The Foreigners Division of the Union Ministry of Home Affairs (MHA) has released a set of new guidelines requiring Chartered Accountants (CAs) to submit audit returns for NGOs to disclose any violations of the Foreign Contribution (Regulation) Act, 2010 (FCRA). These updated regulations, announced last week, are aimed at further enhancing government efforts to ensure FCRA compliance.
Under the updated FCRA rules, CAs should certify if an association or NGO has utilised foreign contributions received for the purposes it was registered for and the annual statements are to be uploaded on the FCRA portal. Additionally, the annual financial statements must be uploaded on the FCRA portal for transparency.
How much tax do I have to pay? Calculate now
According to a notification issued by the Ministry on December 31, CAs are required to include the auditor’s name, email address, registration number, and denote any infractions of the FCRA, 2010 or related regulations when issuing an audit certificate for NGOs. The notification also mandates that details of any violations be provided in the audit report.
“I have examined all relevant books and records, including the items mentioned in column 8 of FC-4, and to the best of my knowledge and belief (name of the person/ association) has not violated any provisions of the FCRA, thereunder or notifications issued thereunder,” the amended Rules stated. The notification amends the Foreign Contribution (Regulation) Rules, 2011.
The new guidelines now permit NGOs to roll over any unutilized administrative expenses to the next fiscal year in addition to the existing requirements. A maximum of 20 percent of foreign funds can be allocated for administrative costs, which must be maintained in a designated account at the State Bank of India (SBI) in compliance with the FCRA regulations.
Since 2015, more than 16,000 NGOs have had their FCRA registrations revoked due to alleged breaches of the Act’s stipulations. It should be emphasized that FCRA registration is compulsory for NGOs seeking to accept foreign contributions or grants.
It is compulsory for non-profit organizations to have FCRA registration in order to receive any donations or funds from international sources. Under section 11 of the FCRA, individuals, associations, and companies must obtain registration from the Central Government before receiving any foreign contribution or donation from foreign sources.