Recent Amendments to the CSR Rules and Implications for the Not-for-Profit

The Central government has recently introduced several changes to the FCRA regulations to provide greater clarity and flexibility to organizations receiving foreign contributions. These amendments were made through a combination of Public Notice dated 31st December 2024 and the Foreign Contribution (Regulation) Amendment Rules, 2024 (FCRA Rules), which came into effect on January 1, 2025.

The following are the key amendments to the FCRA rules:

Extension of Pending Renewals:

FCRA certificates expiring on December 31, 2024, have been extended until March 31, 2025, or until the renewal application is decided, whichever comes first.
Certificates expiring between January and March 2025 remain valid until March 31, 2025, if a renewal application is submitted before expiry.

Handling of TDS Refunds:

If TDS refunds are received in a non-FCRA account, the portion related to FCRA must be transferred back to the FCRA bank account. This transfer will not be considered an FCRA violation.
The TDS deducted can be treated as utilization of FCRA funds, and the refund received in the FCRA account should be treated as other income.
The refund in the FCRA account must be reported in Form FC-4.

Carry Forward of Unspent Administrative Expenses:

Associations can now carry forward unspent allowable administrative expenses from one financial year to the next.
Reasons for the carry forward must be specified in Form FC-4. Carry forward under 4(3)(iv) requires the following additional details:

SI. No.	Particulars	Amount (Rs)
A.	Brought forward unspent part of allowable administrative expenses
B.	Total foreign contribution received during the year
C.	Allowable administrative expenses of current financial year [20 per cent. of B]
D.	Total administrative expenses incurred during the current year
E.	Administrative expenses of current year utilised out of A above
F.	Administrative expenses of current year utilised out of C above
G.	Unspent part of C above available to be carried forward.
H.	Out of G above, amount to be carried forward to next financial year.
I.	Reason for carry forward of unspent part of allowable administrative expenses to next financial year.

Reporting Requirements in Form FC-4:

New clauses in Form FC-4 require reporting on:

Transfer of FC-related TDS refunds.
Unspent administrative expenses brought forward, current year's contributions, expenses, and carry forward amounts.
Reasons for carrying forward unused funds.

Chartered Accountant (CA) Certification:

Form FC-4 must now include the CA's name, address, registration number, email, and date of certificate.
The CA must confirm compliance with FCRA regulations or report any violations with details.

These amendments aim to streamline the FCRA compliance process, provide greater flexibility to organizations and enhance transparency in the utilization of foreign funds. By allowing the carry forward of unspent administrative expenses and clarifying the treatment of TDS refunds, these regulations aim to create a more conducive environment for organizations engaged in charitable activities.

Key Amendments to Foreign Contribution (Regulation) Rules, 2011

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