Section 7 of FCRA, 2010 states
“No person who –
Is registered and granted a certificate or has obtained prior permission under this Act; and
Receives any foreign contribution, shall transfer such foreign contribution to any other person unless such other person is also registered and had been granted the certificate or obtained the prior permission under this Act.
Provided that such person may transfer, with the prior approval of the Central Government, a part of such foreign contribution to any other person who has not been granted a certificate or obtained permission under this Act in accordance with the rules made by the Central Government.” Rule 24 of FCRR, 2011, as amended vide the Foreign Contribution (Regulation) Amendment Rules, 2012 [G.S.R. 292 (E) dated 12th April, 2012] prescribes the procedure for transferring foreign contribution as under:
"24. Procedure for transferring foreign contribution to any unregistered person.
A person who has been granted a certificate of registration or prior permission under section 11 and intends to transfer part of the foreign contribution received by him to a person who has not been granted a certificate of registration or prior permission under the Act, may transfer such foreign contribution to an extent not exceeding ten per cent of the total value thereof and for this purpose, make an application to the Central Government in Form FC-5.
Every application made under sub-rule (1) shall be accompanied by a declaration to the effect that-
(a) The amount proposed to be transferred during the financial year is less than ten per cent of the total value of the foreign contribution received by him during the financial year.
(b) The transferor shall not transfer any amount of foreign contribution until the Central Government approves such transfer.
A person who has been granted a certificate of registration or prior permission under section 11 shall not be required to seek the prior approval of the Central Government for transferring the foreign contribution received by him to another person who has been granted a certificate of registration or prior permission under the Act provided that the recipient has not been proceeded against under any of the provisions of the Act.
Both the transferor and the recipient shall be responsible for ensuring proper utilization of the foreign contribution so transferred and such transfer of foreign contribution shall be reflected in the returns in Form FC-4 to be submitted by both the transferor and the recipient.
It should be noted that any transfers made to FCRA registered organizations need to be disclosed in the online annual returns in Form FC-4. Details such as Name of the association, amount and date needs to be disclosed in the appropriate space provided in FC-4. Therefore, the donor organization should be recording such transfers in a way, where such records can be easily retrievable for reporting purposes to the FCRA in the annual returns.