2

Chapter
Foreign Contribution
Regulation Act, 2010
  1. BASIC
Objectives of u FCRA 2010 is enacted to achieve following purposes:
the Act n To prohibit on certain persons from accepting foreign contribution
n To restrict certain persons from accepting foreign hospitality
n To regulate the acceptance of foreign contribution by persons having a
definite cultural, economic, educational, religious or social programme.
Scope and u The basic purpose of FCRA 2010 is to regulate the acceptance and utilisation
coverage 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.
u It covers persons in sensitive government positions, political parties and
persons associated with the news media.

  2. DEFINITIONS
Foreign Definition u It means any donation, delivery or transfer made by a foreign
Contribution – source of :
Section 2(1)(h) n any article excluding any article given as gift or personal
use and value of gift does not exceed Rs. 25,000,
n currency (whether Indian or foreign) or
n any security.

Elements u Definition is very wide both in terms of coverage and the mode
of transfer of the assets covered.
u It covers not only money, but also covers any asset transferred
from a foreign source.
u It covers all modes of receipt of foreign contribution, be it
transfer, gift or delivery in any manner. Even advance or loan
received from a foreign source would be treated as foreign
contribution.

41
42 Foreign Contribution Regulation Act, 2010

Example:
u Fees paid by a foreign student for enrolment to an Indian
educational institution or fees for enrolment to any seminar
or workshop will not be treated as foreign contribution.
Foreign u It includes:
Source - Section n The Government of any foreign country or territory and any agency of
2(1)(j) such Government
n Any international agency, not being the United Nations or any of its
specialised agencies
n The World Bank, International Monetary Fund or such other agency as
the Central Government may, by notification, specify in this behalf
n A foreign company
n Foreign incorporated corporation.
n A company within the meaning of the Companies Act, 1956 or 2013, and
more than one-half of the nominal value of its share capital is held, either
singly or in the aggregate, by one or more of the following, namely:
l The Government of a foreign country
l Foreign citizens
l Corporations incorporated in a foreign country or territory;
l Trusts, societies or other associations of individuals formed or registered
in a foreign country.
l Foreign company

Foreign u It means any offer made by foreign source for providing a person with :
Hospitality - n free cost of travel to any foreign country or
Section 2(1)(i)
n free boarding, lodging, transport or
n free medical treatment.
u Foreign hospitality mean any offer made in cash or kind by a foreign source
for providing a person with the costs of travel to any foreign country or with
free boarding, lodging, transport or medical treatment.

  3. FOREIGN CONTRIBUTION

Person who u Following persons are prohibited from accepting foreign contribution :
can’t accept n Candidate for election
foreign
n Correspondent, columnist, cartoonist, editor, owner, printer or publisher
contribution -
of a registered newspaper
Section 3
n Judge, Government servant or employee of any entity controlled or owned
by the Government
n Member of any Legislature
n Political party or its office bearers
n Organisations of a political nature as may be specified
n Associations or company engaged in the production or broadcast of audio
news or audio-visual news or current affairs programmes through any
electronic mode or form or any other mode of mass communication
n Correspondent or columnist, cartoonist, editor, owner of the association
or company referred to in preceding above.
What kind u Any person can accept foreign contribution in the following specific situation:
of foreign n By way of remuneration for himself or for any group of persons working
contribution is under him
allowed?
n By way of payment in the ordinary course of business transacted in or
outside India or in the course of international trade or commerce
 Foreign Contribution Regulation Act, 2010 43

n As agent of a foreign source in relation to any transaction made by such

foreign source with the Central or State Government
n By way of gift or presentation as a member of any Indian delegation
However, the gift or present should be accepted in accordance with the
rules made by the Central Government
n From his relative
n By way of any scholarship, stipend or any payment of like nature.

Acceptance Who can n An association having a definite cultural, economic, educational,

of foreign accept? religious or social programme can accept foreign contribution
contribution if it has obtained a certificate of registration or prior permission
from the Central Government.
Currency n Any amount received from ‘foreign source’ in rupees or
foreign currency is construed as ‘foreign contribution’ under
law. Such transactions even in rupees term are considered
foreign contribution.
Organisation of n Any organisation of political nature (which is not a political party) cannot
political nature accept any foreign contribution.
cannot accept n Any person cannot accept foreign contribution on behalf of such organisation.
foreign contri-
n Organisation of political nature means such organisations as the Central
bution – Sec-
tion 5 Government may, specify in this behalf by an order in a Gazette.
n Government will frame guidelines specifying grounds on which an organisation
shall be specified as an organisation of a political nature.
n Following can be declared as organisation of a political nature, if their activities
or objectives are for political goals or political actions:
n Trade unions
n Voluntary Action Groups
n Front or Mass Organisations like Students’ Union, Workers’ Union, Youth
forums and Women’s wings of political party
n Organisation of farmers, workers, students, youth based on caste,
community, religion, language or otherwise
Restrictions on u Any association having definite cultural, economic, educational, religious or
social and cul- social programme can accept foreign contribution. Such association should
ture organisa- not be of a political nature.
tion – Sections u To accept foreign contribution by such association, it should either be
8 & 11 registered with Central Government or obtain prior permission of Central
Government.
u Prior permission is for specific donor and specific project while registration
is required if the foreign contribution will be obtained on regular basis.
u Foreign contribution received (received as per above rules) :
n Shall be utilised for purpose for which it is received
n Cannot be used for speculative activities

  4. RESTRICTION ON ACCEPTANCE OF FOREIGN HOSPITALITY – SECTION 6

Who can’t u Following persons can’t accept foreign hospitality without prior permission
accept foreign of Central Government:
hospitality n Member of a Legislature
without
n Office-bearer of a political party
permission
of Central n Judge
Government? n Government servant
n Employee of any corporation or any other body owned or controlled by
the Government
44 Foreign Contribution Regulation Act, 2010

Prior u Above mentioned person is required to obtain prior permission of Central

permission Government to accept foreign hospitality while visiting outside India.
u Application should be made in Form FC-2.
u It must reach to authority two weeks before date of onward journey.

No prior u It is not be necessary to obtain any such prior permission for an emergency
permission in medical aid needed because of sudden illness contracted during a visit outside
emergency India.
u However, after receiving such hospitality the person is required to intimate
within one month from the date of receipt of such hospitality to the Central
Government about source and the manner in which, he received such
hospitality.
u No such intimation is required if the value of such hospitality in emergency
medical aid is up to one lakh rupees or equivalent thereto.

  5. CERTIFICATE OF REGISTRATION

How to u Organisation wants to receive foreign contribution for definite cultural, social,
obtain foreign economic, educational and religious programmes may:
contribution? n Get registration or
- Section 12
n Get prior permission.
u If organisation has proved track record of at least 3 years of functioning in
above specified work, it may receive foreign contribution by registration.
u If organisation has no track record, it may obtain prior permission and obtain
foreign contribution.
Registration u Online application should be made in Form FC-3.
process u Hard copy of application duly signed with chief of organisation is forwarded
- Section 12 to central government within 30 days.
u Central Government grants permission or certificate of registration within
90 days of receipt of application.
Renewal of u Certificate of registration is valid for 5 years.
certificate of u It has to be renewed within last 6 months before its expiry.
registration
u Renewal application is made in Form FC-5.
- Section 12
u Central Government may condone delay for sufficient reasons but such delay
should not be more than 4 months after expiry.
u For multi-year project, renewal application may be made before 12 months
from date of expiry.
Suspension of u Central Government can suspend registration for maximum period up to
certificate of 180 days.
registration u It shall record reason for suspension.
- Section 13
u During suspension, foreign contribution cannot be accepted without prior
permission.
u Organisation can utilise 25% of existing foreign contribution for declared
purpose with prior approval of Central Government.
u Remaining 75% of unutilised foreign contribution can be utilised only after
revocation of suspension.
Cancellation u Certificate of registration can be cancelled for following reason:
of certificate of n If holder has furnished false information
registration
n If holder has violated its terms and conditions or provisions of Act
- Section 14
n If holder has not renewed it
n If holder has not been engaged in any reasonable activity for two consecutive
years
u Certificate cannot be cancelled without giving opportunity of being heard.
 Foreign Contribution Regulation Act, 2010 45

u Such person cannot apply for registration or prior permission for next 3 years
from date of cancellation.
u Bank becomes custodian of an amount of foreign contribution until Central
Government issue further order.

  6. ACCOUNTS, Records and reporting

Bank account – u Foreign contribution should be received in a single bank account through
Section 17 one of the branches of such bank as specified in application form.
Maintenance u Every association should maintain account of foreign contribution received
of accounts & by it and record of its utilisation.
records – u Accounts and records can be audited and inspected by Governmental
Section 19 Gazetted Officer holding Group A post.
Reporting of u Every person who receive foreign contribution shall submit report annually
receipt of For- in Form FC-4 with income and expenditure statement, receipt and payment
eign Contribu- account and balance sheet within 9 months from end of financial year.
tion u Report contain amount of foreign contribution received, bank account in
which it is received and utilisation of fund.
u Report should be certified by Chartered Accountant.

Seizure of u The accounts can be seized, if required.

Records – u The records should be returned, if no proceeding are brought within 6 months
Section 24 from date of seizure.
Transfer of u Foreign contribution received can be transferred to:
Foreign n Other registered person; or
Contribution n Unregistered person,
with permission of Central Government
n Application should be made in form FC-5.

  7. POWER OF CENTRAL GOVERNMENT

Power of u Central Government is empowered to:
Central n Prohibit any person or organisation specified in Section 3, from accepting
Government - any foreign contribution.
Section 9 n Require any person to obtain prior permission before accepting any foreign
contribution.
n Require any person not specified in Section 11, to furnish intimation within
such time and manner as prescribed as to amount of foreign contribution
and source.
u No prohibition is made unless Central Government is satisfied that acceptance
of foreign contribution or foreign hospitality likely to affect prejudicially
sovereignty and integrity of India or public interest or friendly relation with
any foreign state.

  PRACTICE QUESTIONS

Q-1 The object of the Foreign Contribution (Regulation) Act, 2010 is to legalise foreign
donation and hospitality to office bearer of political parties. Comment.
Ans. Statement is not correct. Refer paragraph no. 1
Q-2 What is foreign source?
Ans. Refer paragraph no. 2
Q-3 What is foreign contribution?
Ans. Refer paragraph no. 3
Q-4 Whether earnings from foreign client by person in lieu of goods sold or services rendered
by it is treated as foreign contribution?
Ans. No. Refer definition of Foreign contribution.