What is "FCRA"?

Foreign Contribution Regulation Act (FCRA), 2010 (FCRA 1976 has since been repealed)An Act to regulate the acceptance and utilization of foreign contribution or foreign hospitality by certain persons or associations, with a view to ensuring that parliamentary institutions, political associations and academic and other voluntary organizations as well as individuals working in the important areas of national life may function in a manner consistent with the values of a sovereign democratic republic, and for matters connected therewith or incidental theretoAll organizations (Societies/NGO's in India) who want to receive contribution from foreign source MUST get permission from the Ministry of Home Affairs. Foreign source can be organization or individual in any country outside India (excluding NRIs).Organization outside India donating to ---> Organization in India ----> FCRA is MUST for organization in India.Individual outside India donating to ---> Organization in India ----> FCRA is MUST for organization in India.Organization outside India donating to --->Individual in India in rupees or foreign currency ----> FCRA not required. Individual receiving money in India has reporting requirements. (Fellowships - Please note)Individual (Indian Citizen) outside India donating to ---> Individual in India in rupees or foreign currency ----> FCRA not required. Individual receiving money in India has to show the money as income and pay taxes to government of India (if applicable).FCRA 2010 might have reporting requirements for the scenario above if the amount is more than Rs.25,000 unless given as a gift for personal use from a "foreign source". This applies to holders of PIO (Person of Indian Origin) and OCI (Overseas Citizen of India) cardholders too, even if the foreign national is a relative of the individual in India (amount limit is Rs. 1 lakh in this case). But this is not applicable if the foreign donor is an Indian Citizen (NRI)Types of FCRA permissiona) Prior Permission under section 6(1A) (or one time permission)b) Permanent Permission under section 6(1)(a), (longer term registration - 5 years under FCRA 2010)Important Note!Organization in India can apply for full-time registration/permission only if the organization has history of utilizing prior permission towards it's stated goal. History means organization should get prior permission and use the funds over 3-4 years and prove to the MHA that funds received are spent for the purposes they were requested. The organization has to submit accounts (FC-6 form) within 9 months at the end of financial year to MHA. Failure to submit accounts might lead to NOT granting future permissions / cancellation of permanent registration number.Pre-requisites for FCRA -a) The organization be registered under the Societies Registration Act 1860 or the Indian Trusts Act 1882 or section 25 of the Companies Act 1956 etc.b) Been in existence for 3 years and conducted nominal activity in their area using foreign contribution for at least Rs.10 lakhs (audited by a CA) (for full-time registration)c) No foreigners in the 'Executive Committee' of the organizationProhibition on certain persons from accepting foreign contribution :The following persons are prohibited from accepting foreign contribution :(a) Candidate for election;(b) Correspondent, columnist, cartoonist, editor, owner, printer or publisher of a registered newspaper;(c) Judge, government servant or employee of any entity controlled or owned by the government;(d) Member of any Legislature;(e) Political party or its office bearers;(f) Organisations of a political nature as may be specified;(g) Associations or company engaged in the production or broadcast of audio news or audiovisual news or current affairs programmes through any electronic mode or form or any other mode of mass communication;(h) Correspondent or columnist, cartoonist, editor, owner of the association or company referred to in (g) above.However, foreign contribution can be accepted by the above-mentioned persons in the following specific situation :(a) By way of remuneration for himself or for any group of persons working under him;(b) By way of payment in the ordinary course of business transacted in or outside India or in the course of international trade or commerce;(c) As agent of a foreign source in relation to any transaction made by such foreign source with the Central or State Government;(d) 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;(e) From his relative;(f) By way of any scholarship, stipend or any payment of like nature.The Central Government, before granting registration or prior permission, is required to ensure that the person or organisation is in no way working to the detriment of national interest. For example, (and the below-mentioned items are only illustrative) it should not be engaged in :(a) Religious conversion through inducement or force;(b) Creating communal tension or disharmony;(c) Propagation of sedition or advocating violent methods to achieve its ends;(d) Undesirable purposes.Besides, permission can be denied if the acceptance of foreign contribution is likely to affect prejudicially the sovereignty and integrity of India or is against the security, strategic, scientific or economic interest of the State; or is opposed to public interest.This clearly brings out that the Central Government has almost absolute powers to deny registration or prior permission. The manner in which some of the above criteria can be interpreted is extremely subjective and fear is that too much power is placed in the hands of the bureaucracy and this may lead to undesirable consequences