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Post at: Aug 26 2022

Amendment in Foreign Contribution Regulation Act (FCRA)

Why in news?

  • On 2nd July2022, the Central government has made seven amendments to existing rules of the Foreign Contribution (Regulation) Act (FCRA) rules 2011.
  • The new rules, now renamed Foreign Contribution (Regulation) Amendment Rules, 2022, came into effect on  July 1.
  • Explaining the rule, an MHA official told , “In order to reduce compliance burden, rule 6, rules 9(1)(e), 9(2)(e), and Rule 20 amended.”

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. 
  • The FCRA is applicable to all associations, groups and NGOs which intend to receive foreign donations.
  • The Act extends across India and also applies to the NRIs.
  • Associate branches or subsidiaries, outside India, of companies or bodies corporate, registered or incorporated in India also have to follow the rules of the Act.
  • 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 contributions 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. 

Who cannot receive foreign donations?

  • 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  • However, in 2017 the MHA, through the Finance Bill route, amended the 1976-repealed FCRA law paving the way for political parties to receive funds from the Indian subsidiary of a foreign company or a foreign company in which an Indian holds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.

Suspension of Registration 

  • The MHA on inspection of accounts and on receiving any adverse input against the functioning of an association can suspend the FCRA registration initially for 180 days. 
  • Until a decision is taken, the association cannot receive any fresh donation and cannot utilise more than 25% of the amount available in the designated bank account without permission of the MHA. 
  • The MHA can cancel the registration of an organisation which will not be eligible for registration or grant of ‘prior permission’ for three years from the date of cancellation.
  • According to MHA data, since 2011, the registration of 20,664 associations was cancelled .
  • it was done for violations such as misutilisation of foreign contribution, non-submission of mandatory annual returns and diversion of foreign funds for other purposes. 

Amendments in the FCRA Act

  • The principal rules were published on April 29, 2011, and subsequently amended on April 12, 2012; December 14, 2015; March 7, 2019; September 16, 2019; November 10, 2020, and January 11, 2021.
  • Presently, In exercise of the powers conferred by section 48 of the Foreign Contribution (Regulation) Act, 2010 Central Government makes the rules further to amend the Foreign Contribution (Regulation) Rules, 2011.
  • The Central government has made seven amendments to existing rules of the Foreign Contribution (Regulation) Act.
  • The seven amendments
  • There are two amendments in rule 6 by substituting the words "one lakh rupees" with the words "ten lakh rupees"; and the words "thirty days" with the words "three months".
  • There is also an amendment in rule 9, in sub-rule (1), in clause (e), for the words "fifteen days", the words "forty-five days" shall be substituted.
  • and in sub-rule (2), in clause (e), for the words "fifteen days", the words "forty-five days" shall be substituted.
  • Clause (b) of rule 13 has been omitted from the fresh rules; 
  • In rule 17A, for the words "fifteen days", the words "forty-five days" shall be substituted.
  • The last amendment is done in rule 20, and it mentions that for the words "on a plain paper", the words "in such form and manner, including in electronic form as may be specified by the Central Government" shall be substituted.

Conclusion 

  • The FCRA aims at regulating the forging contribution to India in order to to promote socio economic causes and at the same time protect the internal security and peace and stability in the country. The present amendment in FRCRA will contribute in improving the balance between two. 

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