FCRA in India
Introduction to FCRA and Its Evolution
There was an emergency rule in India when the Foreign Contribution (Regulation) Act (FCRA) came into effect in 1976. It aimed to govern the foreign donations that individuals and groups received so that they could function in a manner that safeguarded the principles of an independent democratic republic.
To strengthen monitoring of the receipt and utilization of foreign funds and to consolidate and solidify the law, the FCRA has changed over the years. The focus of this article is to provide people with an in-depth knowledge of the FCRA, covering its main provisions, registration requirements, exemptions, legal status, and impact on foreign donations and organizations they support.
Concerns of Foreign meddling in Indian affairs through independent groups backed by foreign powers prompted the enactment of the FCRA. To strengthen the laws regulating the use of foreign funds and prohibit their use for causes adverse to the well-being of the nation, the Foreign Contribution Regulation Act (FCRA) was revised in 2010. Further changes were made in 2020 to give the government greater control over foreign funds that non-governmental organizations (NGOs) received.
Registration Requirements and Prohibited Entities
For anyone who wants to receive foreign donations, an individual or NGO has to register under the Act, open a bank account solely for receiving the funds, and make use of the funds only for the reasons defined by the Act.
The Act does not allow political candidates, journalists, newspapers, media outlets, judges, government staff, members of the legislature, political party officials, and other groups with an interest in politics to accept any kind of foreign donations.
The Act supervises individuals, organizations, and businesses to accept and make use of the donations. The donation or transfer of any currency, security, or thing (beyond an allocated value) by a foreign source is commonly referred to as a foreign contribution.
To get foreign donations, individuals or NGOs must comply with the specific criteria outlined in the FCRA. Firstly, they must be registered under the Act. Further, they are required to open a dedicated bank account in the State Bank of India, Delhi, solely to receive foreign funds. Use of these funds must strictly align with the purpose for which they were received, as laid out in the FCRA. Plus, FCRA registrations are given exclusively to entities with clearly defined cultural, economic, educational, religious, or social programs.
Key Provisions and Compliance Criteria
Particular categories are laid out in the Foreign Contribution Regulation Act (FCRA) where collecting foreign funds is banned. Candidates campaigning for the office, journalists, media outlets, judges, public servants, lawmakers, members of political parties or their office bearers, and political groups are among them. In addition, prerequisites for eligibility for foreign funds involve having to be an authentic organization, not having sued for conversion activities, not having a role in provoking communal conflict or disharmony, and not being engaged in inciting sedition. To ensure compliance with FCRA regulations, it is essential that you completely abide by these guidelines.
The FCRA registration is valid for five years. NGOs must file a renewal application within six months following the registration expiration date. If an NGO abuses the Act, quits from carrying out reasonable activities in its given field for two successive years, or ceases to exist, the government can suspend its FCRA registration. The NGO will not be allowed to register again for three years once the registration is called off. One can appeal High Court against government order.
Amendments to FCRA in India in 2010 and 2020
2010 Amendment: Tighter regulations on accepting and making use of contributions from aboard, with an emphasis on upholding the interest of the country.
2020 Amendment: The transfer of money was limited, the administrative expense allowance was reduced from 50% to 20%, and foreign currency receipts were needed to pass through a specific SBI branch in New Delhi.
Latest Changes in FCRA Laws (2022)
Several important changes have been made to the Foreign Contribution (Regulation) Act (FCRA) laws in the year 2022. Particularly, the ceiling on foreign contributions from relatives without government notification has been increased to Rs 10 lakh, and the list of breaches that constitute compoundable offenses has been expanded. In addition, there is a longer deadline to inform the government about newly created bank accounts.
Ensuring Compliance and Maintaining FCRA Registration
With groups and individuals that get foreign donations, the FCRA in India has major implications. Even though its main aim is to regulate foreign donations and give transparency, certain issues have been raised regarding how it will be enforced and the challenges NGOs might face. The FCRA mandates submitting yearly returns, maintaining precise records, and using funds as directed. To continue to maintain their FCRA registration active and continue getting donations from aboard, both people and groups have to agree to specific laws.