Concerns over FCRA 2026 for NGOs-Part 2 of 4, The Fiscal Reality

Summary of the YouTube Video
In this Sunil Fernandes, a Chartered Accountant shares his expert views on the Foreign Contribution (Regulation) Act (FCRA), particularly focusing on the recent amendments and their implications for NGOs in India.
Sunil begins by advising NGOs not to approach the FCRA with fear but to thoroughly understand the law. He emphasizes that while laws are meant to protect, the FCRA is heavily procedural in nature. Even minor lapses in compliance can lead to severe consequences, unlike Income Tax or GST where tribunals often overlook procedural errors if the substance is correct. He notes that the FCRA has historically been somewhat arbitrary in its application.
A major portion of the talk deals with the new amendments, which have significantly expanded the definition of “responsible persons.” Earlier limited mostly to the chief functionary, liability now extends to the entire board of directors, governing body members, trustees, finance managers, project managers, and others involved in FC funds. Sunil stresses the importance of maintaining detailed minutes of meetings — not just bullet points, but proper records of discussions — to demonstrate that decisions were taken in good faith and with due diligence. This documentation can prove crucial if the organization faces cancellation or inquiry.
He explains the vesting of assets provision: once an FCRA certificate is canceled, all foreign contribution assets automatically vest with the designated authority. There is no automatic right to utilize funds during proceedings, making prevention of cancellation extremely important.
Key practical compliance points highlighted include:
Ensuring trustee addresses are accurate and updated (including foreign addresses if applicable).
Filing returns and renewal applications on time (FCRA has no revision facility like other laws).
Proper bifurcation and documentation of income and expenses, especially distinguishing between FC funds and local funds.
Careful handling of overhead expenses (capped at 20%), with clear job profiles and contracts for governing body members who also work at the field level.
Maintaining separate invoices when expenses are met from both FC and local sources.
Challenges with the designated SBI account, including issues in depositing certain refunds, rental income, or TDS related to FC funds.
Sunil also touches upon sensitive issues for faith-based organizations, advising them to maintain proper affidavits and recordings when involved in religious activities or conversions to avoid accusations of proselytization, which can be grounds for cancellation under Section 14.
He concludes by warning that many NGOs risk losing their properties and registration not due to anti-national activities, but purely on procedural lapses. He strongly recommends meticulous record-keeping, professional guidance from a good chartered accountant, and proactive compliance to safeguard operations under the stricter FCRA regime.
Overall, the session serves as a practical compliance guide for NGOs receiving foreign contributions, urging them to treat FCRA with utmost seriousness through better documentation, coordination among board members, and technical understanding of the law.