The Foreign Contribution Regulation Act (FCRA), 2010 is a law enacted by the government to regularize individuals and associations registered in India while receiving unauthorized grants and contributions from foreign entities which is detrimental to the national interest. For each entity receiving any contribution or any hospitality from any foreign source will have to take prior permission of the authorities guided by the act and have to opt for registration under the act regulations.
The Act also provides for Annual return filing with Form FC-4, by all entities registered under the act for acknowledging remittance received in the year to the Ministry of Home Affairs.
Who is required to file an Annual Return under FCRA?
Any person, organization or association in pursuance of Section 11 of FCRA,2010, receiving foreign remittance/s and opting for registration or ‘prior permission ‘ for acceptance of such foreign remittance using form FC-2, FC-3A or FC-3B shall be required to file an Annual return using Form FC-4.
When to file an Annual return under FCRA?
The return is to be filed online for each financial year by all registered entities within nine months from the closure of the year i.e., by 31st December.
For example: For the financial year 2017-18, the annual return is to be filed before 31st December 2017.
How to file Annual returns under FCRA?
Filling of Annual return using form FC-4 can be done online on the official web portal of the Ministry of Home Affairs. The steps involved are as follows:
Step 1: Locate to https://fcraonline.nic.in/Home/Sample_form.aspx?id=4 and login with user details. (Apply for registration if received remittance for the first time).
Step 2: Fill in the form details reporting all the sources of funds/remittances received, purpose, use of funds, identity details, etc.
Step 3: Get the declaration enclosed, certified from a Chartered Accountant (CA) either through DSC or manually uploading the certified copy.
Step 4: Upload other necessary documents as asked for.
Step 5: Preview the form and Submit.
Step 6: Pay the required fees as prescribed.
Key changes made to the FCRA are as under:
- The Annual Return Form FC – 4 now prescribes for furnishing of Darpan ID only on an optional basis. The mandatory requirement for the application of DarpanUser ID has now been removed.
- The requirement for reporting of the name of the association has been removed from Section 1 of the Form FC-4, and now it only requires date of registration obtained under FCRA.
- In the form, the section ‘Interest Income and Other receipts’ has now been bifurcated to (1) Interest Incomes, (2) Other receipts from projects/activities for detailed reporting of other incomes received.
- Now the Annual Return requires reporting of each remittance received during the year as the clause ‘foreign contributions received above Rs 20,000 ‘has been removed from the form FC-4’, which further implies that now each foreign remittances below Rs, 20,000 are also to be reported.
- It will be necessary to report in the Annual Return, all particulars about the usage of the remittance/contributions received including any transfers to any bank or Fixed Deposit accounts.
- If transferred the contribution to other associations or contributions which led to the Creation of assets shall have to be mandatorily reported under Section 3(c) in the annual return.
With the insertion of Section 6, the Annual Return i.e., Form FC-4 has been made particularly for reporting of all utilized lands and holdings made with foreign contributions/remittances over the last two years.
Penal provisions for delayed filling of Annual Return under FCRA
For delay in filing of Annual return, the act prescribes for the following penalties:
- 2% of the amount received or Rs 10,000 whichever is higher if filed within 90 days from the due date.
- 3% of the amount received or Rs 25,000 whichever is higher if filed between 90 to 100 days from the due date.
- 5% of the amount received or Rs 50,000 whichever is higher, if more than 180 days plus 500 per day beyond that.
To conclude, the Annual return under FCRA is a summary record of all foreign contributions which have to be mandatorily filled. It will help the common public to get a transparent view of the association they are linked to and receiving contributions from.
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