What is FCRA?
· Foreign Contribution Regulation Act (FCRA)
· It regulates the foreign contribution (money donation) and foreign hospitality (e.g. free airplane tickets and hotel lodging during videsh-yaatra) given to various NGOs, institutes, judges, journalists, public servants etc.
What is the need of FCRA Act?
· To check that foreigners are not affecting India’s electoral politics, public servants, judges, journalists, NGOs etc. for wrong purposes.
· If someone violates the FCRA act, he can be sent to jail for up to 5 years.
Who can accept Foreign Contribution?
· Organizations working for definite cultural, social, economic, educational or religious programs.
· But first, they’ve get permission from the Ministry of Home Affairs AND
· Second, they have to maintain separate account book listing the donation received from foreigners and get it audited by a Chartered Accountant and submit it to Home Ministry every year.
Who cannot accept Foreign Contribution?
1. Election candidate.
2. MP and MLAs.
3. Newspaper-walla: Correspondent, columnist, cartoonist, editor, owner, printer or publishers of a registered Newspaper.
4. Public Servents: Judge, government servant or employee of any Corporation or any other body controlled on owned by the Government.
Why is FCRN Act in news?
· So Home ministry got in action, bank accounts of some NGOs were frozen after it was found that they were diverting money received from their donors abroad into funding protests at the Koodankulam plant.
· Now, Home ministry has cancelled some more registrations including top 8 national educational institutions such as –Jawaharlal Nehru University, IIT-Kanpur and Jamia Milia Islamia saying that these institutes are not maintaining proper FCRA accounts.
· so, Unless their registrations are restored, these institutions cannot receive contributions from abroad.
· The Home Ministry had earlier made a notification that if xyz organization’s accounts are audited by CAG then it doesnot need to maintain FCRA accounts.
· Jamia Milia, JNU etc. = Central Universities = hence audited by CAG = They don’t need to maintain FCRA accounts in the first place.
Q1. Which of the following statements are correct?
1. Finance Ministry is responsible for implementing Foreign Contribution Regulation Act (FCRA)
2. Kundankullam Power plant is located in Andhra Pradesh.
3. A Lok Sabha election candidate can accept foreign donations for campaign after taking necessary approval from Chief Election Commissioner.
Q2. Write a note on the Salient Features of Foreign Contribution Regulation Act (FCRA). 12 marks.
NGO Receiving Donation from Outside India:
There are certain restrictions for NGOs to receive donation from outside India. The source of money is the important determination in applying Foreign Contribution Regulation Act (FCRA) of 1976 on the recipient NGO. Any foreigner or organization, which is not controlled by Indians, is a ‘foreign source’. Some organizations such as World Bank and UN Agencies are not called ‘foreign source’.
NGO need to have either prior permission or registration under FCRA.
In order to receive contribution in any kind or currency from foreign sources NGO needs the approval from Indian government which is called prior permission or they have to register under FCRA (foreign contribution regulation act) . Foreign source includes:
i. The Government of any foreign country or territory and any agency of such Government.
ii. Any international agency, not being the United Nations or any of its specialized agencies, the World Bank, International Monetary Fund or such other agency as the Central Government may, by notification in the official Gazette, specify in this behalf.
iii. A foreign company within the meaning of the section 591 of the Companies Act, 1956 (1 of 1956), and also includes-
a. A company which is a subsidiary of a foreign company.
b. A multi- national corporation within the meaning of this Act.
iv. A corporation, not being a foreign company, incorporated in a foreign country or territory.
v. A multi-national corporation within the meaning of this Act.
vi. A company within the meaning of the Companies Act, 1956 (1 of 1956), if more than one-half of the nominal value of its share capital is held, either singly or in the aggregate, by one or more of the following, namely:
a. Government of a foreign country or territory.
b. Citizens of a foreign country or territory.
c. Corporations incorporated in a foreign country or territory.
d. Trusts, societies or other associations of individuals (whether incorporated or not), formed or registered in a foreign country or territory.
vii. A trade union in any foreign country or territory, whether or not registered in such foreign country or territory.
viii. A foreign trust by whatever name called, or a foreign foundation which is either in the nature of trust or is mainly financed by a foreign country or territory.
ix. A society, club or other association of individuals formed or registered outside India.
x. A citizen of a foreign country, but does not include any foreign institution, which has been permitted by the Central Government by notification in the Official Gazette, to carry on its activities in India.
Any organization, which has a ‘definite cultural, economic, educational, religious or social program’, is covered by FCRA. For practical purposes, this definition covers all NGOs and also the unregistered societies like Mahila Mandals. NGO with FCRA registration or prior permission should not give FCRA funds to NGOs which do not have FCRA registration or prior-permission. NRI donations to an Indian NGO may be Indian funds or FC funds. If the NRI holds an Indian passport, then the donation will be Indian funds. If not, then these will be FC funds. The type of bank account or currency does not matter.
i. If you are holding Indian Passport, you are free to donate to any NGO registered in India. Your donation will not be treated as of foreign source.
ii. If you are a non-resident Indian, not holding Indian Passport, you can donate to NGOs that registered under FCRA. Your donation will be treated as of foreign source.
If you wish to donate an NGO that is not registered under FCRA, you may give a letter of intention to donate a specified amount for a specific purpose/program of the NGO to the Central Government of India and the NGO.
NGO need to apply for prior permission, under FCRA act, by attaching your letter of intention. Once prior permission is received by the NGO, then that NGO is eligible to accept your donation.
iii. If you are a citizen of any country other than India, the norms as stated above in point (ii) will apply.
Nonprofit NGO organization should have a FCRA certificate to receive foreign currency funds. Any type of NGO should apply to the Central government for prior permission to receive foreign currency from outside India towards their foreign fundraising. When you deal with FCRA, you should also know about the documents during and after the process of FCRA. There are several penalties and punishable offenses, if you misuse foreign contribution, or if you import foreign funds without prior permission with Central government of India.
The important point which you should keep in mind before foreign fundraising or any type of foreign contribution from outside India.
A. You should maintain a separate bank account for foreign contribution, you should not mix your local bank transactions or any local currency dealings, with such FCRA bank account. Bankers may guide you more.
B. Up to date you should maintain accounts in separate books and account to avoid penalties, punishments, and imprisonments related to FCRA and foreign contribution activities.
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