5 The form is fairly simple and starts with name, PAN and contact details.6 NGOs #lling the form also have to give their FCRA Registration number (or prior-permission number) and date.

You will have to #le a separate form for each donor, each type of articles, and each time these are received. For example, if a donor has given you blankets and milk powder three times during the year, you will have to #le six separate forms.


RECEIPT OF ARTICLESFill up the details of the articles you have received in the next section, along with donor’s name, address and purpose. Also give brief description, quantity and approximate value of the articles. This value must also be reported in form FC-4, as discussed under Foreign Contribution Received during the year on page 330.

VALUING THE ARTICLES?How to value the articles? FCRA rules are silent on this. If the articles were imported, then the customs documents show a declared value. This amount should be given in FC-1 and FC-4. Sometimes, donors mention a value in the covering letter,7 or other accompanying documents (such as transport documents). This value can be used, if available.

If none of these are available, then you can ask the donor or use your best estimate.

USE OF ARTICLESIf you’ve used these up, then this should be mentioned. If you’ve sold these, then give the name of the buyer.8 Record the money received against sale in your FCRA accounts, and report it in FC-4, as discussed under Project-wise Utilization on page 334.

If you’ve given these away to the community or bene#ciaries, then mention this in the form. If you’ve given these to an NGO, then mention its name and FCRA number in the form. This transaction should also be re&ected in your FC-4 as a transfer to other NGOs. Remember that you cannot make transfers to other NGOs any longer after 29-Sep-2020.

REVIEW AND SUBMISSIONAfter #lling the form, and uploading your signatures, click on ‘save data’. This opens up a preview window, where you can recheck the form, and make any corrections. Once this is done, you should click on ‘#nal submit’.

Once the form is submitted, print a copy before closing the window. Unlike FC-4, you cannot download your form from the FCRA database. Therefore, make sure you keep a copy for your record.

FORM FC-1 FOR NGOS: SECURITIESIf you’ve received shares or bonds as a donation, choose third option.9 The form is simple and starts

1 Rule 17 of FCRR 2011

2 Articles up to Rs. 1 lakh each, when gifted for personal use to an individual, do not count as foreign contribution (Rule 6 read with 6A)

3 Sec. 21 of FCRA 20104 Rule 18 of FCRR 20115 Online #ling for giving intimation about foreign contribution by way of (Articles) from relative by an individual.6 The form asks for Aadhaar number, though NGOs do not have an Aadhaar number. 7 In case of software and other electronic items, corporate donor often mention the list price, which is more than the street

price in India. Please check with your auditors whether you should this value or the real market price. 8 In case of sale, the amount should be taken to FCRA books, and reported as an adjustment in form FC-4. 9 Online #ling for giving intimation about foreign contribution by way of Securities.


IX. ONLINE RESOURCESVISIT WWW.FCRA$%&%.IN OR SCAN QR CODE

&. NON'FOREIGN SOURCES$. BANNED SOURCES(. ORGANIZATIONS OF A POLITICAL NATURE). GAZETTE NOTIFICATIONS*. PUBLIC NOTICES+. PARLIAMENTARY DEBATES: &,+-'$%$%-. PARLIAMENTARY REPORT: $%%... TABLE OF CONTENTS /SEARCHABLE0,. INDEX /SEARCHABLE0


XI. INDEX

A

Aadhaar, of bene#ciaries, 406Aadhaar, recti#cation of, 309n20, 321n21accelerator grant, 236-7accounting, 215-8

chart of, 217-8computerized, 215-8cost centers, 215-8groups, 215-8manual, 215-8

addressemail, importance of updating, 244postal, importance of updating, 244

administrative expenses, 176applying exceptions, 385-6basic listing, 384calculating, 383-6confusion, 379-80de#ned, 379de#nition, preciseness of, 380disclosure note, 386disclosure of, 226excluded, 380FCRA Receipts & Payments Account, use for calculating, 384Greenpeace, 381n2impact due to regranting ban, 265limit on, 172limit, revised, 276management letter, 404myth of program salaries not being, 259organization, nature of, 383over-spending, 414Parliamentary Committee report on, 173n11penalty on overspending, 176primary engagement, 380-1question in FC-4, 340Receipts & Payments Account, 386relaxation chart for NGOs, 382research or training organizations, relaxation in, 335-6rights-based organizations, 382-3Sabrang, 381n2salary of policy and advocacy sta%, 380sta% salaries, 380, 381n4sub-grants, impact of, 335, 335n20total spent, 335-6total utilization, compared with, 335

trainers, 380-1trainers, when excluded, 380-1training of own sta%, 382welfare-oriented, salary expenses of, 380

advances and regranting, 264advertisement. See publicity campaign under mythsadvertisement, payment for, 253a$davit, 365

board members, personal liability of, 366implications of, 366notarizing, 366purpose of, 365-6stamp paper, 366violations to be reported, 366when needed, 366-7who should submit, 366worries about, 367

aid. See foreign aidaid contractors, checklist for, 277amendment

companies with foreign shareholders, 227-9reason for, 227subsidiaries treated as foreign sources, 229

annual return, 197-8material. See form FC-1material or securities, 198money, material or securities, 198money, material, securities. See form FC-4

anonymous donations, myth re, 251-2appeal

con#scation order, 187orders which can be appealed, 187-8orders which can not be appealed, 187time limit, 187

approvalchange in board, 197change in name or address, 196change in nature, objects or registration, 196change/opening of another bank account, 196change/opening of designated bank account, 195-6closing of utilization bank account, 196opening of utilization bank account, 196

art auctions, myth of, 254ashrams, myth of, 249association

types of, 147audit


FMRRS, 242IPAI, 242site visit, 242

auditors, checklist for, 278

B

Balance Sheet, 224bank account numbers, updating, 267-8bank charges, 215bankers, checklist for, 277-8banking, 210-13

accounts, 213accounts, sample resolution for, 212-3additional accounts, 212-3another account, 212-3ATM cards, 215cash withdrawals, 215conditions, 212-4debit cards, 215designated account, 210-1designated account, activation, 212designated account, change of, 211designated account, deactivation of, 212utilization accounts, 212-3

banking details, myth of, 252bitcoin, 96board a$davit. See a$davitboard members, changes in. See form FC-6Ebranch o$ce, applicability of FCRA, 168branch, opening outside India, 269building infrastructure for another and regranting, 265-6bureaucrats, 127business advances, myth of, 248business payments and regranting, 260business people, applicability of FCRA, 248

C

cancellation, 413, 414, 416, 417, 418after or before suspension, 178assets and FC, 181-2associated organization, 325-6bar on further receipts, 244-5Citizens for Justice and Peace, reasons for, 173n4#ling of annual returns, 197n13for inactivity, 180Greenpeace, 144-5grounds for, 179-80, 244-5loss of assets, 244-5mixed fund assets, 186no FC for three years, 179

no registration or prior permission for three years, 244-5numbers over three decades, 83n3opportunity for hearing, 244powers of, 178-80prior permission for accepting FC, 303public interest, 179, 244-5restoration of registration, 244-5result of, 244-5show-cause notice, 243show-cause notice is must, 178suspension a pre-condition?, 244-5

cancellations, large scalein 1997, 61n25in 2005, 61n25in 2012, 61n25in 2015, 61

catalogues, myth of, 252Central Government and bilateral receipts, myth of, 258Central Plan Scheme Monitoring System. See PFMSCEO, change in. See form FC-6Echannelizing, implications for grant-makers, 248channelizing, myth of, 248charge sheet, 185, 298, 299n21, 309n22, 322, 323n24charitable trusts, 147-8charities, checklist for, 274-7charity events, myth of, 253-4chartered accountants, checklist for, 278checklist for

aid contractors, 277auditors, 278bankers, 277-8charities, 274-7chartered accountants, 278corporate foundations, 274-7CSR companies, 274CSR foundations, 274-7donor agencies, 273-4foreign companies, 274foreign donor agencies, 273-4foreign individual donors, 272-3foreign MNCs, 274foreigners, 272-3for-pro#t companies doing program activities, 277for-pro#t project implementers, 277government servants, 271-2Indian subsidiaries of foreign entities, 274individuals, 272individuals doing programs, 277journalists, 272


judges, 271-2media persons, 272NGOs, 274-7OCI, 272-3ordinary individuals, 272PIOs, 272-3political parties, 271-2politicians, 271-2public servants, 272sec.8/25 companies, 274-7societies, 274-7subsidiaries of foreign entities, 274trusts, 274-7

chief functionary, change in. See form FC-6Echurches, myth of, 249collecting information or documents, 184commissioned news

by FC-registered NGO, myth of, 250by INGO, myth of, 250

compounding, 175-7application fee, 177application for, 176-7cannot exceed total FC, 176delayed #ling of FC-4, 176fees, 174-6, 176, 198, 212, 243, 249, 325, 340, 325n38, 351n4, 353fees, negotiating, 243introduced, 35multiple o%ences, 176o%ences eligible for, 175-6repeat o%ence, 176

Computer Assisted Scrutiny System, 241conducting programs outside India, myth of, 259congregations, myth of, 249consultancy contracts, myth of, 251consultancy income, myth of, 255consultants, appointing in India and regranting, 262controlled foreign companies - non-foreign source, myth of, 251conversion of entity and regranting, 262-3converting FC funds, myth of, 257corporate foundations, checklist for, 274-7corporations

aggregate, 108ecclesiastical, 108religious, 108sole, 108types of, 108

corpus, myth re, 258CPSMS. See PFMScrowdfunding

impact of, 52

prospects, 52crowdfunding, myth of, 252crowdfunding, when treated as regranting, 262crypto-currency, 96CSR

and FCRA, 227-31case studies, 230checklist, for banks, 231checklist, for companies, 230-1checklist, for NGOs, 230forms of contribution, 229-30foundations, 229

CSR companies, checklist for, 274CSR foundations, checklist for, 274-7custody, 137, 181-2, 186, 245and management, 181-2

D

Darpan ID, 191, 344, 347, 352, 358, 361, 499de#nite and speci#ed program, precondition for regulated receivers, 148de#nition/meaning of

‘means and includes’, Justice Nariman on, 114-5administrative expenses, 379administrative expenses, preciseness of, 380another bank account, 212-3articles, 92association, 147-8B-Corp, 163-4branch o$ce, 168bureaucrats, 127CAG audit, 137candidate for election, 131charitable individuals, 159club, 108company, 110company under foreign control, 117cooperative society, 164corporate foundations, 157-8corporation, 108currency, 93designated bank account, 210-1dual citizenship, 105electoral candidate, 131electoral trusts, 158-9electronic media, 125fellowship, 100foreign company, 110foreign contribution, 87foreign hospitality, 169foreign source, 113foreigners, 103


foundation, 108government, 106government servant, 288HUF, 159-60interests of the State, 74international agency, 106judges, 288judiciary, 130legislators, 130, 286-7legislature, 130liaison o$ce, 166-8magistrates, 288MNC, 116municipalities, 142national interest, 74nominal branch o$ce, 168NRI, 105OCI, 105organization of political nature, 68, 132-3owned by the Government, 136Panchayat, 131n31PIO, 105political

as per dictionaries, 69as per Government, 71as per Patna High Court, 69as per Supreme Court, 69

political activity as per Religious Institutions (Prevention of Misuse) Act, 1988, 68politicians, 130, 287political parties, 132print media, 124producer company, 164-6public interest, 74public servant, 128, 289-90quasi political organizations, 132relative, 161-3scholarship, 98sec.8/25 company, 147secondary source, 117securities, 96statutory bodies, 134stipend, 99subsidiary, 112subsidiary of foreign company, 112trade union, 109trust, 107utilization bank account, 212-3

defunct organization, 181-2designated bank account, 120, 174, 177n25, 195-6, 210-2, 213n11, 241, 338, 350-1, 352, 353, 355, 417n130designated or another bank, changes in. See form FC-6C

dharma and FCRA, 80direct grants and regranting, 263-4direct implementation and regranting, 265donor agencies, checklist for, 273-4donor watchlist, 242-3

delays, 242process, 242-3RBI,242-3RTI, 242-3secrecy, 242-3

E

election candidategift received by, 193intimation, 193remittance, 193time window, 193

electoral bonds, 93electoral trust, 158-9emergency medical aid, 193-4

intimation format, 170time limit for reporting, 170

Emergency, link with FCRA, 57endowment when utilized, myth of, 258endowment, myth re, 258enforcement, 242-6

audit. See auditdonor watchlist. See donor watchlistprior reference category. See donor watchlistscrutiny, 242

escrow account, 236-7exchange rate, 215exempt entities, restrictions on and regranting, 221exempted receivers, 123, 137-45

APIICL?, 139autonomous bodies, 137-8by separate order, 143-4Central Government, 143central pollution control board?, 141central universities?, 140conditions, 134CSIR, 143direct grants, 144examples, 138-41government companies, 138government, exempt or not?, 143Greenpeace volunteer, treated as violation, 144-5ICSSR?, 140IIM?, 140IIT?, 139-40implications, 144indirect support, 144-5


Kalakshetra?, 140LAMP case, 144-5legislative bodies?, 141-2legislature – indirect support through interns, 144-5material, 144municipal corporations?, 142municipalities?, 142NABARD, 140-1NDMA, 140NSDFC, 143ONGC?, 138-9panchayats?, 142-3PM-CARES, 143-4PMNRF, 143-4private aid?, 143PSUs, 138-41secondary receipt, 144state government?, 143state pollution control board?, 141state universities?, 140sub-granting to entities without FCRA, 145sub-granting to others, 145Swacch Bharat Kosh, 143undertaking, 145volunteers, 144-5

exemption conditionscompulsory CAG audit, 136-7set up by government, 134-6wholly owned by government, 136

expropriation of trust funds, setting precedent?, 80

F

FC assets and regranting, 262FC assets, restrictions on and re-granting, 262FC becoming Indian, myth of, 257FC #nancial statements

alternative format, 340-1audit certi#cate, 341audit certi#cate, when not needed, 341audit tests, 341-2audit tests, recommended by FCRA department, 341-2auditor’s role, con&ict with ICAI standards, 342auditor’s role, FCRA charter, 342format of, 340-1management letter by auditors, 342

FC funds- unrestricted, myth of, 258-9FCRA

and dharma, 80and Inquisition, 79and Mahabharat, 80

Arab Spring, 64arbitrariness in administration?, 79attitude of courts, 75compounding fees, collections from, 79cultural con&ict, 62Emergency, link with, 57evangelization vs. proselytization, 63expropriation of trust assets, 79FATF, impact of, 63FATF, on FCRA, 64future prospects, 53genesis of, 57globalization, 64government attitude towards missions, 63history, 54in other countries, 64international environment, 66jurisdiction, 85Kudal Commission, 58missionary activities, 63number of registered organizations, 83n3politics, de#nition of, 68preamble compared, 82proselytization vs. evangelization, 63purpose of, 83-5questionnaire. See under questionnairereasons for refusal, lack of clarity, 79religious evangelism, 63repeal and its e%ect, 85social media, 126terrorism, 64test of proportionality, 79total receipts, no drop in, 62yardsticks of behavior, not stated clearly, 79

FCRA applies to NGOs only, myth, 247FCRA not applying to individuals, myth of, 248FCRA timeline

1956, Niyogi Committee and missionaries, 57n21967, debate in parliament, 561967, reports in media, 561969, bill promised in parliament, 561973, bill tabled, 561974, JP movement launched, 561974, referred to JPC, 561975, Emergency imposed, 571976, bill passed, 571976, JPC report, 571977-80, political instability, 581982, Kudal Commission set up, 581984, ordinance issued, 581988, committee set up, 592004, drafting started, 602005, draft circulated, 60


2006, bill presented, 602008, committee report, 602010, passed in, 602010, presidential assent, 602011, came in force, 602011, rules noti#ed, 602014, ‘foreign-funded’ NGOs, popularization of term, 612014, Intelligence Bureau report, 602014, Sabrang case, 612014, US foundation faces inquiry, 612014-20, changes in rules and law, 622014-20, environment, 612014-20, social media activism, 612014-20, streamlining, 612015, cancellations, 612015, donor beware – doctrine of, 612016, renewals, 612016, retroactive amendment to 2010 Act, 1152018, retroactive amendment to 1976 Act, 1152020, amendment, 62

FCRA, applicability to impact investments, 233federations, myth of, 249fellowship, myth of, 251FEMA and FCRA, comparison of entities covered, 146FEMA vs. FCRA, myth of, 250FEMA, applicability of, 232-3FEMA, applicability to impact investments, 233female feticide, 68#xed assets. See under records:#xed assets#xed assets or stocks, sale of, 268-9#xed assets, reporting in form FC-4, 266foreign aid

abortions, destigmatization of, 68cultural impact of, 67cultural in&uence of, 51diplomatic tool, use as, 67female feticide, link with?, 68inter-state, 51literary traditions, European, 67literary traditions, Indian, 67neo-Malthusian debate, 68population programs, 68positive in&uence of, 51

foreign companies, checklist for, 274foreign contribution

as bonds or shares, 96as currency, 93as paintings or collectibles, 92bitcoin, 96buying program services, 90casual volunteering, 96

commercial receipts - when not exempt, 88commercial receipts, exemption for, 88consultancy fees, exemption for, 88crypto-currency, 96de#nition of, 87directed giving, 120fellowship, 100fellowship and fees - distinction, 100foreign exchange, quantum of, 52free software, 97free use of premises, 98gems, bullion or silver, 93impact investments, 90in form of articles, 92in form of land, 92interest and project receipts, reporting of, 118-9interest as, 118laundering of, 120loss of foreign character, 120mobile wallets, 95old currency, 93payments to for-pro#ts, 88payments to for-pro#ts – when not exempt, 90professional receipts, exemption for, 88pro#t element in sale of goods or services, 88program services - tests, 90program services vs. program activities, 90project receipts as, 97purchase of services from for-pro#ts, 89royalty on IPR, 97sale of goods by for-pro#ts, 89scholarship, 98scholarship or stipend, 98scholarship or stipend – paid through NGOs, 99school fees, exemption for, 88sec. 8/25 company, 94share capital, payment for, 94sponsored premises, 98sponsored volunteers, 96stipend, 99subsidy – exemption for, 90subsidy – when not exempt, 90total amount of, 52traveler’s cheques, 95website - sponsored, 98website design, 98what is, 91

foreign currency as non-FC, myth of, 250foreign donor agencies, checklist for, 273-4foreign hospitality, 169

application for, 170elements of, 169for NGO workers, 98


form FC-2, 170medical emergency. See emergency medical aidnot restricted for, 170permission for, See form FC-2, 195public servants, 170restricted for, 169university employees, 170within India?, 170

foreign individual donors, checklist for, 272-3foreign MNCs, checklist for, 274foreign source

business organizations, 110clubs, 108company with foreign shareholders, 117corporation as, 116corporations, 108dual citizens, 105due diligence by receivers, 121exempt sources, 106, 120foreign companies under Indian control, 117foreign company, 110foreign MNC, 116foreign NPOs, 107foreigners, 103-4foundations, 108giving portals, 119giving portals, discretion of, 119government agencies, 106governments, 106Indian citizens not treated as, 120Indian MNC not treated as, 116individuals, 103-6INGOs, 107international agencies, 106NRIs are not, 105OCI, 105PIOs, 105prior reference category, 120prohibited, 120questionnaire for corporate donors, 117questionnaire for CSR donors, 117registered o$ce as, 116secondary sources, 117societies, 108subsidiary of foreign company as, 116, 117trade unions, 109trusts, 107types of, 118UNO is not, 106watchlist donors, secrecy surrounding, 121watchlist, donors on, 120work permits for internal agencies no longer exempt, 107

foreign volunteers, disclosure in FC-4, 270foreign volunteers, honorary or sponsored, 270foreigners, checklist for, 272-3form FC-1

Aadhaar, 284Aadhaar of NGO?, 281n6, 283n10articles, details of, 281articles, how used, 281articles, valuing, 281copy of, 281, 282, 284, 285election candidates, 284-5

after nomination, #ling again, 285articles or money from relatives, 284

#ling, 281, 282, 284, 285#ling by foreigners resident in India, 282#ling by Indian citizens, whether resident or not, 282#lling, for election candidates, 284-5#lling, for individuals, 282-4#lling, for NGOs, 281, 282individuals

articles, 283-4remittances, 283securities, 284

items, reporting values in form FC-4, 281nationality of donor, 283-4NGOs, 280PAN, 280, 282, 284relative, de#nition of, 283review, 281, 282, 284, 285 securities

details of, 282multiple #ling, 282reporting under FEMA, 282reporting values in FC-4, 282valuation of, 282

types of, 280form FC-2

applicant details, 290attachments, 291departmental recommendation, 290#le number, 290#ling, 291#lling up, 290-1hospitality – permission denied, 291hospitality details, 290hospitality in the past, 291host details, 291need not #le

journalists, 286public servants, 286retired persons, 286

PAN, 290


submission, 291when to #le, 286who should #le, 286

corporator, 286councillor, 286government employees, 286government servants, 286judges, 286MP, MLA, MLC, 286o$ce bearers, 286panchayat member, 286politicians, 286

form FC-3AAadhaar, 296-7administrative expenses, 294administrative expenses, excluded for threshold, 293adverse orders, 299-300a$davit, 301aims, 294attesting documents, 302bank details, 300basic details, 294board details, 296board member, connected with other NGOs, 299 cancellation, 293, 298cancellation of associate, 301cancellation, history of, 301chief functionary, how to specify, 295-6clari#cation, 302convictions, 298corrections, 302Darpan ID, 294documents, 301-2eligibility for registration, 292-3executive committee, 294-7FATF undertaking, 302#ling, 302#lling up, 293foreign nationality, 297foreigners on board, generally not permitted, 297governing board, 294-7government o$cers on board, 297history, 300Indian Trusts Act, 1882 vs. Registration Act, 1908, 294key person designations, 295key persons, not on board, 294-5misuse, 298nationality, 296newspaper, newsletter or publications, 302NRIs, 297

objects, 294objects, care in summarizing, 294occupation, 296old application, 292organization details, 294other details of board, 297-9other NGOs, association with, 299other NGOs, links with, 301PAN, 294, 296-7particulars of conviction, other NGOs etc., 299past cancellation, 301past defaults, 300PIOs, 297PRBA certi#cate, 301-2prior permission history, 300prohibited, 298prohibition, 298, 299n27prosecution, 298

details, relying on a$davits, 298implications of, 298in civil matters, 298when charge sheet #led, 298

Registration Act, 1908 vs. Indian Trusts Act, 1882, 294relatives on board, 296re-submission, 302status, how to check, 302welfare-oriented, 294

form FC-3B, 303-15Aadhaar, 308adverse orders, 310-1a$davit, 314aims and objects, 305-6aims and objects, care in summarizing, 305-6applicant details, 305associate, 310attesting Documents, 314bank details, 311board membership, of other organizations, 310branch, 310cancellation, 310cancellation details?, 312cancellation of associate, 312charge sheet, 309chief functionary, 304, 307clari#cations, 315contact information, 307convictions, 309Darpan ID, 303, 305details of default, 310documents, 314donor commitment, 312-3donor details, 313


donor details, for institutional donors, 313donor, relationship with, 304eligibility, 303-4executive committee, 306-8FATF undertaking, 314fees, 314-5#le number, 314-5#ling, 314-5#lling up, 305-14foreign nationality, 308foreigners, 308governing board, 306-8governing board, additional details, 308-10government o$cers, 308key functionaries, 306-8key persons, not on board, 306links with other NGOs, 312misuse of funds, 310mobile numbers, 307multiple donors, 314multiple permissions, 304nationality, 308nationality of donor, 313nationality of institutional donors, 313nationality of resident PIO, 313newspaper, newsletter, other publications, 314NRIs, 308occupation, 307old applications, 303over Rs. 50 lakh, 304over Rs. one crore, 304PAN, 305, 308past prior permission, 311past registration details, 312PIOs, 308PRBA Certi#cate, 314prohibition, 310prohibition, of another organization, 310prosecution,309

details, relying on a$davits, 309implications of, 309in civil matters, 309when charge sheet #led, 309

recommendation letter, not required, 314registration details, 305relationship, with FC-registered NGOs only, 310relatives on board, 307revision, 315status, 315track record, 311unit, 310violation – accepting funds without prior permission, 311-2

waiting period, before re-applying, 304waiting period, if cancelled, 304website, 304

form FC-3CAadhaar, 320-1, 321adding members, 319adverse orders, 324a$davit, 326aims, 318attesting documents, 326bank details, 324basic details, 317board details, 320board member, connected with other NGOs, 323cancellation, 322-3chief functionary, how to specify, 320convictions, 322corrections, 326date of change, 322delayed application, implications of, 317designated bank details, delay in approval of FC-6C, 324documents, 326due date, 316executive committee, 318-9FATF undertaking, 326#ling, 326#lling up, 317-26foreigners on board, generally not permitted, 321funding history, discrepancies?, 318governing board, 318-9government o$cers on board, 321history, 324-5key functionaries, changes in, 318-9key functionaries, designations, 319key functionaries, not on Board, 319misuse, 322nationality, 320-7NRIs, 321objects, 318objects, care in summarizing, 318occupation, 320old application, 316old FC-6E, not approved yet, 319organization details, 317-8other NGOs, association with, 323-4other NGOs, links with, 325-6PAN, 320-1particulars of conviction, other NGOs etc., 323PIOs, 321preparation, 316prohibited, 322-3


prosecution, 322details, relying on a$davits, 322implications of, 322in civil matters, 322when charge sheet #led, 322

relatives on board, 320re-submission, 327status, how to check, 326updating board details, 319utilization bank details, 324welfare-oriented, 318when to #le, 316

form FC-4, 328adding donors, 333administrative expenses, 335-6bank details, 339bank statements, 342contribution in cash and kind, 330corrections, 342declaration by chief functionary, 342delayed #ling, 328directly from foreign source, 330documents, 342donors - project details, 333donor-wise table, 333-4due date, 328FC #nancial statements. See FC #nancial statementsFC in cash or bank, 338FD transactions summary, 338#ling, 342-3#lling up, 329#nal submission, 342-3#xed assets, details of purchases during the year, 336foreign source – overseas or resident, 330foreigners, working in NGO, 336IGP receipts, 332in kind, 330income derived from FC, 331interest, 331land or building, unused, 338late fee, 328local source, meaning of, 330-1matching utilization #gures, 335no login ID, 328opening balance, 330project receipts, 331-2project-wise summary, 332purpose-wise summary, 332

funds from FC-registered entities, 332tallying totals, 332

questions, 339

Receipts & Payments Account, for FC funds only, 329refunds, 332regranted amounts, 336reporting on cash basis only, 329review before submitting, 342-3revision, 343rupee donations, 330sale of shares, 331-2secondary source, in kind contributions from, 330-1summary #gures, 330total available, 332total FC received, 330transfer to other NGOs, 336unable to #le, 329unutilized balance, 338utilization, 334-6utilization – project-wise, 335welcome screen, 329

form FC-6A, 344address change, within state, 345documents, 344-5documents for change of address, 345due date, 344email ID, 345#ling, 345#lling up, 344intimation or approval, 344processing time, 344registrar’s certi#cate for change in name, 344

form FC-6B, 346changes in aims and objects, 347-8documents needed, 347-8due date, 346email ID, 348#ling, 349#lling up, 346intimation or approval, 346preview before #ling, 349processing time, 346registrar’s certi#cate for changes, 347registration details, changes in, 348submission, 349

form FC-6C, 350another FCRA account as per FCRA records, 353another FCRA account, adding details of, 353another FCRA account, using, 351association details, 352common errors, avoiding, 354-5correction after approval, 356designated account, converting old one into another FCRA account, 352-3


designated account, details, 352designated account, using, 351documents, 353due date, 351email ID, 352fees, 355#ling, 355#lling up, 352-3intimation or approval, 351previewing to prevent errors, 353-4processing time, 351resubmission, 356sample tables, 353-4SBI NDMB, account details, 352SBI NDMB, state and city?, 355

form FC-6D, 357-9association details, 358correction after approval, 359due date, 357email ID, 359#ling, 359#lling up, 358-9intimation or approval, 358processing time, 358resubmission, 359submission, 359utilization bank account

adding details, 358closing of, 357closing or changing, 358details of existing account, 358documents needed, 358-9

form FC-6E, 36050% change threshold, no longer relevant, 360Aadhaar, 364adding names, 362a$davit. See a$davitassociation details, 361board details, 363board members, changes in particulars, 360chief functionary, 363chief functionary, how to specify, 363clari#cations, 365corrections, 361Darpan details, 361date of change, 364documents, 364-5due date, 360editing details, 362email ID, 362executive committee, 362#ling, 365#lling up, 361-5

foreign nationality, 364foreigners on board, generally not permitted, 364governing board, 362government o$cers on board, 364intimating another change, while approval pending, 361intimation or approval, 360key functionaries, existing, 361key person designations, 362nationality, 364NRIs, 364occupation, 363PAN, 364persons covered, 362PIOs, 364processing time, 360reason for change, 364relatives on board, 363resubmission, 361submission, 365

form FC-7, 368-9bank account details, 369chief functionary’s Aadhaar, 369detail, 369disposing of assets, 368-9disposing of assets, caution in, 368-9documents, 369due date, 368#ling, 369#lling up, 369intimation or application, 368PAN, 369processing time, 368submission, 369welcome and con#rmation, 369

formalities - overview, 192-8for-pro#t companies doing program activities, checklist for, 277for-pro#t project implementers, checklist for, 277for-pro#ts, regranting to, 260foundations, in&uence of, 50freelance writers, myth of commissioned news, 250

G

government employee, de#ned, 288-9government servant, 128, 231, 271, 273, 274

de#ned, 288government servants, checklist for, 271-2grants in kind, reporting in FC-1 and FC-4, 269grants made overseas and re-granting, 263-4guest recoveries, myth of, 256


Hhire at nominal rates and re-granting, 265-6hire charges, myth of, 256Hvistendahl, Mara, 65

I

impact investment, 232, 233applicability of FEMA and FCRA, 233by US foundations, 234FCRA, applicability of, 233FCRA, relevance of investor’s objectives, 233-4FEMA, applicability of, 233instruments, 232-3investors, 234not-for-pro#t entities, 233

imprisonment, 95, 175, 184, 185n6, 201n13, 245-6, 299n23, 407, 409, 410, 411, 412, 413, 414, 415, 416, 417, 418

advisers, 246auditors, 246

Income & Expenditure Account, 225income from endowment, myth of, 258income from FC projects, myth of, 255-7Indian subsidiaries of foreign entities, checklist for, 274Indian subsidiary, foreign source or not?, 114, 115Indian Trusts Act, 1882 vs. Registration Act, 1908, 294individuals doing programs, checklist for, 277individuals, checklist for, 272INGOs and re-granting, 261Inquisition, 79, 79n21

and FCRA, 79apparatus for, 80as business, 79auto de fé, 79Guantanamo Bay, similarity of techniques?, 79

inspection, 178, 183, 184-5, 243, 419examination during, 184powers of, 184search, 184

Intelligence Bureau, 203n28, 207n552014 report, 60, 240Greenpeace, 240role of, 240

interest on FC is not FC, myth of, 251interests of the State, 74internal transfers and re-granting, 261international programs, myth of, 259intimation, 193-4

emergency medical aid, 193-4gift from relative, 193

investigationagencies authorised for, 184-5powers of, 184-5

investing endowment funds, myth of, 258inward remittances

bank charges, 215exchange rate, 215purpose code, 214-5

J

journalists, checklist for, 271-2journalists, myth of commissioned news, 250judges, 187, 288

de#ned, 288judges, checklist for, 271-2jurisdiction, 186

K

key functionary a$davit. See a$davitkey persons, changes in. See form FC-6E

Llegal holder, myth of, 248legislators, de#ned, 286-7liaison o$ce

activities, 166-8applicability of FCRA, 166-8

liaison o$ces and re-granting, 261loans between FC and non-FC, problems with, 268local source, disambiguation - FC-registered entity, 330-1

Mmagistrates, de#ned, 288Mahabharat, 80

and dharma, 80media persons, checklist for, 272merger and re-granting, 262-3micro-credit and directed repayments, problem of, 267micro-credit, loan or grant?, 267micro-credit, reporting and accounting, 266-7mixing

of FC and non-FC, 186, 212, 221n25, 237of FC and non-FC while paying salaries, 219-20of FC and non-FC, avoiding, 186of FC and non-FC, loss of assets, 186of FC and non-FC, online fund-raising, 251of FC and non-FC, precautions against, 259PF or ESI payments, 259refund of TDS, 259


through loans between FC and non-FC, 268monitoring, 240-2

complaints, 241data analysis, 241FCRA activists, 241tax returns, 241whistle blowers, 241

mysteries. See mythsmyths, 247

administrative expenses and program salaries, 259advances, 248advertisement, payment for, 253anonymous donations, 251-2applies to NGOs only, 247art auctions, 254ashrams, 249bank account numbers, updating, 267-8banking details, 252branch, opening outside India, 269business advances, 248business people, when applicable, 248catalogues, 252Central Government, bilateral receipts, 258channelizing, 248channelizing, implications for grant-makers, 248charity events, 253-4churches, 249commissioned news, 250commissioned news by FC-registered NGO, 250commissioned news by freelance writers, 250commissioned news by INGO, 250commissioned news by journalists, 250congregations, 249consultancy contracts, 251consultancy income, 255controlled foreign companies - non-foreign source?, 251converting FC funds, 257corpus, 258crowdfunding, 252endowment, 258endowment, when utilized, 258FC becoming Indian, 257FC funds, unrestricted, 258-9federations, 249fellowship, 251FEMA vs. FCRA, 250#xed assets or stocks, sale of, 268-9#xed assets, reporting in form FC-4, 266foreign currency as non-FC, 250foreign volunteers, disclosure in FC-4, 270

foreign volunteers, honorary or sponsored, 270foreigners, resident, 250grants in kind, reporting in FC-1 and FC-4, 269guest recoveries, 256hire charges, 256income from endowment, 258income from FC projects, 255-6interest on FC is not FC, 251international programs, 259investing endowment funds, 258jointly #nanced #xed assets, sale of, 268-9legal holder, 248loans between FC and non-FC, problems with, 268micro-credit and directed repayments, problem of, 267micro-credit, loan or grant?, 266-7micro-credit, reporting and accounting, 266-7mixing of FC and non-FC, 259mixing through loans between FC and non-FC, 268news commissioned by news agency, 250news commissioned in ordinary course of business, 250not applicable to individuals?, 248NRI donations, 253OCI donations, 253old items, reporting in FC-1 and FC-4, 266online fund-raising, 252outside India, conducting programs, 259personal gifts for NGOs, exemption for, 266PIO donations, 253prior permission

amount of, 249exchange rate variations, 249repurposing of, 249

professionals, when applicable, 248program advances, 248program salaries, as administrative expenses, 259project recoveries, 256publicity campaign by FC-registered NGO, 250publicity campaign by INGO, 250publicity campaign by INGO – program permission, 250publicity campaign, when permitted, 250purpose, change of, 257raising funds abroad, 254-5recoveries from bene#ciaries, 257refund of unspent grant to overseas donor, 268regranting. See regrantingreimbursement, 248-9reinvesting, 258


religious books, sale of, 252religious groups, 249remittance in wrong account, 252re-purposing, 252rupee donations are non-FC, 251sahayog rashi, 256sale of publications, 256second or subsequent receipt, reporting for, 269separate account books, keeping, 269separate #nancial statements, 269service contracts, 251shadow-lending, 248souvenirs, 252spending FC abroad, 259sta% advances, 248sta% recoveries, 256sub-contracting, 248sub-granting. See regrantingswitching of funds, 257transfer to others. See under regrantingumbrella entities, 249UN bodies, 251unrestricted FC funds, 258-9unrestricted FC funds, under prior permission, 259utilization by proxy. See under regrantingutilization of endowment grant, 258

N

name or address, changes in. See form FC-6Anational interest. See public interest

courts’ views, 74, 76nationality, 273, 291

PIO, 105, 105n9, 321nature, objects or registration, changes in. See form FC-6Bnews commissioned by news agency, 250news commissioned in ordinary course of business, 250NGOs

Arundhati Roy on, 62charitable vs. political, 77di$culties of, 63eschatological view of history?, 62Left critique of, 62neoliberalism and, 62political activity. See political activityregulation of, 51religious evangelism, suspicion of, 62scrutiny, 52suspicions of missionary activity, 63total number registered under FCRA, 52

NGOs, checklist for, 274-7nominal branch o$ce, 168NRI donations, myth of, 253

O

OCI donations, myth of, 253OCI, checklist for, 272-3o%ences, penal action for, 177-80o%-shore banking and regranting, 264o%-shore banking and sub-grantees, 264o%-shore granting and regranting, 264-5old items, reporting in FC-1 and FC-4, 266online fund-raising

con#rming nationality, 251myth of, 251

orders, revision of. See revisionordinary course of business and regranting, 261ordinary individuals, checklist for, 272organizations of a political nature, 71

INSAF case, 71Supreme Court decision, 72Supreme Court decision, analysis of, 73Supreme Court decision, impact of, 74

outcome funder, 239

P

PAN, 345n5PAN, recti#cation of, 321n21Panchayat, de#nition of, 131n31penalties, 174-6

banking related, 174compounding. See under compoundingmisuse, 174other, 175regranting, 174reporting defaults, 174unlawful acceptance of foreign contribution or hospitality, 174

permitted depositsanother account, 214designated account, 214utilization account, 214

permitted receivers, 123B-corporations, 163-4businesses, 163

when not exempt, 163cooperative societies, 164CSR, 163-4individuals, 160-3nominal branch o$ce, 168producer companies, 164-6


relatives, de#nition of, 161-3relatives, remittances from, 161-3social business, 163-4

personal gifts for NGOs, exemption for, 266PFMS, 350, 355, 357, 358PIO donations, myth of, 253PIOs, checklist for, 272-3PIOs, permitted on board, 321placing employees through HR agency and regranting, 262placing personnel in India and regranting, 262political activity

advocacy seen as, 78as part of UN mandate, 78in other countries, 77practical implications, 74Supreme Court on, 72under German law, 78under UK law, 78under US law, 77

political activity, de#nition ofas per Religious Institutions (Prevention of Misuse) Act, 1988, 69

political NGOs, punitive action against, 52political organization. See organizations of a political naturepolitical parties, checklist for, 271-2political, de#nition of

as per dictionaries, 69as per government, 71as per Patna High Court, 69as per rule 3 of FCRR, 68as per Supreme Court, 69

politiciansaccepting foreign funds, 83categories of, 130checklist for, 271-2de#ned as, 287-8

preamble, analysis of, 82prior permission, 195, 200, See form FC-3B

amount, myth of, 249denial of, grounds for, 200-2myth of exchange rate variations, 249myth of repurposing, 249on behalf of grantee?, 204order copy, 202processing time, 202reasons for, record of, 202suspension of, 178

prior reference category. See donor watchlistprofessionals, applicability of FCRA, 248program, 149

alternate classi#cation, 155-7

civil rights advocacy, 157CREES, 149cultural, 149-50de#niteness of, 148economic, 151educational, 152-3other activities, 154-5religious, 150research, 152, 157service delivery, 155-7social, 153-4test of, 152training, 152types of, 149

program - speci#ed, 149program advances, myth of, 248program or services, distinction wrt regranting, 260-1program salaries as administrative expenses, myth of, 259programs covered, 148prohibited receivers, 123, 134

bureaucrats, 128candidates for election, 131-2candidates for election – not barred from hospitality, 131-2electronic media, 126exempt transactions, 124government employees, 128government o$cers, 128journalists, 124, 126judges, 130judiciary, 130judiciary – payments in ordinary course, 130legislature – de#nition of, 130magistrates, 130media, 124, 126media - content, 127municipalities – treated as legislature, 130NGO nominees, 128organizations of a political nature, 132other nations, situation in, 123panchayat – treated as legislature, 130political parties, 132political parties - unregistered, 132politicians, 130print media, 124public sector employees, 127public servants, 128public servants – associated NGOs not barred, 128public servants – payments in ordinary course, 128


public servants –hospitality not restricted, 128quasi-political organizations, 132

extent of restriction, 133grounds for notifying, 133no restriction on o$cer bearers in personal capacity, 132types of organization covered, 134

prohibition, 83, 123, 124, 125, 131, 132, 171-3, 182, 200-1, 201n10, 204, 261, 262, 311n28, 322-3, 409, 410, 411, 412, 413, 414, 416, 417, 418

administrative expenses – limit on, 172giving to unregistered Persons, 171media, 172mutual funds, 172political activities, 172regranting, 171-2regranting to exempt entities, 171-2repurposing, 172speculative activities, 172speculative investments, 172transfer, 171-2

project recoveries, myth of, 256prosecution

commencement of, 322commencement of?, 309commences when charge sheet #led, 298details, relying on a$davits, 309implications of, 298, 309in civil matters, 322in civil matters, disclosing, 309in civil matters, disclosure of, 298in private life, disclosing, 298, 309, 322powers of, 183

public disclosureannual #nancial statements, 224-6FCRA #nancial statements, 224-6quarterly receipts, 222

contribution in kind, 222-3FCRA website, 224own website, 223-4

Public Financial Management System. See PFMSpublic interest, 74, 75n14, 76, 127, 179n52, 203n20, 244, 247, 374, 376, 414

meaning of, 74public servant, de#ned, 289-90public servants, checklist for, 272publicity campaign by FC-registered NGO, myth of, 250publicity campaign by INGO – program permission, 250publicity campaign by INGO, myth of, 250publicity campaign when permitted, 250punishment, 245-6

purchasing program services and regranting, 260-1purpose change, myth of, 257purpose code, 214-5

Q

questionnaire, 182, 230, 242

R

raising funds abroad, myth of, 254-5RBI purpose code, 214-5Receipts & Payments Account, 225-6

disclosure of endowment or corpus, 258for calculating administrative expenses, 384for FC funds only, 329income derived from FC, 331micro-credit transactions, disclosure of, 266-7preparation of, 225-6project-wise details, matching of, 332

receiversB-corporations, 163-4branch o$ce, 168businesses, 163categories, overview, 122CBOs, 166cooperative societies, 164CSR, 163-4exempted. See exempted receiversfederations, 166liaison o$ce, 166-8mahila mandal, 166nominal branch o$ce, 168permitted. See permitted receiversproducer companies, 164-6prohibited. See prohibited receiversregulated. See regulated receiversrelatives, de#nition of, 161relatives, remittances from, 161SHGs, 166social business, 163-4

records, 218-21distribution register, 221

in Excel, 221#xed assets

ownership of, 218physical veri#cation of, 219register in Excel, 218register, basis of, 218

investment registerformat, 220in Excel, 220securities, proof of, 220


program registers, 221salary register, 219-20

format, 219-20in Excel, 219-20project-wise, 220

stock register, 220-1in Excel, 220-1stationery, 220-1

recoveries from bene#ciaries, myth of, 257refund of unspent grant to overseas donor, 268registration, 194-5, 204

applying again after rejection, 206eligibility for, 204-6

registration, applying for. See form FC-3Are-granting, 204, 259-66

administrative expenses, impact on, 265advances, 264building infrastructure for another, 265-6consultants, appointing in India, 262conversion of entity, 262-3crowdfunding, when a%ected, 262direct grants, 263-4direct implementation, 265exempt entities, restrictions on, 261FC assets, 262FC assets, restrictions on, 262for-pro#ts, 260hiring at nominal rates, 265-6INGOs, 261internal transfers, 261liaison o$ces, 261merger, 262-3money or material, 259-60o%-shore banking, 264o%-shore granting, 264-5ordinary course of business, 261overseas, 263-4placing employees through HR agency, 262placing personnel in India, 262program or services, 260-1purchasing program services, 260-1reimbursement, 264sale for nominal price, 265-6service contracts, 261service contracts with domestic NGOs, 261takeover, 263transfer as loan, 265-6transfer to others, 259-66utilization by proxy, 265-6

regulated receiversassociations, 147-8charitable business, 160charitable HUF, 159-60

charitable individuals, 159charitable individuals, FCRA registration for, 159charitable trusts, 147-8corporate foundations, 157-8de#nite and speci#ed program, 148de#nite program as a pre-condition, 146electoral trusts, 158-9

donations by subsidiaries, 159prohibition, 158-9

FCRA vs. FEMA, 145-6form of organization, 147-8individuals – when covered, 159NGOs/NPOs, 146other nations, situation in, 123producer companies, 164-6religious trusts, 147-8research, 157sec. 8/25 companies, 147societies, 147-8trusts, 147-8unincorporated entities, 147-8unregistered entities, 147-8

regulation, advantages of, 51reimbursement, myth of, 248-9reinvesting, myth re, 258relief from restrictions, 189religious groups, myth of, 249religious NGOs, punitive action against, 52remittance in wrong account, myth of, 251renewal, 206-9

delay in applying, 207delayed approval, 208delayed approval, implications of, 208extension of expiry date, 207fees, 208follow-up, 208no application, 207-8no application, implications of, 207-8

renewal, applying for. See form FC-3Creporting

election candidate, receipt of FC by. See form FC-1gifts from relatives. See form FC-1

reporting by banks, 194re-purposing, myth of, 257resident foreigners, myth of, 264revision

application for, 188of orders, 188

rupee donations are non-FC, myth of, 251


S

sahayog rashi, myth of, 256sale

for nominal price and re-granting, 265-6of jointly #nanced #xed assets, 268-9of publications, myth, 256of religious books, myth, 252

sec.8/25 companies, checklist for, 274-7second or subsequent receipt, reporting for, 269secondary transfer, 204seized items

adjudication, 186con#scation, 186

seizure, 185-6, 409, 410, 413, 419accounts and Records, 185assets #nanced with FC and non-FC, 186foreign contribution, 185-6record of, 186

separate account books, keeping, 269separate #nancial statements, 269service contracts as re-granting, 261service contracts with domestic NGOs and re-granting, 261service contracts, myth of, 251show-cause notice, 243social media, 126, 241social stock exchange. See SOSTEXsocieties, checklist for, 274-7SOSTEX, 55, 235-9

and FCRA, 239CSR escrow, 236-7FCRA implications, 239models, 235-9mutual funds, 235-6outcome funder, 238pay-for-success model, 238pay-for-success, loan-based, 238-9sec. 8 company, 235social impact bonds, 238ZCZP bonds, 235zero coupon, zero principal bonds, 235

souvenirs, myth of, 252sta% advances, myth of, 248sta% recoveries, myth of, 256sub-contracting, myth of, 248sub-grantees, 182, 335sub-grantees and re-granting, 263-4sub-granting, myth of. See regrantingsubsidiaries of foreign entities, checklist for, 274subsidiary of foreign company, as foreign source, 114subsidiary of foreign company, doubts regarding, 114surrender, 79, 180-1, 207, 368, 420

assets and FC, 181-2mixed fund assets, 186new provision, 54taking over assets, 79

surrendering FCRA Registration. See form FC-7survey, 184suspension, 177-8, 243-4, 303, 412

accepting FC, during, 243-4accepting FC, exceptional cases, 243-4bank freeze, 243-4duration of, 243-4extension of, 243-4freezing non-FCRA Bank, 243-4of prior permission, 178prior permission for accepting FC, 303receipt of funds during, 177-8spending, permission for, 243-4summary inquiry for prior permission cases, 178use of assets or equipment, 243-4Use of funds during, 177-8

switching of funds, myth of, 257

T

takeover and regranting, 263Tooley, Prof. James, imprisoned, 185n6transfer as loan and regranting, 265-6transfer to others, myth of. See under regrantingtrusts, checklist for, 274-7TT buying rate, 215

U

umbrella entities, myth of, 249UN bodies, myth of, 251unincorporated entities, 147-8universities, 170university employees, 170unregistered entities, 147-8unrestricted FC funds under prior permission, myth of, 258-9unrestricted FC funds, myth of, 258-9utilization bank account, opening of. See form FC-6Dutilization by proxy and re-granting, 256-6utilization by proxy, myth of. See under re-grantingutilizing endowment grant, myth of, 258

V

vestingauthority nominated for, 244-5autonomous bodies, property of, 136


bank balances, 182complications, 181delayed application for renewal, 207government societies, dissolution of, 137-8IIT, property of, 139Kalakshetra, property of, 140minority institutions, 181

pollution control board, properties of, 141

W

welfare-oriented NGOs, relaxation in administrative expenses, 318Winding up, 181-2

AccountAble Handbook FCRA 2010

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