FCRA (Foreign Contribution Regulation Act)

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Overview:

Recently, the Centre for Policy Research (CPR), a leading Indian public policy think tank, had its FCRA license canceled, culminating in a series of government actions since IT raids in September 2022.

About FCRA (Foreign Contribution Regulation Act) 

  • Purpose: FCRA stands for Foreign Contribution (Regulation) Act, which is a law enacted by the Parliament of India to regulate the acceptance and utilization of foreign contributions by individuals, associations, and companies.
  • Prohibition: The Act prohibits the receipt of foreign contributions "for any activities detrimental to the national interest".
  • Registration: Organizations require the government’s permission to receive funding from abroad.
  • Implementation: The Act is implemented in convergence with various Union government Ministries and agencies, State authorities, and a network of formal and informal institutions and individuals.
  • Amendments: The Act has been amended over time, with the latest amendment being the Foreign Contribution (Regulation) Amendment Act, 2020. The Bill makes the following changes to the Act:
    • Public servants and foreign donations: Public servants are prohibited from accepting foreign donations.
    • Restriction on donation transfer: Foreign donations cannot be transferred to any other person, regardless of their registration status under the Act.
    • Identity proof requirement: Aadhaar number, passport copy, or Overseas Citizen of India card must be provided as identity proof by those seeking permission, registration, or renewal of registration to accept foreign donations.
    • FCRA account: Foreign donations can only be received in an “FCRA account” in a specified branch of the State Bank of India in New Delhi.
    • Unutilised foreign donations: The government can halt the use of unutilised foreign donations if the Act is violated.
    • Registration certificate renewal: Every person with a registration certificate must renew it within six months before it expires.
    • Administrative expense limit: The limit for using foreign donations for administrative purposes has been reduced from 50% to 20%.
    • Voluntary surrender of registration certificate: The central government can allow a person to surrender their registration certificate.
    • Suspension period: The government can suspend the registration of a person for up to 360 days, instead of 180 days.
  • Penalties: The Act provides for penalties for making false statements, delivering false accounts, and for contravention of any provision of the Act.

 Q1) What is Foreign Currency Non-Residential (FCNR) (B) Account?

Under this, NRIs or POI can make these deposits in the currency of their country of residence and shall be held in that account in any one of the foreign currencies prescribed by RBI. Income from the FCNR account is tax-free as the principal and interest amounts are exempted from taxation.

Source: Centre for Policy Research | Wrath of the state