In India, if organizations want to get donations from other foreign countries, they have to follow strict rules in the Foreign Contribution Regulation Act (FCRA). They also have to register and get approval from the Ministry of Home Affairs (MHA) beforehand. According to Section 6(1) of the 2010 FCRA, charitable trusts, societies, and Section 8 companies that accept foreign contributions must go through the FCRA registration process. If your organization gets donations from foreign countries, then you have to regularly share your financial details with the Ministry of Home Affairs by means of FCRA Annual Return. If the foreign donations you receive in a year are more than 1 crore, you need to submit Quarterly FCRA Returns.
For each financial year, from April 1st to March 31st, you must use a specific form called FC-4 to submit FCRA Annual Return. This FCRA Annual Return FC 4 form needs to include a certified financial statement, including a balance sheet and a record of your incoming and outgoing funds, prepared by a chartered accountant. The certificate should cover:
- The starting balance of foreign donations from the previous year.
- The foreign donations received this year.
- The leftover foreign donation balance at the end of the year that wasn’t used.
The FCRA online portal makes it easy for FCRA Annual Return Filing. It’s user-friendly and allows you to pay your FCRA fees online too.
The Indian government, through a notification dated September 22, 2023, has made changes to the rules regarding foreign contributions. They’ve amended the rules that were in place since 2011 and updated a FCRA Annual Return FC 4 form, which organizations need to fill out. This updated FCRA Annual Return FC 4 form now requires organizations to provide information about assets bought or acquired using foreign contributions by the end of each financial year, specifically as of March 31st.
Before these changes, organizations only had to report these assets in a specific section known as para 3(b) of Form FC-4. However, starting from September 22, 2023, the Amendment Rule has added two new sections, para 3(ba) and 3(bb), after para 3(b) in Form FC-4.
Even if an FCRA-registered NGO didn’t receive any foreign contributions, they are still required to do Nil FCRA Annual Return Filing. Up until 2015, this report was referred to as the FC-6 form, but it was later renamed as the FC-4 form with a few changes. These FCRA Online Annual Return have been available online for public access and download on the FCRA website since 2006.
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Who is required to file FCRA annual return under FCRA?
Anyone, whether it’s a person, a company, or a team, who receives money from foreign and chooses to officially register or get “pre-approval” for receiving these international funds using forms FC-2, FC-3A, or FC-3B, is required to submit FCRA Annual Return using FC 4 form. This obligation is outlined in Section 11 of the FCRA, 2010.
Procedure for FCRA Annual Return Filing:
To report your yearly foreign contributions, you’ll need to take a few steps. First, have a certified balance sheet prepared by a chartered accountant. Then, gather details of the money you received and spent. With this information, you can do FCRA Annual Return Filing online using FC 4 form on fcraonline.nic.in. Even if you didn’t get or use any foreign contributions in a particular year, you still need to do NIL FCRA Annual Return Filing. In this case, you don’t have to upload an audited statement of accounts, but you’ll still need a certificate from a chartered accountant.
For FCRA Annual Return Filing with Form FC-4, here’s a simple guide:
- Go to the Ministry of Home Affairs’ official website: https://fcraonline.nic.in/Home/Sample form.aspx?id=4. Complete the form and log in with your username and password. If it’s your first remittance, fill out the registration form.
- Provide details of all received money or remittances, including their sources, purpose, and your identifying information.
- Have the declaration certified by a Chartered Accountant (CA) using a Digital Signature Certificate (DSC) or by uploading a certified copy.
- Upload any additional required documents as requested.
- Review the form to ensure accuracy before submitting.
- Follow the provided instructions to pay the required fees.
Documents required for FCRA Online Annual Return:
- A certificate from a Chartered Accountant, duly signed and stamped, along with their CA registration number.
- A certificate endorsed by the Chief Functionary, affirming specific information.
- A financial statement scrutinized by an auditor, comprising a Payment Account, an Income and Expenditure Statement, and a Balance Sheet.
- An account statement from a bank, validated by a bank officer.
- Images of the Chief Functionary’s signature and the Association’s seal.
Declaration and authentication while filing FCRA Online Annual Return
The top leader of the organization has to sign the FCRA Annual Return FC 4 form. Additionally, a certified accountant must give a summary detailing how the funds under the FCRA were utilized, along with the starting and ending balances. While the term “Chief Functionary” isn’t explicitly defined in the FCRA Act or Rules, it usually means the head of the organization. However, the organization has the flexibility to designate someone else as the Chief Functionary by passing a resolution through their General Body or Governing Body, especially for tasks such as filing FCRA returns and forms.
Due Date for Filing FCRA Annual Return
Make sure to submit your FCRA Returns either by December 31st or within nine months after the year concludes.
Penalty for Delay in FCRA Annual Return
Failing to submit your FCRA Online annual return on time is considered a legal violation, potentially resulting in a fine under section 37 of the FCRA law. The penalty could be either 1,00,000 or 10% of the foreign funds you received during the period when you didn’t file the report, whichever is lower. You can settle this penalty on the FCRA website when filing your overdue FCRA returns.
Here’s a breakdown of the penalties:
- Non-furnishing of FCRA returns within three months after December 31st incurs a penalty of 2% of the foreign contribution received during the financial year or Rs 10,000, whichever is less.
- Non-furnishing of FCRA Annual return after three to six months after December 31st results in a penalty of 3% of the foreign contribution received during the financial year or Rs 50,000, whichever is less.
- Non-furnishing of FCRA Annual Return Filing after six months to one year after December 31st attracts a fine equal to 4% of the foreign contributions received during the financial year or Rs 2 lakh, if less.
- Non-furnishing of FCRA Online Annual Return after one to two years after December 31st incurs a penalty of 5% of the foreign contribution received during the financial year or Rs 5 Lakh, whichever is less.
- Not submitting a FCRA Returns within two to three years after December 31st each year attracts a penalty of 10% of the amount of foreign contribution received during the financial year or Rs 10 Lakh, whichever is less.