24th January 2021

Confidant Classes

A Premier Judicial Service Coaching

What is FCRA ?

Recently, licenses of 13 non-governmental organizations (NGOs) were suspended this year in 2010 under the Foreign Payments Regulations (FCRA). Their FCRA certificates were suspended and bank accounts were frozen. The Department of the Interior (MHA) reported receiving “serious negative comments” about the work of various NGOs under the FCRA in tribal areas. The licenses of at least two NGOs working in Jharkhand have been suspended.

What is FCRA?

The FCRA regulates foreign donations and ensures that such donations do not adversely affect internal security. The first law was introduced in 1976 and amended in 2010 with the adoption of a series of new measures to regulate foreign donations.

  • The FCRA applies to all associations, groups and NGOs that intend to receive foreign donations. All of these NGOs must register with the FCRA.
  • The registration is originally valid for five years and can be renewed later if you comply with all the rules. Registered associations can receive foreign payments for social, educational, religious, economic and cultural purposes.
  • Filing annual returns is mandatory for income taxes. In 2015, the MHA announced new rules under which NGOs pledged that the acceptance of foreign funds is unlikely to negatively affect the sovereignty and integrity of India or friendly relations with any other state or upset community harmony.
  • She also said that all these NGOs must use accounts with national or private banks that have central banking systems so that security agencies can access them in real time.

Who cannot receive foreign donations?

Members of the legislature and political parties, government officials, judges, and people in the media are prohibited from receiving foreign aid. In 2017, however, through the Finance Bill route, the MHA amended the FCRA Act, repealed in 1976, which paved the way for political parties to obtain funding from a foreign company or an Indian subsidiary of a foreign company, where the Indian has at least 50%.

  • According to legal experts, the change was based on allegations that the Bharatiya Janata Party and Congress had received foreign funding for political activities from the Vedanta Group in the UK between 2004 and 2012.), a public advocacy group, had filed a petition. public interest against both parties in Delhi High Court in 2013 for violating FCRA rules by accepting foreign funds. Both parties challenged a higher court decision that the donations were classified as illegal in 2014 and transferred to the Supreme Court. The petitions were withdrawn following a retroactive amendment by the FCRA.

How else can you get foreign financing?

Another way to obtain payments abroad is to apply for a prior permit. It is awarded to obtain a certain amount from a particular donor for certain activities or projects. However, the association must be registered under rules such as the Business Registration Act of 1860, the Indian Trusts Act of 1882 or section 25 of the Business Act of 1956.

  • In addition, a letter of commitment from a donor is required. foreigner to specify quantity and purpose. In 2017, the MHA suspended the FCRA, one of India’s largest public health advocacy groups, the FCRA, which used “foreign funds” to represent parliamentarians in the fight against smoking. After several representations by PHFI to the government, it was classified as “prior authorization”.

When is registration suspended or canceled?

The MHA may inspect the accounts and, upon receiving damaging information about the association’s activities, suspend the FCRA registration for an initial period of 180 days. Until a decision is made, the association cannot receive new donations and cannot use more than 25% of the amount available in a particular bank account without permission from the MHA. The MHA may withdraw an ineligible organization registration or “prior authorization” registration for a period of three years from the withdrawal date.

Have there been outages in the past?

According to the MHA, as of 2011, 20,664 NGOs were terminated due to violations such as misuse of foreign contributions, failure to file mandatory annual returns, and diversion of foreign funds for other purposes.

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