Socio Research & Reform Foundation

This amendment has been brought to bring into rules (through Notification) various changes brought in by FCRA Dept through a Checklist brought in by FCRA Dept for submitting various documents at the time of applying for registration.

Important ones are briefly summarized below.

Form FC3A (for registration amended)

• Last three years financial statements [Balance Sheet (B/S), Income & Expenditure (I&E) & Receipt & Payment (R&P)] and audit reports to be submitted along with the registration application. Earlier form did not specify this requirement.
• Year-wise activity reports for three years.
• I&E & R&P should reflect project/activity-wise expenditure. These statements should reconcile with each activity in the activity-wise report. If not, then submit a CA certificate giving such details and ensuring figures as per activity reports reconcile with the relevant I&E & R&P.
• Proforma affidavit format amended. It now requires each Board member to confirm that s/he is an Indian citizen, give OCI Card particulars if applicable, no conviction or prosecution pending.
• If NPO involved in publication related activities or if the Objects include such activities, then Chief Functionary needs to give an undertaking that no violation of S.3(1)(g) – reproduced below for ready reference

No FC to be accepted by association or company engaged in the production or broadcast of audio news or audio visual news or current affairs programmes through any electronic mode, or any other electronic form as defined in clause 2(1)(r) of the Information Technology Act 2000 or any other mode of mass communication.

• If any publication of NPO registered with Registrar of Newspaper for India (RNI, then obtain a certificate from TNI that it is not a Newspaper.

Form FC3B (Prior Permission) &FC3C (for renewal amended)

• Similar changes made in above forms, particularly relating to Proforma format.

Form FC4 (Annual Return)

• Purchase of new assets a Table has been added, requiring details of assets purchased.
• Details regarding movable & immovable assets, new Tables provided, requiring that figures should match with details in Balance Sheet.
• Chartered Accountants now are required to include in their own certificate project-wise opening & closing balances, alongwith project-wise receipt & utilization. This is quite onerous responsibility and will require Cas to spend substantial time in ensuring these figures.

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Socio Research & Reform Foundation (NGO)                       
512 A, Deepshikha, 8 Rajendra Place,
New Delhi – 110008

Dear Members,

I believe by this time at least some of the FCRA registered organisations would have started filing their FC-4 return for FY 2024-25. When I tried to file the return of an organisation, I found some difficulties in filing in the newly formatted FC-4 format.

For example, under the heading 2. Details of utilisation of FC, there are 5 sub headings to be filled. In 2.1 Utilisation, the normal details of (i) Utilisation for projects as per aims and objectives of the person/association (Rs.), ii) Total Administrative Expenses as provided in Rule 5, FCRR 2011 (Rs.) and iii)Total Foreigners as key functionary/working/associated are normally filled. In the i) we fill the details of project related expenditure and in the ii) we fill the administrative related expenditures. Below that there is (c) Foreign Contribution transferred to other persons/Associations before 29.09.2020 (The Foreign Contribution (Regulation) Amendment Act, 2020), which also can be filled if we have made any such transfers. Then comes D) Total utilisation in the year (Rs.) (A+C) that gives the correct amount utilised during the year for project and administrative expenses put together.

But, in the next sub-heading 2.2 Utilisation – Project wise, the columns Sl.No., Name of project/ activity, previous balance, receipt during the year, utilised and balance appear and in this the utilised column restricts us to the project expenses mentioned by us in the previous sheet. Only if we include the admin expenses also, the correct balance amount in the year appears, otherwise it is showing an incorrect balance, as it gets polluted automatically. If we change the figure in the previous sheet indicating the utilisation for projects, including the admin expenses, then the second sheet shows the correct balance, but in the previous sheet, the figure given as Total Utilisation in the year becomes wrong, as the admin expenses get added double time.

I feel the FCRA support team should do something to rectify this technical error. Or, if there is any other way to rectify this with the currently available format, it may please be indicated to us.

Yours sincerely,

Subramania Siva
Coimbatore, Tamil Nadu.

Govt has brought out new Income Tax Bill 2025 to replace Income Tax Act 1961. While the overall Bill has a large number of provisions, SRRF has made a summary of impact of changes proposed in the new Bill for Non-Profit Organisations. These are summarised as below:

1. Consolidation and Simplification of Provisions

Unified Framework

a.   The Bill consolidates scattered provisions related to NPOs into a dedicated chapter XVII Part B, covering clauses 332 to 355. The Chapter is further sub-divided into seven sub-parts. This will enhance clarity.

Standardized Terminology

b. “Registered Non-Profit Organisation or NPO” would be the new term encompassing entities registered under Sections 12A, 12AA, 12AB or 10(23C), provided their registration is not cancelled. This will replace existing term like Trust, Charitable, NGO, etc.

2. Streamlined Registration and Compliance

Existing Registrations

c.  NPOs already registered under the current provisions need not re-register under the new bill. However new approvals under S.10(23C) will cease after 1-10-2024.

Structured Compliance

d. The bill introduces a structured approach to registration, taxation of income, permissible commercial activities, accumulation and compliance, etc. 

3. Revised Income Computation mechanism

New Income Definitions

e.    The bill introduces concepts such as ‘regular income’, ‘taxable regular income’, ‘deemed accumulated income’, and ‘residual income’ for NPOs. These definitions aim to provide a clearer framework for income computation.

f. Regular Income: consists of voluntary contributions consisting of general donations, rent from trust property, interest on trust funds, dividends from investments and income from incidental business activities. 85% application rule is generally calculated on regular income.

g.  Taxable regular income: Regular Income that is not applied to charitable purposes and is not validly accumulated. Any regular income which is neither applied, nor validly accumulated, becomes taxable at 30%.

h.  Residual Income: Total income of an NPO becomes fully taxable when the NPO violates certain core provisions of the Income Tax Act. These get triggered when an NPO

• Misapplies income (e.g. uses for non-charitable purposes),
• Engages in prohibited commercial activities (activities not incidental to main objects)
• Fails to maintain proper books of accounts
• Violates the terms of registration or approval
• Does not file income tax returns or audit report (Form 10B/10BB) within prescribed time.
• Fails to re-invest proceeds from asset transfers as required.

4.  Major Changes in case of treatment of capital gains

Capital Gains Treatment: Earlier S.11(1A) allowed NPOs to claim exemption on capital gains if the net consideration from the sale of a capital asset was reinvested in acquiring another capital asset, as this reinvestment of income was treated as application for charitable purposes. However under the proposed Bill this option is no longer available and such gains are to be considered under the standard 85% application rule of regular income, as net consideration is considered part of regular income of an NPO. Thus there is no deduction available to NPOs for capital gains, otherwise covered under the Income Tax for other type of assessees.

5. Restrictions on Commercial Activities

The Income Tax Bill explicitly prohibits NPOs from engaging in any commercial activity, except for activities that are incidental to their objectives.

6. Section 80G revisions

Deductions for donations under S.80G are now covered under Clause S.133, under two clauses of 100% and 50%. Most NPOs would fall under the 50% category.

7. Introduction of the ‘Tax Year’ Concept

The bill updates the terms ‘assessment year’ and ‘previous year’ with ‘tax year’, aligning with international tax terminology.

8. Effective date

Govt has promised to bring the bill to come into effect on 1-4-2026.

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Socio Research & Reform Foundation (NGO)                       
512 A, Deepshikha, 8 Rajendra Place,
New Delhi – 110008

Dear Sir/Madam,

I am writing here to get some clarity on FCRA funds.

One society is having 2 FCRA bank accounts one utilization account in PNB(This was the old receipt and utilization account) which is currently the deemed utilization account. After opening the FCRA SBI New Delhi Account, the society has not received any FCRA donations. The SBI account does not have any balance in it. Today the society received a email stating that the due to no transactions in the account it will be marked inoperative.

Can we transfer some funds from the PNB account to the SBI account which will be utilized at a later date for the societies activities only.

Thanks in advance,
Noel Gole

MHA has come out with a clarification through a Public Notice dt 21-1-2025, that once a FCRA registration is suspended or cancelled, they cannot use FCRA funds lying either in Designated Bank account or Utilization bank Accounts. While in case of suspension / cancellation, FCRA authorities intimate SBI of the same, however no intimation goes to bankers who are maintaining Utilisation Accounts. Therefore, such bankers are not aware of the of suspension / cancellation of FCRA registration. At times, NPOs continue to use funds lying in these Utilisation bank accounts, even after FCRA has been suspended or cancelled. FCRA Dept has now clarified that such use is violative of FCRA provisions, and concerned NPOs could face penal action for the same.

The Dept has also clarified that any NPO, which fails to apply for renewal before expiry of registration, their FCRA registration falls under the category of Deem to be Ceased. Such NPOs cannot use FCRA funds lying in designated / utilization bank accounts after the registration has deemed to cease. Such NPOs who use fund after this date, are violating FCRA provisions, and could face penal actions.

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Socio Research & Reform Foundation (NGO)                       
512 A, Deepshikha, 8 Rajendra Place,
New Delhi – 110008

FCRA Form FC4 has been amended vide FCRA Amendment Rules 2024. These amendments are summarised below.

• Unspent Admin Expenses: If an entity has not spent allowable 20% of the FCRA funds received in a year, unspent part can be carried forward to next year. Thus say, an Association has received Rs 1 crore as FC receipts during FY 2024-25 and therefore at the maximum is allowed to spend Rs 20 lakh under Admin Heads. If it spends, say Rs 15 lakh only during FY 2024-25, new rules enable it to carry forward Rs 5 lakh to next year (FY 2025-26).
• Details of Chartered Accountant certifying FC4: Now details of chartered accountant who provides FC4 certificate are to be given in FC4. Details include Name, address, Member Registration No., Email address, Date of Issue of certificate, In case any violations pointed out then these need to be specified in the FC4.
• Chartered Accountant Certificate format amended: Now CA certificate needs to state that there are no violations, and in case there are violations, then these violations need to be specified.
• TDS refund rec’d in non-FCRA Bank A/c can be transferred to FCRA Bank A/c: FCRA authorities have vide Public Notice dt. 31/12/2024 have allowed to transfer any TDS refund received in non-FCRA account to be deposited in FCRA Bank a/c. In case the refund covers both FCRA deposits as well as non-FCRA deposits, than appropriate proportion of the same can be transferred to FCRA bank account from non-FCRA Bank account. FC4 has been suitably amended to disclose such refunds separately.

SRRF Dialogue Comment: Above changes reflect two major developments.

1. By clarifying on TDS issue being deposited in non-FCRA Bank a/c, FCRA Dept for first time has shown some responsiveness to issues being raised by Associations. Hope there will be more such responsiveness by the Dept, on part of Associations, they should write more regularly to the Dept, wherever they face problems.
2. On the line of Form 10B, FCRA Dept is also making Chartered Accountants specify that there are no violations, and if violations are there, these need to be specified. Thus the Dept forcing Chartered Accountants to be more accountable.

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Socio Research & Reform Foundation (NGO)                       
512 A, Deepshikha, 8 Rajendra Place,
New Delhi – 110008

Regarding refund of TDS pertaining to foreign contribution received in non-FCRA bank account can be transferred to FCRA bank account…(click here for notification)

Administrative expenses can be carried forward to the next year…(click here for notification)

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Socio Research & Reform Foundation (NGO)                       
512 A, Deepshikha, 8 Rajendra Place,
New Delhi – 110008

Validity of FCRA registration has been extended till 31-Mar-2025 vide a Public Notice issued by the FCRA (Director) on 27^th December 2025. Thus all those NGOs whose FCRA had been earlier extended till 31-Dec-24 because their renewal application was pending with the FCRA Dept.

Also in case an NGO’s FCRA expires between 1^st Jan 2025 and 31^st March 2025 and they have applied for FCRA renewal before expiry of 5 year period from the date of previous FCRA registration, then their FCRA will also be extended to 30^th June 2024.

In case renewal application is refused then the validity of the certificate shall be deemed to have expired on the date of refusal of application of renewal. In such a situation organization would not be eligible to either receive or utilize FCRA funds after such date.

Documents requirements made more stringent at the time of Renewal/Application

As per a press report all those applying for FCRA or renewing their FCRA would need to submit key documents like Memorandum of Association/Trust Deed, etc. Further now activity report has to be submitted for each-year and not a generic report, alongwith Accounts, including Receipt & Payment Account for each year.

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Socio Research & Reform Foundation (NGO)                       
512 A, Deepshikha, 8 Rajendra Place,
New Delhi – 110008

Namaste Sir,

Greetings of the day!

We have been going through the blogs of Socio Research & Reform Foundation regarding FCRA. 

We are Anatta Sangha Trust registered as a charitable public Trust under Indian Trusts Act 1882.

We want to invite foreign volunteers on an E3 Employment Visa to India (for honorary work with an NGO). So that they can work with us voluntarily in our projects for long term.

Kindly guide us whether FCRA registration is mandatory for our Trust to send them E3 visa invites along with our various registration documents. As of now, we don’t have FCRA registration.

We look forward to hearing from you.

Thanking You,

Warm Regards,

Sangha Das

Anatta Sangha Trust

Dear Sir/Madam,

I got your contact information from your website and have a quick question.

• Can a NRI be on the executive committee of a non-profit organization which is applying for FCRA renewal? This NRI still holds a valid Indian passport, Aadhar card etc.

Thank you so much in advance for your advice.

Best regards,

Seshu