Foreign Contribution (Regulation) Amendment Act, 2020

The FCRA 2010 regulates the acceptance and utilisation of foreign contribution by individuals, associations and companies. Foreign contribution is the donation or transfer of any currency, security or article (of beyond a specified value) by a foreign source.

The objective is to prevent use of foreign contribution or foreign hospitality for any activity detrimental to the national interest.
All societies, companies, associations and NGOs have to register themselves under the FCRA and fulfil definite criteria to be eligible for foreign funds.
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.

Members of the legislature and political parties, government officials, judges and media persons are prohibited from receiving any foreign contribution.
However, in 2017 the Ministry of Home Affairs (MHA), amended the 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.

Last year, the Parliament passed the Foreign Contribution (Regulation) Amendment Act, 2020 which amends the Foreign Contribution (Regulation) Act, 2010.

Highlights of the 2020 Act

Prohibition to accept foreign contribution

The amendment adds public servants (as defined under the Indian Penal Code) to the list of persons who are prohibited to accept any foreign contribution.
Public servant includes any person who is in service or pay of the government, or remunerated by the government for the performance of any public duty.

Transfer of foreign contribution

The amendment act prohibits the transfer of grants received under FCRA to any other person or organisation.

Aadhaar for registration

Any person seeking prior permission, registration or renewal of registration must provide the Aadhaar number of all its office bearers, directors or key functionaries, as an identification document.
In case of a foreigner, they must provide a copy of the passport or the Overseas Citizen of India card for identification.

FCRA account

Organisations can receive the foreign funds in a bank account designated as the ‘FCRA account’ only in branches of the State Bank of India, New Delhi, as notified by the central government.

Reduction in use of foreign contribution for administrative purposes

Under the 2010 Act, a person who receives foreign contribution must use it only for the purpose for which the contribution is received. Further, they must not use more than 50% of the contribution for meeting administrative expenses.
The amendment act reduces this limit to 20%.

Under the 2010 Act, the government may suspend the registration of a person for a period not exceeding 180 days.
The latest amendment adds that such suspension may be extended up to an additional 180 days.

The Ministry of Home Affairs (MHA) has extended the deadline till December 31 for NGOs to apply for renewal of their Foreign Contribution (Regulation) Act (FCRA) registration certificates.
The registration is mandatory for associations and NGOs to receive foreign funds. The Ministry had earlier given a relief up to September 30 to NGOs whose registration was expiring between September 29, 2020 and September 30, 2021. The latest order says the deadline for NGOs certificates or registration expiring between September 29, 2020 and December 31, 2021 could apply for renewal till December 31, 2021.
The FCRA registration is renewed every five years.

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