In earlier part we covered changes in Rules relating to
- Opening of FCRA Account at SBI Main Branch, New Delhi
- Maintaining another FCRA Account for keeping & utilization of Funds
- Transfer of funds to other NPOs under S.7 totally prohibited
- Administrative Exps. Limited to 20%
- Renewal of FCRA
- Changes in Annual Return (FC4)
For seeing the changes re above, please go to the link: http://blog.srr-foundation.org/?p=4074
This post covers several other changes made in the Rules.
Organisations of Political Nature
A new sub-rule (2) has been brought up under Rule 5. It requires that any organization which undertakes activities which can fall under last two clauses [(v) & (vi)] under Rule 5(1) shall be considered as of political nature. Thus paving the way to allow FCRA staff / inspectors to decide which organization is of political nature, without any office order. [Rule 5(2)]
Eligibility for registration enhanced & codified
Earlier an organization to be eligible for registration, it had to be at least three year old and should have spent Rs 10 lakh on its core activities for the benefit of the society during the last three financial years. This was not codified, but was a practice followed by the Dept. Now the Govt has codified it under Rules.
The eligibility limit has been further enhanced to Rs 15 lakh. The, FCRA Dept has also been empowered to exempt any agency controlled by central or a state government from this condition. [Rule 9(1)( f)(i)]
The Dept has now further allowed to include any capital expenditure already incurred by an NPO as part of this eligibility expenditure, provided that the chief functionary to give undertaking that the assets will be vested with the organization and not to be diverted to any other purpose. [Rule 9(1)( f)(ii)]
Pending applications
All registration & prior permission applications pending at the time of commencement of these amended rules will need to open first FCRA Account, and provide details to FCRA Dept, before these are considered by the Dept. [Rules 9(1A) & 9(2A)]
Prior Permission
- A new sub-rule has been inserted requiring person seeking prior permission for receipt of specific amount to submit a specific commitment letter from the donor. This was again a practice, however now same has been codified. [Rule 9(2)(f)(i)]
Cases or single/ major donor permissions / registrations
- A new condition has been put for common members between Indian & foreign donor organization.
- the chief functionary of Indian organization, must not be ‘part’ of the donor organization. ‘Part’ has not been defined, but earlier undertakings were taken from applicant organizations to confirm that the Chief Functionary was not an employee of the donor organization.
- 75% of the office bearers or members of the Indian governing body shall not be the members or employees of foreign donor organization.
- In case donor being a single individual, that individual shall not be chief functionary or office bearer of the recipient person and further office bearers or governing body members shall not be family members or close relatives of the donor.
The above rules were part of practice of the Dept and have now been codified. [Rule 9(2)(f)(ii)]
The above rules have been specifically made in context of Prior Permission, considering that prior permissions are generally based on a single donor. However these are likely to be also applicable n case of registration, where the Indian entity mainly relies on one donor for the FC funds.
High Value permissions
A new rule has been put in place for permission of more than Rs 1 crore at the date of disposal of application, central Govt may permit funds to be rec’d in installments provided second & subsequent installments will be given only after submission of 75% UC of funds rec’d till that date and after field inquiry of the utilization of FC. [Rule 9A]
This raises a number of questions. Are UCs to be submitted to FCRA Dept ? Who will undertake field inquiry of utilization of funds ? If these functions have to be done by FCRA Dept, will fresh installments can be taken only after submission of its approval by FCRA Dept. This could put new hurdles in smooth utilization of FC funds. Right now it is not clear and one could interpret it as being submitted to donor only, but let’s wait & watch how this pans out in future.
New Fees
For registration now application fee has been fixed at
- Registration : Rs 10,000/- [Rule 9(4)(b)]
- Prior Permission : Rs 5,000/- [Rule 9(4)(a)]
- Renewal : Rs 5,000/- [Rule 9(4)(a)]
- Revision Application for FCRA Order : Rs 3000/- [Rule 20]
- Compounding Application : Rs 3000/- [Rule 21]
All fees have to be deposited on a Payment Gateway specified by the Dept, earlier these were supposed to be paid through demand draft or banker’s cheque. It may be noted while for first three bullets there are specific forms, for revision there is no form and application is to be made on Plain paper. For compounding it is to be made through electronic Form, but no Form No. is specified.
Renewal of Certificate
- Now renewal application must accompany affidavit from each of the office bearer and member giving an undertaking that they will inform of any violation of the Act (Format AA). [ Rule 12(2)]
Considering some of the member based organizations have a very large number of members, asking all members of an Association to submit an affidavit could be totally ineffective. It should be made clear that requirement is for members of governing body and not general body.
- All renewal applications to be submitted along with details of ‘FCRA Account’ in SBI, NDMB Branch. [Rule 12(2A & 2B)]
- FCRA rules now propose that NGOs cannot receive or utilize FC funds after the date of expiry of FCRA registration. [Rule 12(5)] It further states that all unutilized FC and assets created out of FC, would vest in the prescribed authority, till the FCRA is renewed or till fresh registration granted. [Rule12(6A)]
This is likely to cause untold hardship to the NGOs who have applied in a timely manner, but the Dept has not been able to process the application. This will disrupt projects under implementation and will be another roadblock, just like stopping of transfers of FC to Indian registered NGOs.
Last Date for applying for renewal
- Further there seems to be some drafting error as Rule 12(2) says that the application is to be made within 6 months from the date of expiry of the FCRA certificate. While under Rule 12(6), it is clearly mentioned that the renewal application must be rec’d before the expiry of the validity of the registration certificate. For purposes of clarity and abundant caution, please ensure application is submitted at least six months prior to expiry of registration certificate.
Surrender of Certificate
- A new provision has been brought for voluntary surrender of FCRA certificate through Form FC-7. [Rule 15A]
- Surrender of certificate as per S.14A will deem to expire on the date of acceptance of the application by the Dept. [Rule 10(2)]
Changes in bank accounts, name, address, aims, objectives or key members of Association
- All changes in name of the association, address within the State, aims & objects, banks both FCRA designated & utilization, office bearers/key functionaries/members mentioned in the application for grant of registration /prior permission / renewal as the case may be have to be updated on FCRA portal.
- It may be noted that all changes would be effective only after final approval of the Dept.
In addition to above, all changes
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