CONTENTS. FREQUENTLY ASKED QUESTIONS (FAQs) ON FCRA

CONTENTS About the authors I-5 Preface to Second Edition I-7 Preface to First Edition I-9 Chapter-heads I-11 Abbreviations I-39 DIVISION ONE LAW RELATING TO FOREIGN CONTRIBUTION 1 FREQUENTLY ASKED QUESTIONS (FAQs) ON FCRA 1.1 What is foreign contribution? 3 1.2 Whether earnings from foreign client(s) by a person in lieu of goods sold or services rendered by it is treated as foreign contribution? 4 1.3 Section 2(c)(i) of repealed FCRA, 1976 inter alia defined foreign contribution as the donation, delivery or transfer made by any foreign source of any article, not given to a person as a gift for personal use, if the market value, in India, of such article exceeds one thousand rupees. What limit has been prescribed in FCRA, 2010 in respect of such articles? 4 1.4 What is a foreign source? 4 1.5 Who can receive foreign contribution? 5 1.6 Who cannot receive foreign contribution? 5 1.7 Are there any banned organisations from whom foreign contribution should not be accepted? 6 1.8 Whether donation given by Non-Resident Indians (NRIs) is treated as foreign contribution? 6 1.9 Whether donation given by an individual of Indian origin and having foreign nationality is treated as foreign contribution? 6 I-15

CONTENTS I-16 1.10 Whether foreign remittances received from a relative are to be treated as foreign contribution as per FCRA, 2010? 7 1.11 Whether individuals not covered under section 3 or a HUF can accept foreign contribution freely for the purposes listed in section 4 of FCRA, 2010? 7 1.12 Can the fee paid by the foreign delegates/participants attending/participating in a conference/seminar etc. be termed as foreign contribution and thus require permission from FCRA? 7 1.13 Whether a Company incorporated in India under the Companies Act, 1956 having its operations in 2 or more countries is to be treated as a MNC/foreign source under FCRA, 2010? 8 1.14 Can foreign contribution be received in rupees? 8 1.15 Will interest or any other income earned from foreign contribution be considered foreign contribution? 8 1.16 Whether interest or any other income earned out of foreign contributions be shown as fresh foreign contribution receipt during that year or not? 8 1.17 Can NGOs use the foreign contributions for investment in Mutual Funds and other speculative investments? 8 1.18 Can capital assets purchased with the help of foreign contributions be acquired in the name of the office bearers of the association? 9 1.19 Can an association invest the foreign contribution received by it in profitable ventures and proceeds can be utilized for welfare activities? 9 1.20 Can foreign contribution be received in and utilised from multiple Bank Accounts? 9 1.21 Whether inter-account funds transfer shall be allowed within the multiple accounts that an Association is now permitted to open for the purpose of utilizing the foreign contributions and the level of diligence required on the part of the Banks in this regard? 10 1.22 Can foreign contribution be mixed with local receipts? 10 1.23 Whether expenses like interest paid to bank, bank charges, hospitality etc. can be included in administrative expenses? 10 1.24 Is there any restriction on transfer of funds to other organisations? 10 1.25 How would an organisation that is registered or has obtained prior permission under FCRA and intends to transfer a part of the foreign contribution received by it to another organisation would know whether the recipient organisation has been proceeded against under FCRA? 11

I-17 CONTENTS 1.26 What are the eligibility criteria for grant of registration? 11 1.27 What are the eligibility criteria for grant of prior permission? 12 1.28 Whether the amount of foreign contribution for which prior permission has been granted can be received by an association in instalments? 12 1.29 Whether an association should open an exclusive FC A/c before submission of an application for registration or prior permission? 12 1.30 Whether Banks should allow an association which is applying for registration or prior permission under FCRA, 2010 to open an exclusive FC A/c with INR? 13 1.31 Whether Banks should credit any foreign contribution received by an association to its account even if the association does not have registration/prior permission from MHA and subsequent reporting can be made by Banks to MHA? 13 1.32 Should the Banks report transactions pertaining to foreign contributions which are returned back to the remitter by the beneficiary Association for want of registration/prior permission from MHA? 13 1.33 Whether reporting by Banks is also applicable for transfer of funds between FCRA accounts of two or more associations? 14 1.34 Whether the reference period prescribed in Rule 16(3) of FCRR, 2011 for reporting by Banks in respect of transactions during 30-days period should mean calendar month? 14 1.35 What are the conditions to be met for the grant of registration and prior permission? 14 1.36 Can a private limited company or a partnership firm get registration or prior permission under FCRA, 2010? 15 1.37 Whether an individual or a Hindu Undivided Family (HUF) can be given registration or prior permission to accept foreign contribution in terms of section 11 of FCRA, 2010? 15 1.38 Whether infusion of foreign share capital in a company registered under section 25 of the Companies Act, 1956 attracts the provisions of FCRA, 2010? 16 1.39 Is recommendation of District Collector or Deputy Commissioner or District Magistrate mandatory for submission of an application for registration or prior permission? 16 1.40 If an application for registration or prior permission is submitted online by an association, does it need to submit that application in physical form also? 16 1.41 What are the documents to be enclosed with the application? 16 1.42 How to find the status of pending application for registration/ prior permission? 18

CONTENTS I-18 1.43 Whether foreigners can be appointed as Executive Committee members of an association seeking registration or prior permission? 18 1.44 Whether Government servants, Judges and employees of a Government owned/controlled company/body can be on the executive committees/boards of an association? 19 1.45 Whether organisations under Central/State Governments are required to obtain registration or prior permission under FCRA, 2010 for accepting foreign contribution? 19 1.46 What is the procedure for seeking change in the name/address of an association registered under FCRA? 19 1.47 What is the procedure for change of designated FC Bank Account? 19 1.48 Whether intimation regarding the change of Members of the Executive Committee/Governing Council of the association is to be given to the Government? 19 1.49 What is the procedure for filing Annual Returns? 20 1.50 For how many years an association which has been granted prior permission to receive foreign contribution should file the mandatory annual return? 20 1.51 What are the offences and penalties under FCRA, 2010? 20 1.52 Which are the offences that can be compounded and what would be the penalties therefor? 23 1.53 How to apply for compounding of an offence under FCRA, 2010? 23 1.54 What happens after an offence is compounded? 24 1.55 What if the person is unwilling or unable to pay the penalty imposed? 24 1.56 Which are the investigating agencies for investigating and prosecuting a person for violation of FCRA? 24 1.57 Can the Government cancel the certificate of registration granted to a person under FCRA? 24 1.58 Can the Government suspend the certificate of registration granted to a person under FCRA? 25 1.59 Can an organization, whose violation under FCRA, 1976 has been condoned, apply for registration/prior permission? 25 1.60 What is the status of the applications submitted under the repealed FCRA, 1976 but have not been disposed of? 26 1.61 Whether the registration certificate or prior permission granted under the repealed FCRA, 1976 shall remain valid when FCRA, 2010 has come into force? 26

I-19 CONTENTS 1.62 Whether prior permission granted under FCRA, 1976 would also remain valid for next 5 years from the 1st May, 2011, i.e., the date when FCRA, 2010 came into force? 26 1.63 Whether the certificate of registration is to be renewed and what is the procedure for such renewal? 26 1.64 When should an Association which has been granted registration under FCRA, 1976 should apply for renewal of registration? 26 1.65 What is foreign hospitality? 27 1.66 Who cannot accept foreign hospitality without prior approval of the Ministry of Home Affairs? 27 1.67 Whether approval of the Ministry of Home Affairs is required in cases where the proposed foreign visit is being undertaken by a person in his/her personal capacity and the entire expenditure thereon is being met by the person concerned? 27 1.68 How one can seek permission of the Government for receiving foreign hospitality? 28 Annex 1.1 : Quantum of penalty on compounded offences 29 2 INTRODUCTION TO FCRA 2.1 Preamble 30 2.2 Background 30 2.3 Salient features of act as was presented before the JPC 31 Annex 2.1 : Comparative statement on provisions of FCRA, 1976 and FCRA, 2010 34 3 SOME NOTEWORTHY STATISTICS ON FC 3.1 Introduction 42 3.2 Key data for the year 2010-11 43 3.3 Foreign contribution received for various purposes 44 3.4 Purpose-wise analysis 45 3.5 Analysis of foreign contribution receipts in 2010-11 45 3.6 Details in respect of foreign donors and donor countries 47 3.7 Incremental change in receipt of FC 47 3.8 Amount-wise break up of reporting associations 48

CONTENTS I-20 3.9 Top fifteen donor countries 48 3.10 Top fifteen donor agencies 49 3.11 Top fifteen recipient States/Union Territories 50 3.12 Top fifteen recipient districts 51 3.13 Top fifteen recipient associations 51 3.14 Receipt and utilisation of FC towards top fifteen purposes 52 3.15 Trends over last years 53 3.16 Analysis of the last three years data 54 4 APPLICABILITY OF FCRA 4.1 To whom FCRA, 2010 applies 55 4.2 Who is covered under the term person 55 4.3 Will village level SHGs & CBOs be covered 56 4.4 Will individual receiving contribution for personal purposes be covered 56 4.5 Does FC law apply to commercial transaction 58 4.6 Can corporates & commercial organisations receive FC 58 4.7 Does FCRA apply to Central & State Government organisations 58 4.8 Does FCRA apply to Indian citizen staying abroad 58 5 WHAT IS FOREIGN CONTRIBUTION 5.1 The statutory definition 59 5.2 Meaning of foreign security 60 5.3 What is included in foreign contribution 61 5.4 Can foreign contribution be received in rupees? 62 5.5 What is the limit of receiving article or gift from foreign sources 62 5.6 How FC income should be accounted and reported 62 5.7 What is excluded from foreign contribution 62 5.8 Fee paid by the foreign delegates attending a conference/ seminar 63 5.9 Commercial contracts with donor agencies 63 5.10 Interest bearing loan from donor agencies 63

I-21 CONTENTS 5.11 Infusion of initial share capital in a section 25 company or property of trust 64 5.12 Money received from foreign source under will or through nomination 64 5.13 Scholarship or stipend received by individuals 64 5.14 Fellowship received by individuals 65 5.15 Mode of receipt is wide 65 5.16 Contributions by Indian citizen 65 6 WHAT IS A FOREIGN HOSPITALITY 6.1 Who cannot accept foreign hospitality without prior approval 66 6.2 Power to prohibit any person from receiving foreign contribution or hospitality 66 6.3 Whether approval is required if foreign visit is undertaken in personal capacity 67 6.4 How to seek permission for receiving foreign hospitality? 67 6.5 When permission for foreign hospitality is not required 68 6.6 The clearance to receive foreign hospitality is not administrative in nature 69 6.7 Check list for application for receiving foreign hospitality 69 6.8 Guidelines issued by Central Government on accepting foreign hospitality 69 Annex 6.1 : Guidelines for consideration of proposals for acceptance of Foreign Hospitability under the Foreign Contribution (Regulation) Act, 2010 70 Annex 6.2 : Notification with regard to foreign gifts dated 23rd June, 2012 75 7 WHAT IS A FOREIGN SOURCE & FOREIGN COMPANY 7.1 Meaning of Foreign Source 77 7.2 Agencies of Foreign Government & exempted organisations 78 7.3 Banned organisations 78 7.4 What is a foreign company 79 7.5 Subsidiaries are also included 80

CONTENTS I-22 7.6 The changes in definition of foreign company after Companies Act, 2013 80 Annex 7.1 : List of organisations not considered as foreign source 82 Annex 7.2 : List of Banned Terrorist Organisations under section 35 of Unlawful Activities (Prevention) Act, 1967 88 8 WHO CANNOT RECEIVE FOREIGN CONTRIBUTION 8.1 Persons barred from receiving foreign contribution 90 8.2 Important changes in FCRA, 2010 91 8.3 What can be received by all persons including the debarred category persons 91 8.4 Whether individuals not covered under section 3 or a HUF can accept FC for the purposes listed in section 4 92 8.5 What is a political party 93 9 ORGANISATIONS OF POLITICAL NATURE 9.1 Introduction 94 9.2 Can a non-political organisation be declared as an organisation of political nature 94 9.3 What is a legislature 95 9.4 Will working with panchayat be treated as political activity 96 9.5 Procedure to notify an organisation of political nature 96 9.6 Order of declaring an organisation of political nature to be laid before Parliament 97 9.7 Delhi High Court case on political activity 98 9.8 Overall summary 99 Annex 9.1 : High Court judgment on political activities of NGO 101 10 AUDIO VISUAL BROADCAST & COMMUNITY RADIO 10.1 Introduction 110

I-23 CONTENTS 10.2 Persons specifically debarred from receiving foreign contribution 110 10.3 Will uploading information on websites be considered as a violation 111 10.4 Does community radio fall under the purview of public news or current affairs broadcast 111 10.5 Is FC approval necessary for organisation engaged in community radio 112 10.6 Overall summary 112 Annex 10.1 : Policy guidelines for setting up community radio stations in India 114 11 WHO CAN RECEIVE FC AND PERMISSIBLE ACTIVITIES 11.1 Introduction 121 11.2 5 Programs which are permitted under FCRA, 2010 122 12 GIFT RECEIVED FROM RELATIVES & FOREIGN SOURCES 12.1 Introduction 125 12.2 Gifts received from relatives 125 12.3 Who is a relative 126 12.4 Gift from NRI is not covered 126 Annex 12.1 : Meaning of relative as defined under section 2(41), read with section 6 of the Companies Act, 1956 127 13 PROCEDURE FOR OBTAINING REGISTRATION 13.1 Eligibility criteria for grant of registration 128 13.2 Whether an individual or a Hindu Undivided Family (HUF) can be given registration or prior permission 128 13.3 Conditions to be met for the grant of registration and prior permission 129 13.4 Years of existence and utilisation before registration 130

CONTENTS I-24 13.5 Charter for associations applying for grant of prior permission/ registration 130 13.6 Is recommendation of District Magistrate mandatory? 130 13.7 Procedure for submitting application for registration 130 13.8 Time limit for submitting re-application 131 13.9 Documents to be enclosed with the application for registration 131 13.10 How to find the status of pending application for registration 131 13.11 Time limit for processing registration 132 13.12 Rejection of application for registration 132 13.13 Validity and specimen of registration certificate 132 13.14 Opening of bank account 132 13.15 Fees to be paid with application form 132 13.16 Separate books of account as a primary condition 133 13.17 Display of financial information if receipts exceed ` 1 crore 133 13.18 Charter for associations who have been granted prior permission or registration under FCRA 133 13.19 Online messaging system 133 Annex 13.1 : Charter for associations applying for grant of registration/prior permission under FCRA, 2010 134 Annex 13.2 : Specimen of Registration Certificate 136 Annex 13.3 : Charter for associations who have been granted registration or prior permission under FCRA, 2010 138 Annex 13.4 : Notification on online messaging system 141 14 PROCEDURE FOR OBTAINING PRIOR PERMISSION 14.1 Eligibility criteria for grant of prior permission 142 14.2 Conditions to be met for the grant of registration and prior permission 142 14.3 Charter for associations applying for grant of prior permission/ registration 143 14.4 How should individuals receive foreign contribution 143 14.5 Is recommendation of District Magistrate mandatory? 144 14.6 Procedure for submitting application for prior permission 144 14.7 Time limit for submitting re-application 145

I-25 CONTENTS 14.8 Documents to be enclosed with the application for prior permission 145 14.9 How to find the status of pending application for prior permission? 145 14.10 Time limit for processing prior permission 146 14.11 Multiple applications for prior permission 146 14.12 No deemed prior permission 146 14.13 Rejection of application for prior permission 146 14.14 Validity and specimen of prior permission approval 146 14.15 Opening of bank account 146 14.16 Fees to be paid with application form 147 14.17 Separate books of account as a primary condition 147 14.18 Increase in receipt due to exchange fluctuation 147 14.19 Utilisation for the purposes mentioned 147 14.20 Display of financial information if receipts exceed ` 1 crore 148 14.21 Whether prior permission granted under FCRA, 1976 would also remain valid after enactment of FCRA, 2010 148 14.22 Charter for associations who have been granted prior permission or registration under FCRA 148 Annex 14.1 : Specimen of prior permission order 149 15 COMMON GROUNDS FOR REJECTION OF APPLICATIONS FOR REGISTRATION & PRIOR PERMISSION 15.1 Common grounds for rejection of applications under FCRA, 2010 151 16 PROCEDURE FOR RENEWAL OF REGISTRATION 16.1 What is the period of validity of FCRA registration 154 16.2 Will the existing organisations have to apply for renewal immediately 154 16.3 Procedure for applying for renewal 155 16.4 Different time limit for application for renewal for organisations implementing multi-year projects 156 16.5 How much fee to be sent with application for renewal 156

CONTENTS I-26 16.6 What happens if no renewal application is made 156 16.7 What happens if there is a delay in making renewal application 157 16.8 What happens if the registration certificate lapses for failure to apply for renewal 157 16.9 What is the time limit for grant of renewal 157 16.10 What are the information and document to be filed with Form FC-5 157 17 SUSPENSION OF REGISTRATION CERTIFICATE 17.1 Suspension of registration certificate 159 17.2 Opportunity of being heard before suspension and reasons in writing 159 17.3 Reasons for suspension 161 17.4 Condition to be followed during suspension 161 17.5 Extent of amount that can be utilised during suspension 161 Annex 17.1 : High Court judgment on suspension of registration - INSAF case 162 18 CANCELLATION OF REGISTRATION CERTIFICATE 18.1 Cancellation of registration certificate 165 18.2 Opportunity of being heard 166 18.3 Re-application for registration after cancellation 166 18.4 Custody of foreign contribution after cancellation 166 18.5 Custody of foreign contribution of subsequent recipient 166 18.6 Review petition against cancellation 166 19 WHO CAN OR CANNOT BE A BOARD MEMBER 19.1 Whether Government servants, Judges, Political persons can be on the executive committee/board 168 19.2 Can Foreigners be on the board of an Organisation 168 19.3 Are foreigners allowed as members or board members of the society under Indian Laws 169

I-27 CONTENTS 20 CHANGE IN MORE THAN 50% OF BOARD MEMBERS 20.1 Introduction 170 20.2 Undertaking given at the time of Registration 170 20.3 Undertaking given at the time of prior permission 171 20.4 How to compute 50% if the board has been expanded 171 20.5 What if more than 50% change happens for reasons beyond control 171 20.6 What if more than 50% change has already happened due to ignorance of law 172 20.7 Does this law apply to organisations registered under the repealed FCRA, 1976 172 20.8 Concluding remark 172 21 CAN CORPORATES & COMMERCIAL ORGANISATIONS RECEIVE FOREIGN CONTRIBUTION 21.1 Are corporates & commercial organisations exempted from FCRA 173 21.2 All persons having a definite purpose come under FCRA 174 22 ADMINISTRATIVE EXPENSES & SPECULATIVE INVESTMENTS 22.1 Restriction on use of foreign contribution 175 22.2 Investments which shall be treated as speculative in nature 176 22.3 Will business activity be treated as speculative investments 176 22.4 Maintenance of separate register for investments 176 22.5 Administrative expenses 176 22.6 Is separate accounting necessary for administrative expenses as per FCRA 178 22.7 Is administrative expenditure required to be reported to FCRA Authorities 179

CONTENTS I-28 23 DESIGNATED AND MULTIPLE BANK ACCOUNTS 23.1 Introduction 180 23.2 Opening of designated bank account before registration 181 23.3 Opening of multiple bank accounts after registration 181 23.4 Opening of designated bank account before prior permission 181 23.5 Opening of multiple bank accounts after prior permission 182 23.6 Change in signatory of bank account 182 23.7 Change in account number due to computerisation 182 23.8 Separate Bank Account for Separate Donor 182 23.9 Can savings bank account be opened as multiple bank account 183 23.10 Can cash be withdrawn & again deposited in the designated bank account 183 23.11 Whether inter-account funds transfers shall be allowed within the multiple accounts 183 23.12 Summary 184 Annex 23.1 : Sample format for intimation to be sent after opening Multiple Bank Account 185 24 PROCEDURE FOR CHANGE IN BANK ACCOUNT 24.1 Change of Bank Account 186 24.2 Procedure for change of Bank Account 186 Annex 24.1 : Application form for change of bank account/bank 188 Annex 24.2 : Model format of minutes regarding change in bank account & resolution 191 25 PROCEDURE FOR CHANGE IN ADDRESS, NATURE OR OBJECTIVES 25.1 Change in address 193 25.2 Procedure for change of name, address, nature or objectives 193 25.3 Change of address to another district or State 194 Annex 25.1 : Application form for change of name/address 195

I-29 CONTENTS Annex 25.2 : Model format of minutes regarding change in address/ location & resolution 198 Annex 25.3 : Clarification on change of address by FCRA department 200 Annex 25.4 : Model format of letter of request sent by FCRA department 201 26 ROLE & RESPONSIBILITY OF BANK 26.1 Introduction 202 26.2 Can the bank deny credit of foreign contribution in the absence of documentary evidence 203 26.3 RBI master circular for banks 205 26.4 Instructions to Banks harassing NGOs 205 26.5 Report by bank in case of unauthorised receipt of foreign contribution 205 26.6 Report by bank in case of FC receipt over ` 1 crore within 30 days 205 26.7 Whether Banks can credit any FC even if the association does not have registration/prior permission 206 26.8 Should the Banks report transactions pertaining to foreign contributions which are returned 206 26.9 Whether reporting by Banks is also applicable for transfer of funds between FCRA accounts of two or more associations 206 26.10 Does 30-days period mean calendar month for the purpose of reporting by banks 207 Annex 26.1 : Charter for the banks 208 Annex 26.2 : RBI s Master Circular dated 27-3-2012 210 Annex 26.3 : Guideline issued to bank to allow legitimate credit 217 27 INVESTMENT & FIXED ASSETS 27.1 Creation of fixed deposits 219 27.2 Interest earned on investments 219 27.3 Creation of fixed assets 219 27.4 Sale of fixed assets 219 27.5 Income from FC assets 220

CONTENTS I-30 28 CUSTODY AND MANAGEMENT OF FC & ASSETS BY CENTRAL GOVERNMENT 28.1 Management of foreign contribution and assets after cancellation of registration 221 28.2 Management of foreign contribution and assets after dissolution 222 29 TRANSFER OF FUNDS TO OTHER FC REGISTERED ORGANISATIONS 29.1 Is transfer of fund to another FC organisation permissible 224 29.2 Procedure to be followed for transfer of fund to FC another registered organisation 225 Annex 29.1 : Model format of undertaking to be taken from FC registered organisation 226 30 TRANSFER OF FUNDS TO OTHER UNREGISTERED ORGANISATIONS 30.1 Is transfer of fund to other unregistered organisations permissible 227 30.2 Procedure to be followed for transfer of fund to unregistered organisations 228 31 LOAN FROM DOMESTIC & OTHER SOURCES 31.1 Introduction 230 31.2 Issues involved in availing domestic loans 230 31.3 Illustration 231 31.4 Recapitulation 232 32 OTHER ASPECTS OF FCRA 32.1 Revolving funds 234 32.2 Transfer to general fund 234

I-31 CONTENTS 32.3 Treatment of small donations and grants 235 32.4 Mingling of small domestic contribution with foreign contribution 235 32.5 Treatment of undisclosed/anonymous donations 235 32.6 Foreign currency donation boxes 235 32.7 Offering against services received by temples from foreign sources 236 32.8 Political person on the board of an organisation 236 32.9 Subsidised or unsecured loan for charitable purposes 236 32.10 Infusion of initial share capital in a section 25 company or property of trust 236 32.11 Transfer of funds through western union etc. 237 32.12 Programme advance in staff bank account 237 32.13 Reimbursement of expenses to CBOs & individuals who are not working with the organisation 237 32.14 Can FC income generated at field level be deposited in multiple bank account 237 32.15 Books, souvenirs and other material prepared and donated in India by foreign companies 238 32.16 Instruction regarding marking on letter and envelopes 238 Annex 32.1 : Notification regarding marking on letters and envelops 239 33 APPLICABILITY TO LIAISON OFFICES & BRANCH OFFICES OF FOREIGN NGOs 33.1 Introduction 240 33.2 Applicability of FCRA 240 Annex 33.1 : RBI Master Circular on liaison office 243 Annex 33.2 : Permitted activities and conditions for liaison office 258 34 BOOKS OF ACCOUNT & METHOD OF ACCOUNTING 34.1 Method of accounting 259 34.2 Preservation of statements & records up to six years 260

CONTENTS I-32 34.3 Concluding remark 260 34.4 Recapitulation 260 35 FOREIGN CONTRIBUTION RECEIVED IN KIND OR AS SECURITIES 35.1 Accounting for foreign contribution received in kind 261 35.2 Accounting for foreign contribution received as securities 261 35.3 Conversion of foreign articles or securities into funds 261 35.4 Filing of return for FC received as articles or securities 262 35.5 Donation of softwares or other intangibles to charitable organisation 262 35.6 The relevant register and forms for contribution received in kind 262 Annex 35.1 : List of permissible investment under section 11 of the Income-tax Act, 1961 263 36 INTERNATIONAL TRANSFERS, ACTIVITIES & TRANSACTIONS 36.1 Working with organisations in other countries 267 36.2 Direct activities in other countries 267 36.3 International transactions and transfers 267 37 SUPPORTING INDIVIDUAL BENEFICIARIES, CBOs AND SHGs 37.1 Introduction 268 37.2 Helping needy beneficiaries is permissible 268 37.3 Providing support to SHGs & CBOs whether registered or unregistered 269 38 LEGAL DUE DILIGENCE FOR DONORS 38.1 Introduction 270

I-33 CONTENTS 38.2 Declaration of an organisation to be of a political nature 270 38.3 Administrative expenditure 271 38.4 Validity of the registration certificate 271 38.5 Change in Members of Executive Committee/Governing Council 272 38.6 Consultancy income of an NGO 272 38.7 Requirement to put information in public domain 273 38.8 Inter-organisational transfer of FC fund 273 38.9 Power to notify sources from which FC can be accepted 274 38.10 Bank account related issues 275 38.11 Prohibition of speculative investment 275 38.12 Suspension of registration certificate 275 38.13 Persons specifically debarred from receiving foreign contribution 276 38.14 General legal compliances 276 39 PAYROLL DONATIONS BY INDIAN AND INTERNATIONAL CORPORATES 39.1 Introduction 278 39.2 A foreign company having Indian employees in India 278 39.3 An Indian company with more than 50% foreign shareholding 278 39.4 An Indian company with less than 50% foreign shareholding 279 39.5 The legal implications if some of the employees are foreign citizens 279 39.6 Legal analysis of a payroll program run by a foreign company 279 40 INSTRUCTION FOR ONLINE FILING OF APPLICATION FOR REGISTRATION & RENEWAL 40.1 Registration 282 40.2 Form FC-3 282 40.3 Form FC-4 285 40.4 Renewal 288

CONTENTS I-34 41 INSTRUCTIONS FOR ONLINE FILING OF FC-6, FC-7 AND FC-8 41.1 Online submission of account of receipts and utilization of Foreign Contribution for the year (Form FC-6) 289 41.2 Intimation about Foreign Contribution (Articles) Account (Form FC-7) 292 41.3 Intimation about Foreign Contribution (Securities) Account (Form FC-8) 294 42 DOES FCRA APPLY TO CENTRAL & STATE GOVERNMENT ORGANISATIONS 42.1 Do Government organisations need registration or prior permission 297 Annex 42.1 : Notification regarding exemption of certain Government bodies 298 43 OFFENCES AND PENALTIES UNDER FCRA 43.1 What are the offences and penalties under FCRA, 2010? 299 43.2 Making of false statement, declaration or delivering false accounts 299 43.3 Obtaining foreign contribution through violation 299 43.4 Punishment for violating any provision of the act 300 43.5 Additional fine if article or currency is not available for confiscation 301 43.6 Penalty where no separate punishment has been provided 301 43.7 Prohibition to receive foreign contribution for 3 years after second conviction 301 43.8 Offences by companies, societies, trust etc. 302 43.9 Investigating agencies and sanctioning authorities 303 43.10 Bar on prosecution unless authorised 303 Annex 43.1 : Notification regarding investigating authority and agencies 304 Annex 43.2 : Notification regarding sanctioning authority under section 40 305

I-35 CONTENTS 44 COMPOUNDING OF OFFENCES 44.1 Summarised overview 306 44.2 Statutory provision on compounding of offences 307 44.3 Offences that can be compounded and penalties thereof 308 44.4 How to apply for compounding of an offence under FCRA, 2010 308 44.5 What happens after an offence is compounded 309 44.6 What if the person is unwilling or unable to pay the penalty imposed 309 Annex 44.1 : Notification regarding compounding of offences 310 45 INSPECTION, SEARCH & SEIZURE 45.1 Inspection of accounts & records 312 45.2 Power to call for information or document 315 45.3 Investigation 315 45.4 Protection of officers and authority for action taken in good faith 316 45.5 Power of Central Government to give directions and delegate functions 316 Annex 45.1 : Questionnaire used by MHA during inspection of accounts 317 46 POWER TO MAKE RULES 46.1 Power to make rules 320 46.2 Orders and rules to be laid before Parliament 322 47 POWER TO EXEMPT & OTHER POWERS OF CENTRAL GOVERNMENT 47.1 Power to exempt in certain cases 323 47.2 Act not to apply to certain Government transactions 323 47.3 Application of other laws not barred 323

CONTENTS I-36 47.4 Power to remove difficulties 324 47.5 Repeal and saving 324 DIVISION TWO LAW RELATING TO MONEY LAUNDERING AND DONOR AGENCY 48 NGOs UNDER THE PURVIEW OF PREVENTION OF MONEY LAUNDERING ACT (PMLA), 2002 48.1 Amendment-Money Laundering Act 329 48.2 Anonymous Donation can attract Money Laundering Act 329 Annex 48.1 : Prevention of Money-Laundering (Maintenance of Records of the Nature and Value of Transactions, the Procedure and Manner of Maintaining and Time for furnishing Information and Verification and Maintenance of Records of the identity of the clients of the Banking Companies, Financial Institutions and Intermediaries) Amendment Rules, 2009 - Amendment in Rules 2, 3, 5, 6, 7, 8, 9 & 10 330 49 LAW RELATING TO FOREIGN LIAISON & BRANCH OFFICE 49.1 Introduction 333 49.2 Legal issues for foreign NGOs working in India 333 49.3 Does FCRA apply to liaison or branch office in India 334 49.4 Opportunity to regularise by compounding of offence 334 49.5 General condition for Liaison & Branch offices 335 49.6 Documents to be filed 336 49.7 Who should sign the Form FNC? 337 49.8 Who should sign the power of attorney? 337 49.9 Time taken for processing the application 337 49.10 Documents to be filed annually 337 49.11 Setting up of additional liaison office 338 49.12 Renewal of the liaison office approval 338

I-37 CONTENTS 49.13 Other conditions applicable to Branch/Liaison Offices 339 49.14 Closure of Branch/Liaison Offices 340 49.15 Registration with the RoC, New Delhi for all liaison offices 341 49.16 Can a Liaison Office sign MoUs with Indian partners 341 49.17 Can funds be transferred to FCRA Partners 342 49.18 Can liaison office hold workshops and conferences with international participants 342 49.19 Role of Liaison Office in Training, Evaluation, Workshop, Consultancy, etc. 342 49.20 Does liaison office of foreign NGO need 12A registration 343 49.21 Income tax reporting requirement for liaison offices 343 49.22 Does branch office of foreign NGO need 12A registration 343 49.23 Case laws in favour of foreign NGOs getting exemptions 344 Annex 49.1 : Annex 49.2 : RBI Master Circular on compounding of contraventions under FEMA, 1999 346 RBI Circular for Regularisation of Registration of LO/ BO 360 APPENDICES Appendix 1 : Foreign Contribution (Regulation) Act, 2010 365 Appendix 2 : Foreign Contribution (Regulation) Rules, 2011 390 Appendix 3 : Notification regarding the effective date of applicability of FCRA, 2010 399 Appendix 4 : Foreign Contribution (Regulation) Amendment Rules, 2012 400 Appendix 5 : Form FC-1 402 Appendix 6 : Form FC-2 403 Appendix 7 : Form FC-3 405 Appendix 8 : Form FC-4 411 Appendix 9 : Form FC-5 417 Appendix 10 : Form FC-6 419 Appendix 11 : Form FC-7 424 Appendix 12 : Form FC-8 426 Appendix 13 : Form FC-9 429 Appendix 14 : Foreign Contribution (Regulation) Act, 1976 431 Appendix 15 : Foreign Contribution (Regulation) Rules, 1976 446