FCRA is an abbreviation for the "Foreign Contribution Regulation Act." It is a law enacted by the Government of India that governs receiving financial aid or contributions from foreign nations.
The Indian government enacted FRCA on 31 March 1976, under the Ministry of Home Affairs. Additionally, its primary motive is to limit the financial influence on domestic politics. Therefore, the provision of legislation for genuine donations is simple to follow.
Moreover, filing yearly returns is the only requirement for regular compliance. Furthermore, the ministry has a special division to check assent with the Foreign Funding Registration.
Features of FCRA
To ensure accurate regulation of foreign exchange, the FCRA has the following provisions:
- Associations, groups, or NGOs must follow all the guidelines of the FCRA while seeking foreign donations. Most importantly, they need to be registered with the FCRA.
- Groups accepting foreign funding need to renew their FCRA registration every five years.
- They must also fill out all transaction details while filing for income tax returns.
- Furthermore, all organisations must provide access to their financial statements to the national security authorities. Therefore, the a need to maintain an account with a federal or private bank that offers essential banking services.
- No political party members, legislators, media personnel, judges, and government officials can accept foreign funding.
Requirements of the FCRA
The major reason for FCRA’s implementation is believed to be the national interest and considerations associated with it. Moreover, to interpret the clause, the 2013 Companies Act and 2014 Companies Rules are utilised as legitimacy to various legal requirements. However, to regulate the financial affairs of NGOs, the Foreign Contribution Regulation Act is required.
The FRCA’s vision is to tune into a variety of programmes. These include assisting volunteer groups in protecting their fundamental rights, Indian citizens’ interests, public health at work, and environmental safety.
Furthermore, the following points elaborate on FRCA’s requirements in simple terms:
- Safeguarding India's sovereign rights.
- Maintaining the independence of legislature's election.
- Retaining and improving connections with foreign countries.
- Preserving peace among religious, social, regional, and linguistic groups.
Recent FCRA Amendments
The FCRA was significantly amended in 2020 to improve foreign exchange regulation. Subsequently, the Indian government made the following changes to FCRA:
- The amendment restricted public employees from accepting foreign donations.
- Furthermore, people or organisations who are prohibited from getting funds are barred from sending donations to other nations.
- Moreover, all the individuals receiving foreign donations must have an Aadhaar number to prove their identity.
- The state can use a maximum of 20% of the foreign funds to cover administrative costs.
- One can accept foreign donations only to FCRA-designated accounts that are linked to SBI branches in New Delhi.
- A person can renounce the central government's certificate of registration under the FCRA.
Eligibility Criteria to Accept Foreign Contributions
According to the FCRA, individuals and organizations need to meet certain prerequisites to accept foreign donations. These requirements are mentioned below:
- Organisations operating for specific cultural, social, educational, economic, or religious activities must be registered with the Home Ministry.
- Individuals or organisations need a separate bank account to receive overseas donations. Additionally, they must follow a timely audit of the account by a Chartered Accountant. Further, they need to present the details of the audit to the Home Ministry every year.
In addition to eligibility requirements, the FCRA has barred certain individuals and public bodies from getting foreign donations. These include the following:
- Judge, cartoonist, editor, and publisher of a licensed newspaper.
- A participant in government elections.
- Any member of the legislature.
- Employees of the government or any corporation.
- Political organisations.
Suspension or Cancellation of FCRA Registration
If authorities feel that a registered organization is not operating legally, they have the right to cancel their registration. However, they follow the prescribed format for notifying the concerned body.
The following are some of the reasons that may result in the suspension of the license:
- The organisation is not abiding by the regulations of the FCRA.
- Since it is essential for all organisations to file an annual return by the due date, any delay in this regard leads to the cancellation of registration.
- Additionally, cancellation is possible if the organisation is found guilty of misconduct in its operations.
- The money collected through foreign donations is not used to meet the primary goal of the organisation. This includes the purpose mentioned in the FCRA registration application.
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