What is the Foreign Contribution Regulation Act (FCRA)?

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What is the Foreign Contribution Regulation Act (FCRA)? Blog Image

Overview:

The Ministry of Home Affairs (MHA) recently amended rules pertaining to the filing of annual returns by Non-Government Organisations (NGOs) registered under the Foreign Contribution Regulation Act (FCRA), asking them to provide details of moveable and immovable assets created by them using foreign funds.

About Foreign Contribution Regulation Act (FCRA):

  • It is a law enacted by Parliament to regulate foreign contributions (especially monetary donations) provided by certain individuals or associations to NGOs and others within India.
  • The Act, in its consolidating form, was originally passed in 1976 and majorly modified in 2010.
  • The Act aims to prevent foreign organisations from influencing electoral politics, social, political, economic, or religious discussions in India for wrong purposes and activities detrimental to the public interest. 
  • The Act falls under the purview of the Ministry of Home Affairs (MHA).
  • ‘Foreign Contribution’ means the donation, delivery or transfer made by any foreign source of any:
    • article (not being an article given to a person as a gift for his/her personal use, the market value of which is not more than one lakh rupees);
    • currency (whether Indian or foreign);
    • security.
  • Contributions made by a citizen of India living in another country (e.g. a Non-Resident Indian (NRI)) from his/her personal savings through the normal banking channels, will not be treated as foreign contributions. 
  • Who can Receive Foreign Contributions? Any person can receive foreign contribution provided:
    • The person has a definite cultural, economic, educational, religious, or social programme;
    • The person must have obtained FCRA registration/prior permission from the Central Government and
    • Person includes
      • an individual;
      • Hindu Undivided Family;
      • an association;
      • company registered under Section 8 of the Companies Act, 2013;
  • The foreign contribution received has to be utilised only for the purpose for which it has been received, and not more than 20% of the foreign contribution received in a financial year can be utilised to defray administrative expenses.
  • The FCRA requires every person or NGO seeking to receive foreign donations to open a bank account for the receipt of foreign funds in the State Bank of India, Delhi.
  • Registration under FCRA:
    • It is mandatory for all such NGOs to register themselves under the FCRA. 
    • The applicant should not be fictitious or benami and should not have been prosecuted or convicted for indulging in activities aimed at conversion through inducement or force, either directly or indirectly, from one religious faith to another.
    • The registration is initially valid for five years, and it can be renewed subsequently if they comply with all norms. 
    • Registration can be cancelled if an inquiry finds a false statement in the application. Once the registration of an NGO is cancelled, it is not eligible for re-registration for three years.
    • The ministry also has the power to suspend an NGO’s registration for 180 days pending inquiry and can freeze its funds.
    • All orders of the government can be challenged in the High Court.

 


Q1) What is an NGO?

A non-governmental organization (NGO) is a group that functions independently of any government. It is usually non-profit. NGOs, sometimes called civil society organizations, are established on community, national, and international levels to serve a social or political goal such as a humanitarian cause or the protection of the environment.

Source: Indian NGOs registered under FCRA will have to give details of foreign funds now