Every FCRA-NGO must submit an Annual Return to the Ministry of Home Affairs (MHA) online by the 31st of December for the preceding financial year’s foreign fund receipts. In addition, if FCRA NGOs do not receive foreign funding, It is necessary to file a Nil return. This format was known as the FC-6 until 2015, when it was renamed the FC-4 with a few changes. Since 2006, these yearly returns have been published year-by-year on the FCRA website for anybody to view or download.

In addition, any group that receives foreign contributions must provide a certificate from a chartered accountant. Form FC-4 is the template for the certificate that the chartered accountant will issue. Audited Balance Sheet, Income & Expenditure Statement, and Statement of Receipt and Payment Account should also be submitted with this certificate. The chartered accountant is required to certify the following based on the applicable books and vouchers:

1. The foreign contribution brought forward balance at the start of the year.

2. The amount of foreign aid received during the year

3. At the conclusion of the year, the unutilized balance of foreign contributions

4. Attest that the association has kept the foreign contribution account and related records in accordance with the Foreign Contribution (Regulation) Act, 2010.

5. The information provided in the certificate, as well as the attached balance sheet, revenue & expenditure statement, and statement of receipt and payment, is accurate.

The annual returns should also be authenticated by the chief functionary’s signature and the association’s seal, which must meet the following requirements.

Documents to be submitted

Balance Sheet, income & expenditure account, and receipt & payment account are all included in the audited accounts (not required if no Foreign Contribution received or utilized during the financial year)

Declaration of the principal functionary (Chairperson/President/Secretary/CEO/MD) – this declaration is part of Form FC-4 Copy of bank statement of account – where the person maintains an exclusive foreign contribution account, duly certified by an officer of the bank

Authentication and declaration

The FC-4 form must be signed by the organization’s Chief Functionary, and a certificate from a Chartered Accountant must be provided that includes a concise account of the FCRA funds movement as well as the opening and closing balances of FCRA funds.

The FCRA Act and Rules do not define the term “Chief Functionary.” The Chief Functionary is usually understood as the organization’s leader. A General Body/Governing Body decision may also designate any office bearer as the Chief Functionary for the purposes of filing FCRA returns, forms, and other documents.

FC-4 Filing Delayed

According to section 37 of the FCRA code, failure to file an annual return is a violation that carries a penalty. The penalty for non-submission is Rs. 1,00,000/- or 5% of the foreign contribution received during the period of non-submission, whichever is greater. Compounding penalties can be paid through the FCRA portal when late returns are filed.

Various penalties under the FCRA

Various penalties under the FCRA are provided under the Notification S.O. 2291(E) dated 5th June, 2018 and same is reproduced as under;

  1. The Director, or the Deputy Secretary in charge of the section responsible for the Act’s administration, as the case may be. Accepting any hospitality in violation of section 6 of the Act is a crime punished under section 35. amount of the fine 10,000/- rupees
  2. The Director, or the Deputy Secretary in charge of the section responsible for the Act’s administration, as the case may be. Transferring any foreign donation to any other person in violation of section 7 of the Act or any rule adopted thereunder is a crime punishable under section 37. The penalty amount is either Rs. 1,00,000/- or 10% of the transferred foreign contribution, whichever is larger.
  3. The Director, or the Deputy Secretary in charge of the section responsible for the Act’s administration, as the case may be. Defraying a foreign contribution in excess of 50% of the contribution received for administrative expenditures in violation of section 8 of the Act is a crime punishable under section 37. The penalty is Rs. 1,00,000/- or 5% of the foreign contribution that exceeds the permitted limit, whichever is greater.
  4. The Director, or the Deputy Secretary in charge of the section responsible for the Act’s administration, as the case may be. Accepting foreign contributions in violation of section 11 of the Act is a crime punishable under section 35. The penalty amount is Rs. 1,00,000/- or 10% of the foreign donation received, whichever is greater.
  5. (a) The Director, or the Deputy Secretary in charge of the section responsible for the Act’s administration, as the case may be. Offenses punishable under section 37 read with section 17 of the Act include: (a) receiving foreign contributions in any account other than the one specified in his application for a certificate; penalty is Rs. 1,00,000/- or 5% of the foreign contribution received in such account, whichever is greater;

(b) The Director, or the Deputy Secretary in charge of the section responsible for the Act’s administration, as the case may be. Banks and authorized people failing to declare the specified amount of foreign remittances, as well as the source and mode of such remittances. The penalty amount is Rs. 1,00,000/- or 3% of the foreign contribution received or deposited in such account, whichever is greater.

(c) The Director, or the Deputy Secretary in charge of the section responsible for the Act’s administration, as the case may be. Receiving and depositing any funds other than foreign contributions in the account or accounts designated for receiving or using foreign contributions. The amount of the penalty is Rs. 1,00,000/- or 2% of the deposit, whichever is greater.

6. The Director, or the Deputy Secretary in charge of the section responsible for the Act’s administration, as the case may be. Non-furnishing of indication of the amount of each foreign contribution received, as well as the source and manner in which such foreign contribution is received, as required by section 18 of the Act, is punished under section 37. The penalty is Rs. 1,00,000/- or 5% of the foreign contribution received during the non-submission period, whichever is greater.

7. The Director, or the Deputy Secretary in charge of the section responsible for the Act’s administration, as the case may be. Keeping the account and records of foreign contributions received and the way in which they were used, as required by section 19 of the Act, is a crime punishable under section 37.  Amount of the fine whichever is larger, Rs. 1,00,000/- or 5% of the foreign contribution during the relevant period of non-maintenance of accounts

If a person commits more than one offence, the cumulative amount of compounding for those offences cannot exceed the value of the foreign contribution involved.

Under Section 6 (1) of the Foreign Contribution (Regulation) Act, 2010, any NGO, whether in the form of a Trust, Society, or Section 8 corporation, that wishes to receive any type of foreign contribution or donation must first get FCRA registration. For services on FCRA registration in Tambaram,  Chennai get in touch with Phoenixtax- the best Tax consultant in Chennai.

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