Current Effective Status

FCRA

2010

Bill was tabled in Rajya Sabha in 2006 and passed in Rajya

Sabha on 19th August 2010

Introduced in Lok Sabha on 27th Aug 2010 and passed

the same day.
President assent received on 27th September 2010
It was published in the Gazette on the same day.
Made effective w.e.f. 1-5-2011

Rules

- Draft rules placed on MHA website and comments invited

-

by 31st March 2011

Final Rules published on 29 April. Effective 1-5-2011

Background

FCRA legislation background is of late 60s early 70s.

Act was legislated during Emergency
Main objective is to ensure that the foreign funds are
not used to subvert, influence national agenda.
It does not cover foreign monies received through
commercial transactions.
FCRA Legislation basically does it in three ways:
- prohibits certain persons in sensitive positions (legislature,
political parties, govt. servants, judges, persons from media)
- by monitoring persons (incl. organisations) which wish to receive
such funds / benefits - through requiring persons to obtain prior
permission / registration
- by monitoring subsequent receipt of funds and their usage (by
asking persons receiving such funds to submit necessary
information).

In Layman Understanding

Object
Any Foreign
Contribution

Illegitimate Foreign
Source or
With unknown source

Which will weaken

national
Security
Foreign Hospitality

Needs Close
Scrutiny by
Concern is
Threat to
Economy
Home Ministry being
Security Issues

This is all about FCRA..

Why FCRA Regulation

As

per website of MHA, purpose of

FCRA is to facilitate receipt of
foreign contribution for genuine
purposes, without
compromising
national security concerns.
Focus of FCRA has shifted to internal
security
It is apprehended that destructive
elements will use FCRA route to fund
their supporters in India
4

FCRA Override FEMA or other General Acts

Since

the Act is a special Act, its

provisions will prevail over provisions
of FEMA. Thus even if there is
permission for certain transactions
( like donation, gift etc.) under FEMA,
restrictions under FCRA will be
applicable if the transaction is
covered under provisions of the FCRA
5

Foreign Source.
Includes:

Foreign Government,
International agency ( but not UN or its
agencies, World Bank, IMF etc..)
Foreign Company
Multi-national corporation
Company where more than 50% capital is held
by foreigner or foreign company, foreign trust,
foreign citizen etc.

Definition of Foreign
Contribution

Means the donation, delivery or transfer made by

any foreign source and Includes :
Article, not given to a person as a gift for personal use,
Any Currency, whether Indian or Foreign,
Any securities defined under Section 2(h) of the
Securities Contracts (regulation) Act,1956,
Any foreign securities as defined in Section2(o) of the
Foreign Exchange Management Act,1999.
This excludes
Salary, Remuneration, Scholarship, Stipend, etc.
Payment in the course of trade or commerce
Fees, in ordinary course of business (incl. educational
institutions)
From relatives (however if more than Rs 1 lakh in a
financial year received then intimate within 30 days)
7

Who cannot accept foreign Contribution

No

foreign contribution shall be

accepted by any
Candidate for election
Correspondent, columnist, cartoonist,
editor, owner, printer or publisher of a
registered newspaper
Judge, Government Servant or employee
of any corporation or any other body
controlled or owned by the Government
Member of any legislature
Political party or office-bearer thereof,
8

Who cannot accept foreign Contribution

Organization

of a political nature as may be

specified by Central Government
Association or Company engaged in the production
or broadcast of audio news or audio-visual news or
current affairs programes through any electronic
mode, or any other electronic form as defined U/s 2
of the Information Technology Act,2000
Correspondent or columnist, cartoonist, editor,
owner of the association or company.
No person, resident in India, and no citizen of India
resident outside India, shall accept any foreign
contribution, or acquire or agree to acquire any
currency from a foreign source, on behalf of any
political party, or any person referred under FCRA
9

Prohibited Organization to accept

foreign contribution
Organization with fictitious or benami
accounts,
That have indulged in contravention
directly or indirectly,
Created communal tension,
Supported sedition or
have diverted funds earlier would be
barred from receiving foreign
contributions
10

Exception to foreign contribution

Contribution

made by citizen of India living

in another country ( i.e. Non Resident
Indian), from his personal savings, through
the normal banking channels is not treated
as foreign contribution.
However, while accepting any donations
from such NRI, it is advisable to obtain his
passport details to ascertain that he/she is
an Indian passport holder.

11

Not to be Considered as Foreign Contribution

Gift

or Presentation made to Indian

delegation accepted in accordance
with the rules made by the Central
Government
From relative
By way of remittance received in the
ordinary course of business through
any official channel, post office, or
any authorized person in FEMA
By way of scholarship, stipend or any
payment of like nature

12

Not to be Considered as Foreign Contribution

Foreign

Contribution accepted:

By way of salary, wages or other

remuneration due from any foreign source
or by way of payment in the ordinary course
of business transacted in India by such
foreign source
By way of payment, in the course of
international trade or commerce, or in the
ordinary course of business transacted
outside India
As an agent of foreign source in relation to
any transaction made by such foreign
source with the Central Government or State13

Changes in the 2010 Act Vis--vis 1976 Act

Interest

received on foreign contribution

will also fall within the meaning of
foreign contribution
Provision made to permit transfer of
foreign contribution to other person
Restriction to utilize foreign contribution
for administrative purpose to 50%
Prohibition on use of foreign contribution
for speculative purposes

14

General
No

person who receives foreign

contribution as per provisions of
this Act shall transfer to other
person unless that person is also
authorized to receive foreign
contribution as per rules made by
the Central Government
NGO and individuals will have to
submit their accounts in time
failing which actions would be
taken against them
15

Important Provisions of FCRA

Transfer

of Foreign Contribution to other

Registered or Unregistered person
Foreign
Contribution
received
can
be
transferred
to
other
registered
or
unregistered person with permission of
Central Government. Application should be
made in form FC-10
Transfer up to 10% of foreign contribution can
be made even to person who has not been
granted registration or prior permission, with
approval of Central Government
Such transfer should be reported in forms FC6 and FC-10 by the transferor and the
recipient
16

What Foreign Hospitality??

Means

any offer not being casual

one, made in cash or kind by a
foreign source for providing a person
with the costs of travel to any foreign
country or territory or with free
boarding, lodging, transport or
medical treatment. Thus casual
hospitality
is
not

foreign
hospitality
( e.g. offering meals or casual lift in
vehicle)
17

Restriction on Acceptance of Foreign Hospitality

A

member of Legislature, Office bearer of

political party, judge, Government servant or
employee of any corporation or any body
owned or controlled by Central Government
cannot accept foreign hospitality without
prior permission of Central Government
Such person shall apply in form FC-6 for prior
permission to accept foreign hospitality.
Application should be with administrative
clearance of concerned ministry and
invitation
letter
from
host
country.
Application should be made preferably two
weeks prior to proposed date of onward
journey
18

Exception in case of urgent medical treatment

The

only exception is in case of emergent

medical aid on account of sudden illness
contacted during a visit out of India. In such
case, report within one month from the date of
receiving hospitality giving details of hospitality
received
In such case, intimation of foreign hospitality
shall be made within 60 days of such receipt
giving prescribed details, only if the value of
such hospitality in emergent medical aid is Rs 1
lacs or more
19

How to receive Foreign Cont.

Prior Permission
Registration

(S 11(2))
(S 11(1))

20

Prior Permission
To be done online Form FC4
A new prior permission application cannot be
moved within 6 months for the same project.
Documents to be attached
Copy of Trust Deed / Memorandum
Activities over last 3 years
3 Years duly audited annual accounts
Latest Commitment letter from the donor
Details of the project to be funded, such as outlays,
detailed budget, etc.
DD / Pay Order of Rs 1000/ Details of violations / convictions, if any

21

Registration

Prior Permission only for a specific project / commitment while

Registration is general in nature and any FC can be deposited
without recourse to the Dept.
For Registration,- Eligibility criteria
Existence for three years.
Minimum of Rs 6 lakh spending during this period.
(No legislative provision /rules but based on practices at the dept.)
Similar requirements as Prior Permission. Online Form FC3, Fees
Rs 2000/-.
Hard copy duly signed to be submitted within 30 days (otherwise
application would be deemed to be ceased Rule 1b & 2b)
2nd application cannot be moved within 6 months from the date of
cessation.
Separate bank account for receipt of FC.
New Bank accounts for utilisation of FC may be opened. Intimate
the same within 15 days of opening of the account. (Huge Relief)
Pending applications at the time of enactment of New Act will be
valid under New Act provided Fees is submitted.

22

Renewal of Registration
All registrations valid for 5 years
File renewal application online (FC-5).
Fees Rs 500/- by DD/Bankers draft
Seems Dept. wishes to re-visit cases to weed out
any blacklisted, proceeded NGOs.
Application to be moved 6 months prior to expiry
In case of NPOs implementing multi-year project to
apply 12 months in advance.
Delay may be condoned but not later than 4
months after the registration expires. (R. 12 (8))
If renewal not applied than registration ceases after
the expiry period and new application has to be
moved as if its a new registration under Rule 9.

23

Registration..
Power

to
cancel
the
Registration
certificate. (S. 14) Earlier power was not
explicit
in
the
Act
(Govt.
used
blacklisting).
However now no new application can be
moved for 3 years once blacklisted.
Power
to
suspend
Registration
certificates (S.13) upto a maximum of
180 days.
Assets to vest with the Govt wherever
registration cancelled or a registered/
permitted
person
ceases
becomes
defunct.
24

Validity of Registration
Registration

is granted for a period of 5 years.

It can be renewed by making application by
applying six month before expiry of registration
If the application for renewal is not made, the
registration will lapse at the end of 5 years. In
such case, fresh application has to be made
Application for renewal shall be made in Form FC5 with fees of Rs 500/-.

25

Suspension or Cancellation of Registration

Central

Government can suspend registration

for 180 days by order in writing.
During this period, foreign contribution cannot
be accepted or utilized or can be accepted or
utilized only as per terms and conditions
specified by Central Government
Reason should be given and principles of
natural justice has to be followed. Such action
cannot be arbitrary
If such order of suspension is passed, up to
25% of unutilized amount can be spent with
prior approval of Central Government for
declared aims and objects. Balance amount can
be spent only after suspension is revoked
26

Prior Permission vis--vis Registration

Prior Permission

Registration

Prior Permission is for

Specific Donor and Specific
Project

Registration is for all types of

Donation within the object of the
Association and for any Donor

Prior Permission is one time

Registration shall be granted for

5 years

Prior Permission do not

registration

Registration includes Prior

Permission

No reasons for denial shall be

communicated

Reasons for denial shall be

communicated unless protected
under RTI

Application shall be made in

Form FC 4 electronically

Application shall be made in

Form FC 3 electronically

Prescribed Fees Rs 1000/-

Prescribed Fees Rs. 2,000/-

27

General
There are provisions for maintenance of accounts, disposal of
assets in case the organisation ceases to exist / is disabled to
accept foreign contribution, inspection, investigation and audit
etc.
Every person who receives FC has to intimate the same to the
Government or its prescribed authorities of the receipt of the
said FC
Acts done in contravention of a Prohibitory Order issued by the
Government shall be liable with punishment extendible up to
three years plus fine and acts done in contravention of the Act
may invite a penalty by way of imprisonment up to five years
plus fine.
Where an offence under this Act or any rule or order made
there under has been committed by a company, every person
who, at the time the offence was committed, was in charge of,
and was responsible to, the company for the conduct of the
business of the company, as well as the company, shall be
deemed to be guilty of the offence and shall be liable to be
proceeded against and punished accordingly.

28

Offences and Penalties

(i)

Violation of FCRA can attract severe penalties

which could be as under :
(a)
seizure
and
confiscation
of
foreign
contribution receipts.
(b) fine upto 5 times the value of the foreign
contribution spent.
(c) inspection and seizure of accounts and
records.
(d) compulsory prior permission requirement
even if the NGO is registered under FCRA.
(e) imprisonment upto 5 years and/or fine.
(f) prohibition on accepting foreign contribution
for 3 years for persons convicted twice.
29