FCRA
Thursday, 28th May 2015
Lecture on important provisions of
FCRA at Pune Branch of WIRC
Ministry of Home Affairs
FOREIGNERS DIVISION (FCRA WING)
Foreign Contribution Regulation Act, 2010
The Secretary,
Ministry of Home Affairs,
Foreigners Division,
NDCC-II Building JAI SINGH Road, OFF
Parliament Street, Near Jantar Mantar
New Delhi-110 001
CA. Dr. Dilip V Satbhai B.Com (Hons), LL.M.(First rank), Ph. D.(Law), F.C.A. DISA(icai), DIRM(icai)
Senior Partner – Laws,Taxation & Assurance : M/s. D.V. Satbhai% Co., Chartered Accountants, Pune
Former Chairman of Pune Branch of WIRC and Past co-opted committee member of WIRC and
Central council of The Institute of Chartered Accountants of India
A brief history of FCRA
•
Ancient India is credited with many innovations: the zero, the modern numeral notation
and yoga to name just a few. However, few know that this innovative streak has continued
in modern times as well. For example, in 1976, India became the first nation to invent
controls over international charity.
•
This was in the form of FCRA 1976. This law asked all the NGOs to tell the government
how much funds they receive from foreigners. The law was refined in 1984- NGOs could
not accept foreign funds without government permission.
•
In 2010, the law was reinforced further. Charitable individuals were also brought into the
net. The law was made more rigorous: periodic renewals, restrictions over use of funds,
cap on administrative expenses, were introduced.
•
And the world has followed in India's wake. Similar laws have been passed in Bangladesh,
Indonesia, Egypt, Ethiopia, Russia and Venezuela, among others.
•
Pakistan, Sri Lanka might also follow suit.
Executive Summary – (Annual Report)
•
Top Country: USA has been the top donor country. (Rs: 3,260.22 crores)
•
Top Donor: Compassion International, USA has contributed the maximum amount of
foreign contribution as a single donor organization. (Rs: 99.20 crores)
•
Top Recipient State: The State of Delhi has received the highest amount of foreign
contribution. (Rs: 2017 crores), next TN (Rs: 1557 crores) and AP (Rs: 1177 crores)
•
Top Recipient District: Among the Districts, Bengaluru has received the highest
amount of foreign contribution. (Rs: 774.09 crores), followed by CHENNAI (Rs: 772.67
crores)
•
Top Single Recipient: Among the recipient associations, World Vision of India,
Chennai received the highest amount of foreign contribution. (Rs: 233.74crores)
•
Utilization: The highest amount of foreign contribution was utilized for Establishment
expenses. (Rs: 1,337.15 crores out of Rs: 10,334 crores) – 13% approx
Précis – FCRA – Past to Present (Latest)
•
The total number of associations registered as on 31.03.2015 is
46,149
•
The total receipt of Foreign Contributions reported by 22,702
associations during the year 2011-12 was Rs 11,550 crore
•
The total receipt of Foreign Contribution during 2012-13, as
reported by 16,896 associations till 31.03.2015 is Rs 10,875.06
crore.
Précis – FCRA – Past to Present
•
Yearly – 2000 (registrations) + 500 (prior approvals) applications are
approved on an average (2139 + 393 for the year 2010-2011)
•
As on: 31st MARCH 2012:- registered entities are 43,527
•
Compliance: As such 55% of registered entities only File (New ) Form FC
–6
•
Non-compliance: Still 45% of the registered entities do not file (New)
Form FC-6: quite consistent in non-compliance
•
So far: In 91–92: 1400 crores; In 01-02: 4800 crores; In 11-12:
12000 crores – Annual Growth Rate – 12% approx
•
Majority: Out of 40000+ registrations 85% and above are Christian and
hardly 15% are other religions (Buddhist + Hindu + Muslim + Sikh)
Synopsis - FCRA

Out of 43000+ entities – only 3% (1200+) entities received more
than Rs: 1 crore

From 178 countries – contributions are received: Top 10 are
(US + Germany + UK + Netherlands + Switzerland + Spain +
Canada + France + Belgium)

38th year of inception of since repealed FCRA, 1976

Only one amendment so far in 1985 with retrospective effect from
24th Oct 1984

New FCRA, 2010 and FCRR, 2011 is effective from 1st MAY 2011
onwards.

Spotlight: The new law is not much different from old law. In
fact, they could have effortlessly modified the 1976 Act itself.
Preamble FCRA
• To regulate the acceptance and utilisation of Foreign Contribution
or
Foreign Hospitality
by
certain Individuals/
Associations/
Companies
• To prohibit the acceptance and utilization of Foreign Contribution
or Foreign Hospitality for any activities detrimental to the national
interest.
• FCRA, 1976 – 32 Sections, FCRR, 1976 – 9 Rules
• FCRA, 2010 – 54 Sections, FCRR, 2011 – 24 Rules
Eligible entities under FCRA
• Society – Registered under Societies Registration Act,
1860
• Trust – Governed under Indian Trusts Act, 1882
• Company – Under Section 25 of The Companies Act,
1956
• Individual / HUF – Section 2(m) of FCRA, 2010 –
Defines “Person”.
Home Minister
22nd Home Minister
Shri Raj Nath Singh
Minister of State
for Home Affairs
Shri. KIREN RIJUJU
MINISTER OF STATE
Home Secretary
Shri. ANIL GOSWAMI
Additional
Secretary (Border
Management)
Joint Secretary
(Foreigners)
Significant Changes in FCRA 2010
Section
2(h)
11(3)(iv)
12(d)/12(e)
13
14(e)
Focus
Business / consultancy income not part of foreign contribution [Explanation
3]
MHA may obstruct specific sources / donors
Questionable powers given to department for rejecting an application
Suspension of certificate
‘No reasonable activity’ will result in cancellation
15
MHA can manage all FC assets & funds – [FC Assets Management Authority]
16
Renewal of registration every 5 years
17
Multiple Bank account allowed
22
Disposal of fixed assets on dissolution.
Forms in FCRR, 2011
FC
Rule
1
6
2
7(1)
Subject / Purpose
Intimation to CG of receipt of FC by way of gift from relative
Application for seeking prior permission of the CG to accept foreign hospitality
3
9(1)(a) Application for Registration u/s. 11(1) of FCRA, 2010 for acceptance of FC
4
9(2)(a) Application for Prior Permission u/s. 11(1) of FCRA, 2010 for acceptance of FC
5
12(2)
Application for seeking renewal of Registration Certificate u/s. 13 of FCRA, 2010
6
17(1)
Account of FC for the year ending on the 31st March …..
7
17(3)
Intimation about FC(Articles) Account
8
17(4)
Intimation about FC(Securities) Account
9
18
Intimation to CG of Receipt of FC received by a candidate for Election u/s. 21 of
FCRA, 2010
10
24(1)
Application for seeking permission for transfer of FC to other Registered /
Unregistered persons
Foreign Source
•
Individuals – NRIs and PIOs
•
Government of a foreign country / territory (recognized /
unrecognized)
•
International Agencies (except 104)
•
NPO – Trusts / Foundations / Society, Clubs / Trade Unions
•
Business Organisations – Foreign Company / Subsidiary of a
foreign company / foreign corporation / MNC / Company
controlled by foreigners (>50%)
Individuals
•
How do you know whether a person is foreigner or not? This is based on his or
her citizenship. The country of stay is not important.
•
Foreigner in India: This means that a foreigner staying in India, working in
India, earning money in India, will still remain a foreign source.
•
Indian Outside India: On the other hand, an Indian working abroad, getting
salary from a foreign company, will not be a foreign source. An example of this
category is Mr. Amartya Sen
•
Vice-versa situation: On the other hand, if a foreigner acquires Indian
citizenship, then he or she will become an Indian source. Similarly, if an Indian
becomes a foreign citizen, then he or she will become a foreign source.
•
A common area of doubt is NRIs, PIOs and OCIs
•
Are NRIs a foreign source or Indian source? In
general, NRIs are not a foreign source.
They are settled abroad but are still Indian
citizens.
•
NRI: However, the term NRI is sometimes
used very casually. Therefore, it is best to
confirm this by asking whether the person has
become a foreign citizen. If the answer is ‘no’,
then the funds will be treated as Indian.
•
PIO: Persons of Indian origin are treated as a
foreign source. It does not matter whether
they hold the PIO card or not.
•
OCI: Similarly, OCIs – Overseas Citizens of
India (ex: USA) are treated as a foreign
source.
NRIs,
PIOs
&
OCIs
How about Dual Citizenship? Or
When Indian Citizens are treated as Foreign Source?
•
Who is a DC? The Government is now also seriously talking about
dual-citizenship. This means that an Indian can remain an Indian
citizen, even though he or she becomes a foreign citizen.
•
Will this make a difference so far as FCRA is concerned?
Surprisingly, the answer is ‘no’.
•
Under FCRA, 2010 – u/s 2(1)(j), sub-clause (x) clearly says that a
citizen of a foreign country is a foreign source.
•
In the case of dual-citizenship, a person will be an Indian citizen but
will also be a foreign citizen. Thus, he or she will attract clause (x)
and will be treated as a foreign source!
Can an Indian Company be a Foreign Source?
The following well-known Indian companies are classified as foreign source under FCRA:
•
Bata India Ltd.
•
Britannia Industries Ltd.
•
Hindustan Unilever Ltd.
•
Housing Development Finance Corporation Ltd (HDFC)
•
ICICI Bank Ltd
•
IDFC Ltd
•
ING Vysya Bank Ltd
•
ITC Ltd.
•
Jet Airways (India) Ltd
•
Maruti Suzuki India Ltd
•
MphasiS Ltd.
•
Sesa Goa Ltd.
•
Siemens Ltd.
Watch your step!!!
• Under the Companies Act, an Indian company means a company
formed and registered in India.
• A foreign company means a company formed abroad. Things are
different with FCRA.
• Under FCRA, an Indian company is an Indian source, only if it is
controlled by Indian citizens, companies, etc. If the control passes
into the hands of foreigners, then it becomes a foreign source.
For example, if foreigners hold 51% or more of the shares in an Indian
company, it automatically becomes a foreign source.
FCRA 2010 – Section 2(g) and 2(j)
•
2(1)(g) – Foreign Company
•
2(1)(j) – Foreign Source
•
The FCRA 2010 has defined a foreign company under clause (g)
of Section 2(1), which does not include Indian Companies.
However section 2(1)(j) which defines the term ‘foreign
source’ includes an Indian company under the category
of foreign source if more than 50% of its equity is held
by foreigners.
•
This clause is apparently inserted to exclude Indian companies
having more than 50% of foreign equity holding.
FC Receivers
• Political Parties (Prohibited)
• Organizations' of a political nature (with prior permission)
• Individuals in Public Life
• NGOs
• Private Individuals (no restriction except scholarship)
• Business Organizations' (no restriction)
FCRA 2010 – Business/consultancy income of an NGO
•
In the old FCRA 1976 had no clarity.
•
In FCRA 2010, explanation 3 to section 2(1)(h) excludes income
from business, trade or commerce.
•
This amendment was very necessary but it comes with a lot of potent
controversies and trouble for the NGOs.
•
This section states that any fee or cost against business, trade or
commerce shall not be considered as foreign contribution.
•
In other words, such receipts can be treated as local income.
Explanation 3 to Section 2(1)(h)
• Explanation 3 : Any amount received, by any person from
any foreign source in India, by way of fee (including fees
charged by an educational institution in India from foreign
student) or towards cost in lieu of goods or services
rendered by such person in the ordinary course of his
business, trade or commerce whether within India or
outside India or any contribution received from an agent of
a foreign source towards such fee or cost shall be excluded
from the definition of foreign contribution within the
meaning of this clause;
Section 11(3)(iv)
•
11(3) Notwithstanding anything contained in this Act, the Central
Government may, by notification in the Official Gazette, specify –
•
(iv) the source or sources from which the foreign contribution
shall be accepted with the prior permission of the Central
Government.
Section 12(4) –
Questionable powers! for rejecting an application
•
(d) in case the person being an individual, such individual has neither
been convicted under any law for the time being in force nor any
prosecution for any offence pending against him;
•
(e) in case the person being other than an individual, any of its directors
or office bearers has neither been convicted under any law for the time
being in force nor any prosecution for any offence is pending
against him;
Section 16: Renewal of Certificate
•
The FCRA 2010 provides for renewal of registration of NGOs every 5
years. However, the Act has provided relief to all the existing NGOs for
the first 5 years from the date of enactment.
•
In other words, all existing NGOs have to renew their registration at the
end of the period of 5 years from the date of enactment of FCRA 2010.
•
As per Section 16 of the Act, all NGOs should apply for renewal of the
certificate within 6 months prior to the expiry of the five year period.
Last date for renewal
application
Registration
Expiry date
6 months
Rule 12: Renewal of Registration Certificate
•
What: Every COR to be renewed after the expiry of 5 years from the date of its issue
•
How: Application in Form FC-5
•
When: Six months before the expiry of the COR (for on-going multi-year project twelve
months before the expiry of COR)
•
Fee: Rs: 500/-

Caution: If no application is made within 6 months of expiry of COR, the
validity will be ceased from the date of completion of period of 5 years.
•
Consequences: on deemed expiry, the funds received in bank will be in violation of
FCRA, 2010
•
Once COR ceased, fresh application is to be made in Form FC-3 again…..(careful)
•
Condonation of Delay: Is accepted, if application made with reasonable causes within
4 months from the expiry of COR
Section 17: FC through scheduled bank
•
Section 17 of FCRA 2010 provides that multiple bank accounts can
be opened for the purposes of utilisation provided only one bank
account is maintained for receiving foreign contribution.
•
This amendment provides a great relief to all the NGOs which were
struggling under the arbitrary disallowance of multiple bank accounts
under current FCRA.
Rule 13: Receipt of FC in excess of 1 crore rupees
•
Applicable: Registered entities and for prior permission entities
•
Period: In a financial year
•
Amount: In excess of 1 crore i.e. (Rs: 1,00,00,001 and above only. )
•
Condition: Summary data to be placed in Public domain viz. website of the
NGO, in addition it will also be displayed / uploaded in the website of the
Ministry of Home Affairs.
Rule 6: Intimation of receiving FC from relatives
•
Applicable: Any person receiving
•
Amount: Excess of Rs: 1 Lakh or equivalent from any of his relatives
•
Who: “relative” has the meaning assigned to it in clause (41) of section 2 of the
Companies Act, 1956
•
Form: FC-1 giving PAN of the recipient and Income Tax details of the relative
abroad
•
Time: Within 30 days from the date of receipt

Contradiction:? No

No permission is required to obtain foreign contribution from a relative
under section 4 which is a relaxation. However, rule 6 provides that any
gift from relatives above ` 1,00,000/- in one year shall be intimated to
the FCRA department in Form FC-1.
Rule 24: Procedure to transfer FC to other registered / unregistered entities
 Double Check: Transferor to reflect in Form FC-6 and
Form FC-10 & Recipient to reflect in Form FC-6
 Who: Any person intending to transfer FC who has been
granted COR or PP (exception sub-rule 3)
 Form: FC-10 to be applied by the transferor association
 Limit: If the recipient is a unregistered entity, the limit is 10%
of total value of FC received (in a year?) – sub-rule 2(a)
 Countersign: The application must be countersigned by the
District Magistrate having Jurisdiction over the place where the
transferred
funds
are
sought
to
be
utilized
(transferee
Jurisdiction Magistrate)
 Time to be taken by Magistrate: 60 days of the receipt of
such request
 Control: The donor should not transfer till the approval is
granted.
Caution: Wait till
MHA approval for
transfer
Prior Permission
• Prior-permission is given to NGOs by FCRA department to accept foreign
contribution on a case-by-case basis.
• This permission should be obtained before accepting the contribution.
• However, if NGOs are going to receive foreign funds regularly, they
should get ‘FCRA Registration’, so that they don’t have to apply for
permission again and again.
When Prior Permission is needed?
• An NGO would need prior permission in the following four
situations:
1. The NGO does not have an FCRA number (permanent FCRA
registration);
2. The FCRA number has been cancelled by the Government;
3. The NGO has been asked to get prior-permission under section
10(b);
4. The FCRA number is ‘frozen’ due to change in Governing Body.
Procedure for Prior Permission – Role of CAs
•
Statute: Section 11(2) and Rule 9(2)(a)
•
Who: Individual / HUF / Association / Company
•
Application: Apply in Form FC-4 electronically
•
Necessity: Followed by Hard copy – Duly signed by the Chief Functionary
together with relevant documents (Project report, commitment letter). Hard copy
should reach 30 days from e-filing failing which application will be rejected.
•
Caution: Once delayed have to wait for SIX months for next / fresh application.
No Second application within SIX months
•
Bank Account: An exclusive bank account opened for receipt of FC and one or
more multiple bank accounts later opened and informed later within 15 days. (no
format)
•
Fees: Rs: 1000 /-
•
Appeal: Against rejection of application ca be made u/s. 31
Section 12(4): Conditions to be satisfied for
Prior Permission
i.
is not fititious or benami;
ii.
has not been prosecuted or convicted for indulging in activities aimed at conversion through
inducement or force, either directly or indirectly, from one religious faith to another;
iii.
has not been prosecuted or convicted for creating communal tension or disharmony in any
specified district or any other part of the country;
iv.
has not been found guilty of diversion or mis-utilisation of its funds;
v.
is not engaged or likely to engage in propagation of sedition or advocate violent methods to
achieve its ends;
vi.
is not likely to use the foreign contribution for personal gains or divert it for undesirable
purposes;
vii. has not contravened any of the provisions of this Act;
viii. has not been prohibited from accepting foreign contribution;
 The person making an application for prior permission has prepared a
reasonable project for the benefit of the society for which the foreign
contribution is proposed to be utilised;
FCRA Registration
• FCRA Registration means registration under Foreign Contribution
(Regulation) Act, 2010.
• This is necessary, if an NGO wants to receive any funds, material,
securities etc. from a ‘foreign source’.
How to Register? – Role of CAs
•
Statute: Section 11(2) and Rule 9(1)(a)
•
Who: Association / Section 25 Company
•
Application: Apply in Form FC-3 electronically On-line filing
•
Necessity: Followed by Hard copy – Duly signed by the Chief Functionary together
with relevant documents (Recommendation Certificate, Project Report of Activities,
Audit Report). Hard copy should reach 30 days from e-filing failing which
application will be rejected.
•
Caution: Once delayed have to wait for SIX months for next / fresh application.
No Second application within SIX months
•
Bank Account: An exclusive bank account opened for receipt of FC and one or
more multiple bank accounts later opened and informed later within 15 days. (no
format)
•
Fees: Rs: 2000 /-
•
Appeal: Against rejection of application ca be made u/s. 31
Section 12(4): Conditions to be satisfied for
Registration
i.
is not fititious or benami;
ii.
has not been prosecuted or convicted for indulging in activities aimed at conversion through
inducement or force, either directly or indirectly, from one religious faith to another;
iii.
has not been prosecuted or convicted for creating communal tension or disharmony in any
specified district or any other part of the country;
iv.
has not been found guilty of diversion or mis-utilisation of its funds;
v.
is not engaged or likely to engage in propagation of sedition or advocate violent methods to
achieve its ends;
vi.
is not likely to use the foreign contribution for personal gains or divert it for undesirable
purposes;
vii. has not contravened any of the provisions of this Act;
viii. has not been prohibited from accepting foreign contribution;
•
The person making an application for registration has undertaken reasonable
activity in its chosen filed for the benefit of the society for which the FC is
proposed to be utilised;
Issues in Registration
•
Only registered NGOs (Society, Trust, Section 8 Company)
•
3 years existence (mandatory mention in point No: 3 of Form No FC-3)
•
No foreigners on Governing Body (a unwritten rule, better to avoid from
unnecessary questions)
•
Time frame – 90 Days
•
Reasons for refusal – to be communicated in writing to the applicant –
proviso to section 12(3)
•
Undertaking (New Format of FC-3)
Undertaking (in Form FC-3)
There are 4 items to understand before signing the form:
1. Changes in society: If NGO change the name, address, registration, nature, aims
or objects of the association at any time, they have to inform the FCRA within 30
days.
2. Changes in office bearers: The office bearers of the NGO specified in form FC-3
become ‘frozen’. This means that more than 50% of these office bearers should
continue in office. Otherwise, prior permission for change to be applied.
3. Change in bank: If NGO change the FCRA bank or branch, they will have to apply
to FCRA for permission. This can be done on the proforma available on ministry
website. They will also need to give satisfactory reasons for this change.
4. Temporary suspension: Of credit in FC Bank account till Registration Certificate /
Prior Permission is granted.
List of enclosures attached with the application are:
 Certificate from concerned District Collector / District Magistrate / Department
of State Government/ Ministry or Department of Central Government
 Activity report for past 3 years (or annual reports for 3 years)
 Audited Statements of Account for past 3 years (Balance Sheet, Income and
Expenditure, Receipts and Payments Account along with audit report)
 List of states or districts the NGOs will be working in
 A note on socio-economic background of the beneficiaries and of the region to
be covered
FC-6
•
Statute: Rule 17
•
Who: should file FC-6: Every person who received FC
•
New: Column No: 14 added specifying: Places with address of specific activities
•
When: Due Date within 9 months from end of FY (31st December)
•
Annual: File it each year
•
Along with: IE Account, RP Account and BS
•
FC-7: For articles
•
FC-8: For foreign securities
•
Your attention please: Form FC-6, FC-7 and FC-8 all duly certified by CA
•
Retention Period: 6 years
•
Even ‘NIL’ report is mandatory
Advisory to incur expenditure above Rs:
20000/- by cheques / drafts
 The
Ministry
of
Home
Affairs
has
issued
a
Circular
[F.No.
II/21022/58(136)/2014-FCRA(MU)] dated 21st October 2014 an advisory to
associations registered/ granted prior permission under FCRA to incur
expenditure above Rs: 20000/- by cheques / drafts.
 The government advises all FCRA associations to that items of expenditure
/ payments amounting to Rs: 20000/- or more should be done by cheques
/ demand drafts
 Intensive Scrutiny: It is also informed that records and accounts of
associations indulging in cash payments of Rs: 20000/- or more from FC
designated accounts or Utilisation accounts are likely to require more
intensive scrutiny by government
Penalty for delay in filing of
FC-6
• The Ministry of Home Affairs has issued a notification (Notification
No: 939, 29/04/2013) to the organisations registered under the
Foreign Contribution Regulation Act to submit their FCRA Returns on
time.
• Accordingly any delay in filing of Annual Return will attract penalty
ranging from 2% to 5% of the total foreign contribution received
any NGO during the year.
• The following table describes the penalties on non filing of FCRA
return and officer competent for compounding
#
1.
Offences
Amount of Penalty
Officer competent of
compounding
Non-furnishing of FCRA Penalty of 2% of the amount
The Director or Deputy
return upto 90 days after
Secretary in charge of the
received during
31st December every year
Foreign Contribution
the Financial year or
(Regulation) Act Wing of
Rs.10,000/-, whichever is
Foreigners Division in the MHA.
higher.
2.
Non-furnishing of return Penalty of 3% of the amount
after 91 days upto 180
received during the
st
days after 31 December
Financial year or
every year
The Director or Deputy
Secretary in charge of the
Foreign Contribution
(Regulation) Act Wing of
Rs.20,000/-, whichever is
Foreigners Division in the MHA.
higher.
3.
Non-furnishing of return Penalty of 5% of the amount
after 180 days after
received during the
st
31 December every year
Financial year or
The Director or Deputy
Secretary in charge of the
Foreign Contribution
(Regulation) Act Wing of
Rs.50,000/-, whichever is
Foreigners Division in the MHA.
higher, with Rs. 500/- per
day of delay after 180 days.
Suspension or Cancellation of Registration
•
Section 13 – Suspension of Certificate
•
Section 14 – Cancellation of Certificate
•
Section 15 – Management of FC of person whose certificate has
been cancelled
•
Section 22 – Disposal of Assets created out of FC
•
Section 31 – Appeal
•
Section 32 – Revision of orders
Compounding of Offences
• FCRA 2010 has introduced a provision for compounding of offences.
This allows the Government to enter into a compromise with the
offending entity. They can pay a compounding fee, instead of facing
court proceedings, and possibly a fine and imprisonment
• What can be compounded?: In theory, all the offences under the
Act are eligible for compounding. However, only notified offences
can be compounded in practice.
• Repeated Offence: If a similar offence is repeated by a person
within 3 years, it cannot be compounded again
Compounding of Offences…
• Caution: Secondly, compounding is feasible only before prosecution
is started. If a complaint has been filed in the court, then
compounding is no longer an option.
What is not an Offence?:
1.
What happens if the money is transferred electronically into a person’s account,
without their consent? This probably does not constitute an offence – till the
time the person starts using the money.
2.
If the offence is for not filing a document or filing it incorrectly? In such a case,
the person may also be asked to file the missing document etc. before the
offence is compounded
Procedure for Compounding
• How: Make an application on plain paper for this. The application
should be addressed to The Secretary, Ministry of Home Affairs.
The application will be decided by the Director or Deputy Secretary.
• Fees: An application fee of Rs.1000 is to be paid for this. This is in
addition to the penalty that may be levied if the Government agrees
to compound the offence.
#
1.
Offences
Accepting a cheque or draft for
foreign contribution without
registration or prior permission
Amount of Penalty
Rs. 10,000 or 2% of the foreign
contribution involved,
whichever is higher.
#
1.
Offences
Accepting a cheque or draft for
foreign contribution without
registration or prior permission
2.
Depositing a cheque or draft for
foreign contribution without
registration or prior permission
Amount of Penalty
Rs. 10,000 or 2% of the foreign
contribution involved,
whichever is higher.
Rs. 25,000 or 2% of the foreign
contribution involved,
whichever is higher.
#
1.
Offences
Accepting a cheque or draft for
foreign contribution without
registration or prior permission
2.
Depositing a cheque or draft for
foreign contribution without
registration or prior permission
3.
Accepting and using foreign
contribution for specified
purpose without registration or
prior-permission
Amount of Penalty
Rs. 10,000 or 2% of the foreign
contribution involved,
whichever is higher.
Rs. 25,000 or 2% of the foreign
contribution involved,
whichever is higher.
Rs. 1,00,000 or 5%, whichever is
higher.
#
1.
Offences
Accepting a cheque or draft for
foreign contribution without
registration or prior permission
2.
Depositing a cheque or draft for
foreign contribution without
registration or prior permission
3.
Accepting and using foreign
contribution for specified
Amount of Penalty
Rs. 10,000 or 2% of the foreign
contribution involved,
whichever is higher.
Rs. 25,000 or 2% of the foreign
contribution involved,
whichever is higher.
Rs. 1,00,000 or 5%, whichever is
higher.
purpose without registration or
prior-permission
4.
Accepting foreign contribution in kind Rs. 10,000 or 2%, whichever is
without registration or prior
permission
higher.
Chart showing
Consequences of violating provisions
of
Foreign Contribution Regulation Act
2010
SR.No
FCRA
Nature of
offence
Contents
Punishment
1
Sectio
n
33:
Making of
false
statement
,
declaratio
n or
delivering
false
accounts:
Any person, subject to
this Act,
who knowingly,
(a) gives false intimation
under
sub-section (c) of section
9 or
section 18; or
(b) seeks prior
permission or
registration by means of
fraud,
false representation or
concealment of material
fact,
shall, on conviction by a
court,
be liable to
imprisonment
for a term which may
extend to three years
or
with fine or with
both.
2
Section
34
Penalty
for
article or
currency
or
security
obtained
in
contraven
tion
of Section
10:
If any person,
on whom any
prohibitory
order has been
served
under
section 10, pays,
delivers,
transfers
or
otherwise
deals with, in
any manner
whatsoever, any
article or
currency
or
security,
whether
Indian
or
foreign, in
contravention
of
such
prohibitory
Order
he shall be punished with
imprisonment for a term which
may extend to three years, or with
fine,
or
with
both;
and
notwithstanding
anything
contained in the Code of Criminal
Procedure, 1973, the court trying
such contravention may also
impose on the person convicted an
additional fine equivalent to the
market value of the article or the
amount of the currency or security
in respect of which the prohibitory
order has been contravened by
him or such part thereof as the
court may deem fit.
3
Section
35
Punishment
for
contravention
of any
provision of
the Act:
Whoever accepts, or assists
any person, political party or
organization in accepting, any
foreign contribution or any
currency or security from a
foreign source, in
contravention of any
provision
of this Act or any rule or
order
made there under,
shall be
punished with
imprisonment
for a term
which may
extend to five
years, or with
fine, or
with both.
4
Section
36
Powers to
impose
additional
fine where
article
or currency
or
security is
not
available for
confiscation
:
Notwithstanding anything
contained in the Code of
Criminal Procedure, 1973,
the court trying a person,
who, in relation to any
article or currency or
security, whether Indian or
foreign, does or omits to
do any act which act or
omission would render
such article or currency or
security
liable
to
confiscation under this
Act, may, in the event of
the conviction of such
person for the act or
omission aforesaid,
impose on such person a
fine not exceeding five
times the value of the
article or currency or
security or one thousand
rupees, whichever is
more, if such article or
currency or security is not
available for confiscation,
and the fine so imposed
shall be in addition to any
other fine which may be
imposed on such person
under this Act.
5
Section
37
Penalty for
offences
where
no separate
punishment
has been
provided:
Whoever fails to comply
with any
provision of this Act for
which no separate
penalty has been
provided in this Act
shall be punished with
imprisonment for a
term which may extend
to one year, or with fine
or with both.
6
Section
38
Prohibition
of
acceptance
of
foreign
contribution:
Notwithstanding
anything contained in
this Act, whoever, having
been convicted of any
offence under section 35
or section 37, in so far as
such offence relates to
the acceptance or
utilization of foreign
contribution, is again
convicted of such offence
shall not accept any
foreign contribution for
a period of three years
from the date of the
subsequent conviction.
#
Offences
Amount of Penalty
1
Accepting a cheque or draft for foreign Rs. 10,000 or 2% of the
contribution without registration or prior foreign
contribution
permission
involved, whichever is
higher.
2
Depositing a cheque or draft for foreign
contribution without registration or prior
permission
3
Accepting and using foreign contribution for
Rs.1,00,000
or
5%,
specified purpose without registration or whichever is higher.
prior permission
Rs. 25,000 or 2% of the
foreign
contribution
involved, whichever is
higher.
Section 13
Suspension of Certificate
•
Who: The Central Govt. can suspend a registration upto 180 days by order in writing
recording the reasons.
•
Caution: During this period, FC cannot be accepted and utilized or can be accepted and
utilized only as per terms and conditions specified by CG.
•
Rule 14: (FCRR, 2011): 25% may be spent with prior approval, 75% shall be utilised
after revocation of suspension of certificate of registration.
•
Only Hope: CG can revise the order under section 32 of FCRA
•
Tip: No appeal is provided against the order of suspension, but obviously writ petition
can be filed.
Section 14: Cancellation of Certificate
•
Reasons: Registration can be cancelled by CG after making enquiry and after giving
opportunity of hearing
•
1.
Providing false information
2.
Violating the terms and conditions like filing of return, etc.
3.
Acting against public interest
4.
Violating the Act or the Rules
5.
No reasonable activity for 2 years or has become defunct
Caution: Once certificate has been cancelled, they shall not be eligible for registration
or grant of prior permission for a period of 3 (three) years from the date of
cancellation of such certificate.
•
Procedure: CG can revise the order u/s. 32 of FCRA, Application to be made within 1
year from the date of communication of order. (Delay can be condoned, no time limit for
Condonation)
•
Appeal against the order of cancellation lies with High Court under section 31(2) of FCRA
(within 60 days).
Section 31(2): Right to Appeal
• Section 5: Listing as organisation of Political Nature
• Section 12(2): Refusal to grant certificate of Registration or Prior
Permission
• Section 14(1): Cancellation of Certificate of Registration
Who can appeal and what kind of orders are appealable?
• An organization declared to be an organization of political nature
• A person denied permission to accept foreign hospitality
• A person or association denied prior-permission or FCRA registration
• A person whose FCRA registration certificate has been cancelled
 Appeals against above orders must be made within 60 days of receipt of order. These appeals
are to be made in the High Court
Section 32: Revision of Orders
•
Who: The Central Government may, either of its own motion or on an application
for revision by the person registered under this Act
•
Limitation on suo-moto revision – 1 year: The Central Government shall not
of its own motion revise any order under this section if the order has been made
more than one year previously.
•
Revision or Appeal: The CG shall not revise any order where an appeal against
the order lies but has not been made and the time within which such appeal may
be made has not expired or such person has not waived his right of appeal or an
appeal has been filed under this Act.
•
How: Plain Paper (No format)
•
Fee: Rs: 1000/- (in Demand Draft / Banker’s Cheque in favour of “Pay & Accounts
Officer”, MHA, payable at New Delhi)
•
Where: The Secretary, MHA, GOI, New Delhi.
Rule 15: Custody of FC in respect of person whose
certificate has been cancelled
•
With Whom: The amount of FC lying unutilised in the exclusive FC bank
account of a person whose certificate of registration has been cancelled shall
vest with the banking authority concerned till the CG issues further
directions. (Account will be freezed)
•
Caution if transferred: If a person whose certificate of registration has
been cancelled transfers/has transferred the FC to any other person, the
provisions of sub-rule (1) of this rule shall apply to the person to whom the
fund has been transferred.
Section 15: FCAMA – FC Asset
Management Authority
•
FCRA 2010 provides that after cancellation of registration certificate
all the FC and assets thereof shall vest with such authority as
may be prescribed.
•
The government authorities shall take charge of the foreign
contribution and the FC assets till the registration is restored.
•
This seems to be a very harsh provision because it is open ended.
•
Outcome: In other words FC assets created since the inception of
the organisation can be implicated if the registration certificate is
cancelled.
Section 22: Disposal of assets created out of FC
•
Where any person who was permitted to accept FC under this Act,
ceases to exist or has become defunct,
•
All the assets of such person shall be disposed of in accordance with
the provisions contained in any law for the time being in force under
which the person was registered or incorporated, and
•
In the absence of any such law, the CG may, having regard to the
nature of assets created out of FC received under this Act, by
notification, specify that all such assets shall be disposed of by
such authority, as it may specify, in such manner and procedure as
may be prescribed.
Role of CAs
in
FCRA, 2010 & FCRR, 2011
Role of CAs
1.
Charter for the CA:
•
To Verify whether associations are eligible to receive FC
•
To Guide in submission of application for registration / prior permission
•
To Ensure that the associations receives and utilizes the FC through its exclusive
Bank Accounts
•
To Assist in proper maintenance of Books of Accounts
•
To Ensure that the annual returns are prepared in accordance with the provisions
2.
Maintenance of Accounts; Audit of Accounts
3.
Representations – seizure / confiscation
4.
Filing of Returns
5.
Preparation of FCRA Balance Sheet (Cash Basis?)
6.
Certification & Secretarial Practice
Thank You !!