Govt amends FCRA rules, allows kin to freely send ₹10 lakh: Basics Explained

The Centre has amended the rules of the Foreign Contribution Regulation Act (FCRA), allowing relatives to send more money under foreign funding and giving more time to organisations to inform the government about bank accounts for utilisation of funds received under the “registration” or “prior permission” category.

The new rules — Foreign Contribution (Regulation) Amendment Rules, 2022 — were notified by the ministry of home affairs (MHA) through a gazette notification on Friday.

  • Indian citizens can now receive up to Rs 10 lakh annually from relatives abroad without making any disclosure to the government. beneficiaries will be required to make a formal disclosure to the government within 90 days of receiving the funds in case they exceed Rs 10 lakh in a year.
  • It also removed a provision wherein an organisation/individual receiving foreign funds had to declare such contributions every quarter on its official website.
  • Making changes in rule 9, which deals with the application of obtaining ‘registration’ or ‘prior permission’ under the FCRA to receive funds, the amended rules give individuals and organisations 45 days to inform the MHA about bank account(s) that are to be used for utilisation of such funds. This time limit was earlier 30 days.
  • The Centre has also omitted provision ‘b’ in rule 13, which dealt with declaring foreign funds including details of donors, amount received, and date of receipt every quarter on its website. Now, anyone receiving foreign funds under the FCRA will have to follow the existing provision of placing the audited statement of accounts on receipts and utilisation of the foreign contribution, including income and expenditure statement, receipt and payment account and balance sheet for every financial year beginning on the first day of April, within nine months of the closure of the financial year, on its official website or on the website as specified by the Centre.
  • In a separate notification on Friday, the MHA made five more offences under FCRA “compoundable”, making 12 such offences compoundable instead of directly prosecuting the organisations or individuals. Earlier, only seven offences under FCRA were compoundable.

FCRA violations that have become compoundable now include — failure to intimate about the receipt of foreign funds, the opening of bank accounts, and failure to place information on a website etc.

Earlier, offences related to accepting hospitality from foreign entity without informing, defraying of foreign funds for administrative use beyond permissible limit, receiving money in account other than specified for foreign funds and four others were compoundable. The amount of penalty ranges from ₹10,000 to ₹1 lakh or five percent of foreign funds, whichever is higher.

The home ministry strengthened the FCRA regulations in November 2020, clearly stating that NGOs that may not be directly associated with a political party but participate in a political intervention such as bandhs, strikes, or road blockades will be regarded as having a political nature if they participate actively in politics or party politics. Farmers’ organisations, student organisations, labour organisations, and caste-based organisations are among the organisations included in this category.

Government prohibited public employees from accepting foreign money under the FCRA amendment, and they made Aadhaar a prerequisite for all NGOs’ office holders. According to the new regulation, organisations that receive foreign funding are not permitted to utilise more than 20% of those funds for administrative needs. Before 2020, this percentage was capped at 50%. All NGOs that receive funding are required by law to register with the FCRA.

What is the FCRA?

The FCRA regulates foreign donations and ensures that such contributions do not adversely affect internal security. First enacted in 1976, it was amended in 2010 when a slew of new measures were adopted to regulate foreign donations.

Broadly, the FCRA requires every person or NGO seeking to receive foreign donations to be (i) registered under the Act, (ii) to open a bank account for the receipt of the foreign funds in State Bank of India, Delhi, and (iii) to utilise those funds only for the purpose for which they have been received and as stipulated in the Act.

They are also required to file annual returns, and they must not transfer the funds to another NGO.

The FCRA is applicable to all associations, groups and NGOs which intend to receive foreign donations. It is mandatory for all such NGOs to register themselves under the FCRA. The registration is initially valid for five years and it can be renewed subsequently if they comply with all norms. Registered associations can receive foreign contribution for social, educational, religious, economic and cultural purposes.

Filing of annual returns, on the lines of Income Tax, is compulsory. In 2015, the MHA notified new rules, which required NGOs to give an undertaking that the acceptance of foreign funds is not likely to prejudicially affect the sovereignty and integrity of India or impact friendly relations with any foreign state and does not disrupt communal harmony. It also said all such NGOs would have to operate accounts in either nationalised or private banks which have core banking facilities to allow security agencies access on a real time basis.

Members of the legislature and political parties, government officials, judges and media persons are prohibited from receiving any foreign contribution. However, in 2017 the MHA, through the Finance Bill route, amended the 1976-repealed FCRA law paving the way for political parties to receive funds from the Indian subsidiary of a foreign company or a foreign company in which an Indian holds 50% or more shares.

The other way to receive foreign contributions is by applying for prior permission. It is granted for receipt of a specific amount from a specific donor for carrying out specific activities or projects. But the association should be registered under statutes such as the Societies Registration Act, 1860, the Indian Trusts Act, 1882, or Section 25 of the Companies Act, 1956. A letter of commitment from the foreign donor specifying the amount and purpose is also required.


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