The Foreign Contribution (Regulation) Act, 2010 (FCRA) governs the acceptance and utilization of foreign contributions by individuals, associations, and companies in India. The 2024 amendments to the FCRA rules introduced several key changes, including modifications to Form FC-4 and an enhanced role for Chartered Accountants (CAs). Below is a summary of the key amendments:
1. Key Amendments in the 2024 FCRA Rules
Stricter Compliance Requirements: The amendments emphasize stricter compliance and transparency in the utilization of foreign contributions.
Reduction in Administrative Overheads: The limit for administrative expenses has been revised to ensure that a larger portion of foreign contributions is utilized for the intended purpose.
Enhanced Scrutiny of NGOs: Organizations receiving foreign contributions are subject to increased scrutiny, including more frequent audits and reporting.
Mandatory Aadhaar for Office Bearers: Office bearers or key functionaries of organizations receiving foreign contributions must provide their Aadhaar details for verification.
Prohibition of Fund Transfer: Organizations are prohibited from transferring foreign contributions to other entities, except in specific cases with prior government approval.
2. Introduction of New Reporting Items in Form FC-4
Form FC-4 is used for filing annual returns by entities registered under the FCRA. The 2024 amendments introduced new reporting requirements:
Detailed Utilization Certificates: Organizations must provide a detailed breakdown of how foreign contributions were utilized, including project-wise expenditure.
Bank Account Details: Specifics of foreign contribution-related bank accounts, including transactions and balances, must be disclosed.
Donor Information: Enhanced reporting on the source of foreign contributions, including donor details and the purpose of the contribution.
Project-Specific Reporting: Entities must provide detailed information on the progress and outcomes of projects funded by foreign contributions.
Compliance with FCRA Conditions: A declaration confirming adherence to all FCRA conditions, including the non-diversion of funds.
3. Enhanced Role of Chartered Accountants
Mandatory Certification: Chartered Accountants are now required to certify the annual returns and utilization certificates filed by organizations.
Audit Requirements: CAs must conduct a thorough audit of the organization's accounts, ensuring compliance with FCRA provisions and proper utilization of funds.
Verification of Expenditure: CAs are responsible for verifying that expenditures align with the stated objectives and that administrative expenses are within the prescribed limits.
Reporting of Irregularities: CAs must report any discrepancies or irregularities in the utilization of foreign contributions to the authorities.
Enhanced Accountability: The role of CAs has been expanded to ensure greater accountability and transparency in the management of foreign contributions.
4. Implications of the Amendments
Increased Transparency: The new reporting requirements and enhanced role of CAs aim to improve transparency and accountability in the utilization of foreign contributions.
Stricter Enforcement: The amendments empower authorities to take stricter action against non-compliance, including suspension or cancellation of FCRA registration.
Burden on NGOs: Smaller NGOs may face challenges in meeting the enhanced compliance and reporting requirements.
Focus on Genuine Utilization: The amendments aim to ensure that foreign contributions are used for their intended purposes and not diverted for other activities.
These changes reflect the government's efforts to regulate foreign contributions more effectively and prevent misuse while ensuring that funds are utilized for legitimate purposes. Organizations must adapt to these new requirements to maintain compliance and continue receiving foreign contributions.
