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25 October 2022 – The Indian Express

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Foreign Contribution Regulation Act

About:

  • In order to regulate foreign donations and ensure that they don’t endanger national security, the FCRA was initially established in 1976.
  • Foreign donations must be used in accordance with the Act’s guidelines by recipients.
  • The Union Home Ministry is in charge of its implementation.
  • All associations, NGOs, and organisations that desire to solicit donations from overseas must adhere to the FCRA. Each of these NGOs must re-register with the FCRA every five years.
  • Accountability: International donations may be accepted by recognised groups for social, educational, religious, economic, and cultural reasons. The annual returns that are necessary resemble income tax returns.
  • The law was modified in 2010 in an effort to standardise the acceptance and use of foreign contributions or foreign hospitality by individuals, associations, or businesses and to forbid the use of such contributions for actions harmful to the interests of the country.

Who is not qualified to receive foreign donations?

  • Political party members, judges, jurists, and workers of the government are prohibited from accepting any foreign contributions.
  • After the MHA retroactively changed the FCRA statute through the Finance Bill procedure in 2017, political parties can now collect funding from a foreign corporation’s Indian subsidiary or a foreign company in which an Indian holds 50% or more shares.

What other alternatives do I have to get money from abroad?

  • Getting previous consent is a third option if you want to accept contributions from other sources.
  • It is provided in exchange for funding from a certain source to complete a particular project or activity.
  • An organization must register in accordance with applicable law, such as Section 25 of the Companies Act of 1956, the Indian Trusts Act of 1882, or the Societies Registration Act of 1860, in order to be recognized legally.

When does a registration become canceled or suspended?

  • Financial infractions of an NGO: The MHA has the power to temporarily suspend the FCRA registration for 180 days after reviewing the organization’s finances and taking into account any management-related concerns.
  • NGO Functioning Restriction: Until a decision is made, the association is not permitted to accept any new donations or to spend more than 25% of the funds in the specified bank account.
  • If the government feels that the gift to the NGO would negatively affect “public interest” or “economic interest of the state,” it has the ability to refuse authorization.

What FCRA criticisms are there?

  • Because they help people voice and organise their interests, NGOs are crucial to the democratic process. Democracies would necessarily suffer if democratic freedom of action was significantly restricted.
  • Fundamental Rights Affected: The FCRA limits have a substantial impact on the rights to free speech and association that are protected by the Constitution’s Articles 19(1)(a) and 19(1)(c), respectively.

The Foreign Contribution (Regulation Amendment) Act, of 2020 added what new limitations?

  • At such State Bank of India, New Delhi branches, only accounts recognized by the bank as FCRA accounts are allowed to accept foreign donations.
  • This should be the only account used to accept any foreign currencies.
  • The receivers, however, are permitted to open a second FCRA bank account at any of the aforementioned businesses and transfer the monies received there for use.
  • The authorized bank shall notify the relevant authorities of every overseas transfer, together with its source and mode of receipt.
  • The Act mandates that Aadhaar numbers be used for identification reasons by all officials, directors, and other significant individuals of a person receiving foreign donations.
  • Only 20% of the total received foreign donations may now be utilized for administrative costs, which is a reduction in the amount that was previously allowed. A 50% cap was introduced by the FCRA in 2010.

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