There is some confusion regarding consequences of non-renewal before expiry of FCRA Registration Certificate. Many consider that in such a scenario, concerned entity cannot receive or utilize funds. This is based on reading of Rule 12(5), which is reproduced below:
Rule 12(5): No person whose certificate of registration has ceased to exist shall either receive or utilize the foreign contribution until the certificate is renewed. [Note:There seems to be a typographical error and seems intention is to read ‘either’ as ‘neither’, otherwise the intention of the rule is not clear.]
If one reads Rule 12(5) on its own, it states that once the certificate ceases, the entity can neither receive nor utilize the FC. To understand what does ‘cease’ mean, one needs to refer to Rule 12(6) alongwith accompanying Note 2.
Rule 12(6): If no application for renewal of registration is received or the application is not accompanied by requisite fee before the expiry of the validity of the certificate of registration, the validity of the certificate of registration shall be deemed to have ceased from the date of completion of the period of five years from the date of the grant of certificate of registration.
Note 2: If no application is received or is not accompanied by renewal fee, the validity of the certificate of registration issued on the 1st January 2012 shall be deemed to have ceased after the 31st December, 2016 and the applicant shall neither receive nor utilize the foreign contribution until the certificate of registration is renewed.
From Rule 12(6) and accompanying Note 2, the term ‘ceased’ of the FCRA registration is applicable only
- if the Dept has not received renewal application, or
- the application is not accompanied by requisite fee,
before the expiry of the FCRA certificate.
Thus if Rule 12(5) & 12(6) are read together it can be said that an entity can continue to receive and utilize FC funds even after expiry date, provided the above two conditions have been complied with. Thus it is most important to ensure that renewal application alongwith the right amount of fee, is submitted before expiry of the renewal certificate.
While this could mean that an entity can neither utilize nor receive funds in FCRA accounts, however considering FCRA Dept imposed penalties on entities which received funds after expiry of their FCRA certificate in 2016, one should tread cautiously.
—
Socio Research & Reform Foundation (NPO)
512 A, Deepshikha, 8 Rajendra Place,New Delhi – 110008