Thursday, 28 November 2013

Foreign Contribution Regulation Act (FCRA) in India.

Foreign Contribution Regulation Act is defined as donation received from foreign sources. FCRA was enacted through Foreign Contribution Regulation Act 1976, it was redefined and changed in 2010 as the previous act was unable to keep the pace with the India’s Economic growth. The basic objective of this FCRA Act, 2010 as mentioned in the preamble of this Act is “to consolidate the law to regulate the acceptance and utilisation of foreign contribution or foreign hospitality by certain individuals or associations or companies and to prohibit acceptance and utilisation of foreign contribution or foreign hospitality for any activities detrimental to the national interest and for matters connected therewith or incidental thereto.”
As per FCRA 1976 and FCRA 2010, any individual or organisation carrying out a definite cultural, educational, economic, religious or social programme is required to be registered with the Central Government or obtain prior permission of the Central Government before accepting any foreign contribution. Such an NGO cannot in turn transfer the foreign contribution received by it to any other person unless such other person is also registered or has obtained prior permission under FCRA.
The process of registration is strict and loaded with bureaucratic process. Unless the NGO has a track record of at least 3 years, as a matter of practice, registration has generally not been granted under FCRA 1976. As per FCRA 2010, the requirement of having a track record is now codified, as this Act specifically provides that before granting registration, the Central Government shall verify whether the NGO has undertaken reasonable activity in its chosen field for the benefit of society. If the NGO is not able to fulfil the requisite conditions for registration, then the only alternative would be to apply for prior permission, which would be valid only for the specific purpose and source for which it is obtained. Even for prior permission the NGO would have to show that it has a done some reasonable projects for the benefit of society for which the foreign contribution is proposed to be utilised.
Previous FCRA Act 1976 was simpler as per as registration is concerned whereas under FCRA 2010, it is specified that application for registration or prior permission should, after inquiry, be ordinarily granted within 90 days of the application or the Government should communicate the reasons for not granting the same.

But the FCRA registration is valid only for 5 years after that the organization should apply for a fresh registration again. Foreign funding should be received in a separate bank account and the books of accounts to be maintained properly for the said transactions which later should be sent to Central Government with every transaction details of foreign contributions. They should also give details of funds routed through them to a specific authority.

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