Foreign Contribution (Regulation) Amendment Rules, 2024

The Union Home Ministry has announced the Foreign Contribution (Regulation) Amendment Rules, 2024, effective from January 1, 2025.

Background

• NGOs were encountering challenges in transferring FCRA components of funds from their non-FCRA accounts, especially concerning refunds of tax deducted at source (TDS).

Amendments to the Foreign Contribution Regulation Rules, 2011

• The new amendment introduces a proviso in Rule 5 allowing associations to carry forward the unspent part of allowable administrative expenses to the succeeding financial year.
• Reasons for carrying forward these expenses should be mentioned in Form FC-4.

Key Clarifications

• Form FC-4: This form will now address the transfer of foreign contribution parts from income-tax refunds from non-FCRA to FCRA bank accounts.
• Such transfers will not constitute a violation of Section 17 of the FCRA Act, 2010.

Accounting Treatment

• TDS Accounting: TDS deductions will be accounted as utilization of foreign contributions.
• Upon receiving a refund in the FCRA account, it should be recorded as "other income".