New Delhi, Jan 3 : The Ministry of Home Affairs (MHA) has announced significant amendments to the Foreign Contribution (Regulation) Rules, 2011, through a notification issued on December 31, 2024. These changes, effective January 1, 2025, aim to streamline the processes related to the utilization and reporting of foreign contributions under the Foreign Contribution (Regulation) Act (FCRA), 2010.
Highlights of the Amendments
- Carry Forward of Unspent Administrative Expenses
A new provision under Rule 5 allows associations to carry forward unspent administrative expenses from one financial year to the next. Organizations must provide reasons for this carry forward in Form FC-4, the annual return form under FCRA. - New Additions in Form FC-4
Updates to Form FC-4 include:- A provision for reporting the transfer of foreign contribution from income-tax refunds in non-FCRA bank accounts.
- Specific columns for detailing unspent administrative expenses carried forward to the next financial year, along with their utilization and reasons for the carry forward.
- Details of Chartered Accountants
The form now mandates the inclusion of detailed information about the Chartered Accountant issuing the compliance certificate, such as name, registration number, and details of any FCRA violations detected. - Enhanced Certification Requirements
Chartered Accountants are now required to explicitly confirm compliance or detail violations of the FCRA after examining the association’s records, books, and Form FC-4 submissions.
Implications for Organizations
The amendments offer greater flexibility in managing administrative expenses, a long-standing demand from non-profits. The new reporting format aims to enhance transparency and accountability in the use of foreign contributions. Associations must ensure compliance with the updated rules to avoid penalties under the Act.
These changes mark a critical step in the government’s efforts to tighten the regulatory framework while providing operational clarity to organizations receiving foreign contributions. Associations are advised to familiarize themselves with the revised rules and ensure accurate documentation for their financial operations.
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