FCRA updates 2025

The Foreign Contribution Amendment Rules 2024 with effect from 1^st January 2025, has made three significant changes. The first two provide adequate clarity and some relief with regard to transfer of TDS refunds and carrying forward admin expenditure.

Link to the Notification: https://fcraonline.nic.in/home/PDF_Doc/fc_gaz_01012025.pdf

1. Refund of TDS deducted on interest earned on FCRA funds by bank will now be permitted to be transferred to FCRA Bank Account in case the income tax department refunds the same to the local or non-FCRA Bank account.

Prior to this amendment, Banks either refused to transfer such refunds to the FCRA Bank account or the Bank where the NGO had it’s FCRA account refused to accept it. This anomaly is now corrected.

If Banks still refuse to cooperate MHA’s Notification should be furnished.

The Notification unfortunately has not specified whether TDS deducted by bank on interest earned on local funds, if refunded to the FCRA account, can be transferred to the local account. We assume that the spirit of the amendment is to ensure credit of TDS refunds into the right foreign or local Bank accounts.

2. Carry forward of unspent administrative expenses to the next financial year. Currently under FCRA as amended in the year 2020, the organization registered under FCRA or having prior permission cannot spend more than twenty per cent of the foreign contributions received during the financial year on administrative expenses. If an organization spent less than twenty per cent on administrative expenses during a financial year the amount not spent up to twenty percent would lapse.

The amendment now allows an organisation to carry   forward such unspent amount of administrative expenses to the next financial year.

Example: During FY 2024-25 the organisation received foreign contribution of 100 and was allowed to use up to 20 on administrative expenditure but utilises only 15. Now, this amendment allows the organisation to carry forward the unspent 5 to the next financial year and accordingly the organisation would be allowed to spend up to 25 on administrative expenses during the FY 2025-26 to be utilised as additional amount in that year.

3. Additional responsibility on auditor. Under current rules the statutory auditor is required to certify the receipt and utilization of foreign funds. Under the amendment additional responsibility has been cast on the auditor to certify whether the institution has violated any provisions of the FCRA 2010 and the Rules made thereunder and to report violations, if any.  

Extension of validity of FCRA registration certificates

Vide Public Notice dated 27^th December 2024 the Ministry of Home Affairs has extended the validity of FCRA registration certificates of the following categories of FCRA registered entities:

1. The validity of registration certificates of such entities whose validity was extended till 31.12.2024 in terms of the Public Notice dated 28.09.2024 and whose renewal application is pending, will stand extended till 31 .03.2025 or till the date of disposal of renewal application, whichever is earlier.
2. The validity of those FCRA entities whose five years validity period is expiring during the period 1^st January 2025 to 31^st March 2025 and who have applied or will apply for renewal before expiry of five years validity period, will stand extended up to 31.03 .2025 or till the date of disposal of renewal application, whichever is earlier.

Link to the Notice: https://fcraonline.nic.in/Home/PDF_Doc/fc_notice_27122024.pdf