V. B. Prabhu Verlekar speaks about the FCRA and the implications on those receiving foreign funding without registering under the same
The Foreign Contribution Regulation Act or FCRA is a law enacted by Parliament to regulate foreign contributions by way of donations of money and articles, provided by certain foreign individuals and associations to NGOs and others within India, to safeguard national interest. NGO means non-Government organizations and covers charitable institutions registered under Society’s Registration Act, 1860, Indian Trust Act, Section 25 of the Companies Act; associations like Rotary Club, Lion’s Club, Jaycees, religious institutions, and other social, cultural, educational organizations.
FCRA applies to “Foreign Contributions” received from “Foreign source”. “Foreign contributions” include any articles (other than for personal use of individual) exceeding `25,000; foreign or Indian currency or foreign securities like foreign bonds, stocks, shares and income generated from these securities and interest on designated bank accounts
Recently, the Home Ministry of GOI has initiated criminal investigations of several NGOs after they were found misusing money for anti-social and anti-national activities. Registration certificates of many others were also cancelled for not complying with reporting requirements stipulated under the Act.
FCRA applies to ‘Foreign Contributions’ received from ‘Foreign source’. ‘Foreign contributions’ include any articles (other than for personal use of individual) exceeding `25,000/-; foreign or Indian currency or foreign securities like foreign bonds, stocks, shares and income generated from these securities and interest on designated bank accounts.
‘Foreign sources’ includes foreign governments and their agencies, foreign companies, any foreign associations or society and citizens of foreign country which covers foreign citizens of Indian origin like OCI card holders but not non-resident Indians living in foreign countries.
Certain categories of persons are completely banned from accepting foreign contributions or hospitality such as election candidates, persons connected with newspapers and electronic media, government servants, MPs, MLAs, office bearer of political parties, etc. If an individual Indian receives gift from his foreign relatives in excess of Rs one lakh, FCRA requires reporting to central government in Form FC-1 within 30 days. Ban is not applicable for payment of remunerations, scholarships, remittance received in ordinary course of business through official channels.
In order to be eligible to receive foreign contributions as above, the NGO should have definite cultural, economic, educational, religious and social programs, provided, they are either registered with Home Ministry of Central government under this Act or takes prior permission for receiving such contribution. For prior permission, application should be made in FC-3B electronically. This is donor specific, recipient specific and purpose specific. For general registration, application should be made electronically in Form FC-3A. Application granted is valid for five years and renewal of application should be made six months before due date of expiry. Transfer of foreign contribution funds to any person or organization which is not registered or has not obtained prior permission to receive foreign contribution are not permitted.
Any contravention, to the provision of the Act attracts imprisonment for six months to five years and /or fine ranging up to five times the amount involved. These offences are compoundable.
A registered association can receive and use foreign funds only through a designated bank account. Deposit of non-foreign funds is not permitted in this account. Separate independent accounts are required to be maintained of foreign contributions and its utilisations and audited statements with reports of use in Form FC-4 duly certified by Chartered Accountant should be filed with Home Ministry every year before 31st of December, immediately after the end of the financial year. Nil report is required to be filed even if no FC is received or utilized during the financial year.
Very recently FCRA is being amended to restrict administrative expenses to 20 per cent, mandatory furnishing of Aadhaar number for all office bearers, ban on “public servants’’ to receive any benefits, power to stop utilization of foreign funds by an organization by a ‘summary enquiry’.
There are a few NGOs in Goa who receive foreign donations unknowingly in good faith without complying with registration requirements. Given the recent actions taken by the Government against several charitable organizations, it is imperative that all organizations that receive foreign contributions review the FCRA norms and compliance requirements in detail and follow them meticulously to ensure that they do not come under the scanner of the Government for non-compliance
