The Foreign Contribution Regulation Act (FCRA) is an Indian law enacted in 2010 to regulate the acceptance and utilization of foreign contributions and foreign hospitality by individuals, associations, and companies working in India. The primary objective of FCRA is to ensure that such contributions and hospitality do not adversely affect India’s sovereignty and integrity.
Key Features and Provisions of FCRA
1. Definition of Foreign Contribution
- Foreign contribution includes currency, articles, and services received from foreign sources.
- It also covers foreign hospitality provided directly or indirectly.
2. Applicability
- FCRA applies to:
- Individuals who are citizens of India and resident in India.
- Organizations (including associations, trusts, societies, and companies) registered or having offices in India.
- Political parties, electoral candidates, and legislators are not eligible to receive foreign contributions under FCRA.
3. Registration and Prior Permission
- Entities intending to receive foreign contributions must obtain registration or prior permission from the Ministry of Home Affairs (MHA), Government of India.
- Registration is valid for five years and can be renewed subsequently.
- Prior permission is granted for specific projects or activities for a specific amount and duration.
4. Activities Prohibited under FCRA
- Certain activities are prohibited under FCRA, including:
- Activities detrimental to national interest.
- Activities likely to affect communal harmony or social, cultural, or economic fabric of India.
- Activities prejudicially affecting public interest.
5. Utilization of Foreign Contributions
- Foreign contributions can only be utilized for the specific purpose for which they are received.
- Utilization must comply with the objectives of the receiving entity as per its registration or permission granted under FCRA.
6. Compliance and Reporting
- Entities receiving foreign contributions must maintain separate designated bank accounts to receive such contributions.
- They are required to submit annual returns detailing the receipt and utilization of foreign contributions to the MHA.
7. Penalties and Enforcement
- Non-compliance with FCRA provisions can lead to penalties, including cancellation of registration or prior permission, and restrictions on future receipt of foreign contributions.
- Violations can also lead to criminal prosecution under the provisions of FCRA.
Recent Amendments and Changes
- Amendments in 2020: The Foreign Contribution Regulation Amendment Act, 2020 introduced several changes to FCRA, including:
- Restricting the use of foreign contributions for administrative expenses to 20% from the earlier 50%.
- Strengthening compliance measures and enhancing transparency in utilization of foreign contributions.
- Tightening the provisions related to cancellation and suspension of registration under FCRA.
Importance of FCRA
- Safeguarding National Interest: FCRA ensures that foreign contributions do not compromise India’s sovereignty, security, or public interest.
- Regulation and Transparency: It promotes transparency in the receipt and utilization of foreign contributions by entities operating in India.
- Accountability: Entities receiving foreign contributions are accountable for their utilization, ensuring that funds are used for legitimate purposes and in accordance with Indian laws.
The Foreign Contribution Regulation Act (FCRA) is a critical regulatory framework in India governing the receipt and utilization of foreign contributions by individuals and entities. It aims to ensure transparency, accountability, and safeguarding of national interests while facilitating legitimate contributions for developmental and charitable activities in India. Understanding FCRA provisions and compliance requirements is essential for entities involved in activities that may involve receiving foreign contributions or hospitality.
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The FCRA, 2010 is an Indian law enacted to regulate the acceptance and utilization of foreign contributions or hospitality by individuals, associations, or companies to ensure such funds do not affect the sovereignty, integrity, and security of India.
Organizations such as NGOs, trusts, societies, and Section 8 companies that intend to receive foreign contributions for charitable, religious, cultural, or social purposes must obtain FCRA registration.
To be eligible:
- The organization must be in existence for at least 3 years.
- It should have spent at least ₹15 lakhs on its core activities during the last three years (exceptions exist for prior permission).
- The organization’s activities should align with national security and public interest.
- FCRA Registration: For organizations eligible to receive foreign contributions regularly.
- Prior Permission: For organizations not eligible for full registration but intending to receive foreign funds for specific projects or purposes.
Applications can be made online via the FCRA portal by submitting:
- Form FC-3A (for registration) or Form FC-3B (for prior permission).
- Required documents like registration certificates, audited financials, and activity reports.
- Application fees: ₹10,000 for registration and ₹5,000 for prior permission.
Post-registration, organizations must:
- Open a dedicated FCRA bank account in the designated State Bank of India branch in New Delhi.
- File an annual return (Form FC-4) by December 31 each year.
- Maintain proper records of foreign contributions and their utilization.
- Ensure funds are used only for approved purposes.
Non-compliance can lead to:
- Suspension or cancellation of FCRA registration.
- Penalties, including monetary fines and legal action.
- Prohibition from receiving foreign contributions for up to 5 years.
Yes, but only to another FCRA-registered organization and with proper reporting of such transfers in the annual return.
FCRA registration is valid for 5 years. Renewal applications must be submitted 6 months before the expiry date via the FCRA portal along with the prescribed fee of ₹5,000.
The following entities or individuals are prohibited:
- Political parties or their office-bearers.
- Government employees or judges.
- Media personnel and correspondents (unless specified).
- Organizations of a political nature, as defined by the government.
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