In India, receipt of foreign contribution is regulated by Foreign Contribution Regulations Act, 2010 (FCRA). The annual inflow of foreign contribution has almost doubled between the years 2010 and 2019, but many recipients of foreign contribution have not utilised the same for the purpose for which they were registered or granted prior permission under the said Act. Many of them were also found wanting in ensuring basic statutory compliances such as submission of annual returns and maintenance of proper accounts. This has led to a situation where the Central Government had to cancel certificates of registration of more than 19,000 recipient organisations, including non-Governmental organisations, during the period between 2011 and 2019.

In order to curb the malpractice and strength the administration of foreign contribution, the Government has now introduced a bill to amend the FCRA.  

Some of the significant aspects covered in the newsflash include:

  • Prohibition on Inter-se transfer of Donations – Application to be for own purpose – Cannot be transferred
  • Cap on Administrative Expenditure reduced from 50% to 20%
  • Manner of Receipt of foreign contribution – Receive foreign contribution only in an A/c designated as "FCRA Account" maintained with such branch of SBI at New Delhi, as the Central Government may specify
  • Public Servants prohibited from receiving foreign contribution  - Public Servants also includes those in employment with Government (Refer section 21 of Indian Penal Code for definition of “Public Servant”
  • Inquiry before renewal of FCRA – Provision for Inquiry prior to renewal proposed, which was not there earlier
  • Identification documents for office bearers or Directors or other key functionaries – Aadhaar number for Resident Office bearers / Directors or other key functionaries & in case of foreigners, copy of passport or OCI card.
  • Suspension of registration – The period for which registration can be suspended by MHA has been proposed to be increase
  • Surrender of Registration Certificate – Newly proposed provision for voluntary surrender of Registration Certificate

This newsflash provides information about the key amendments proposed by the said bill vis-à-vis the present corresponding provisions.

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