Summary : The Foreign Contribution (Regulation) Act, 2010 (FCRA) regulates the acceptance and utilisation of foreign contribution and foreign hospitality by specified individuals, associations and companies, while prohibiting their acceptance or utilisation for activities detrimental to national interest. The Act applies throughout India, to Indian citizens outside India, and to overseas branches or subsidiaries of companies or bodies corporate registered or incorporated in India. Under Section 2(1)(h), “foreign contribution” includes the donation, delivery or transfer by a foreign source of specified articles (subject to the prescribed gift value exemption for personal use), any Indian or foreign currency, and securities, including foreign securities as defined under the Foreign Exchange Management Act, 1999. The term “person” includes an individual, Hindu undivided family, association and a company registered under Section 25 of the Companies Act, 1956 (now Section 8 of the Companies Act, 2013). A person may receive foreign contribution if it has a definite cultural, economic, educational, religious or social programme, obtains FCRA registration or prior permission from the Central Government, and is not prohibited under Section 3. Section 3 prohibits specified categories, including election candidates, public servants, legislators, political parties, certain media entities and other notified persons, from receiving foreign contribution.
FCRA Series #1: The Foundation of FCRA – Foreign Contribution & Eligibility
Whether you’re an NGO, trust, society, Section 8 company, donor, or professional, understanding the basics of FCRA is essential before dealing with any foreign contribution. Here in this article we will understand what is a foreign contribution.
The Act has been enacted by the Parliament to consolidate the law to regulate the acceptance and utilization of foreign contribution or foreign hospitality by certain individuals or associations or companies and to prohibit acceptance and utilization of foreign contribution or foreign hospitality for any activities detrimental to national interest and for matters connected therewith or incidental thereto. The flow of foreign contribution to India is regulated under the Foreign Contribution (Regulation) Act,2010 and the Foreign Contribution (Regulation) Rules, 2011 (FCRR 2011) read with other notifications/orders etc., as issued there under from time to time.
As per Section 1(2) of FCRA, 2010, the provisions of the act shall apply to:
- i. Whole of India
- ii. Citizens of India outside India; and
- iii. Associate Branches or subsidiaries, outside India, of companies or bodies corporate, registered or incorporated in India
As defined in Section 2(1)(h) of FCRA, 2010, “foreign contribution” means the donation, delivery or transfer made by any foreign source ─
- (i) of any article, not being an article given to a person* as a gift for his personal use, if the market value, in India, of such article, on the date of such gift is not more than such sum as may be specified from time to time by the Central Government by the rules made by it in this behalf.
- (ii) of any currency, whether Indian or foreign;
- (iii) of any security as defined in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956 and includes any foreign security as defined in clause (o) of Section 2 of the Foreign Exchange Management Act,1999.
* In terms of FCRA, 2010 “person” includes ‒
- (i) an individual;
- (ii) a Hindu undivided family;
- (iii) an association;
- (iv) a company registered under section 25 of the Companies Act,1956 (now Section 8 of Companies Act, 2013).
Following “Person” can receive foreign contribution subject to the conditions as mentioned below:-
- a) It must have a definite cultural, economic, educational, religious or social programme.
- b) It must obtain the FCRA registration/prior permission from the Central Government
- c) It must not be prohibited under Section 3 of FCRA, 2010
As defined in Section 3(1) of FCRA, 2010, the following are prohibited to receive foreign contribution:
- (a) candidate for election;
- (b) Correspondent, columnist, cartoonist, editor, owner, printer or publisher of a registered newspaper;
- (c) Public Servant, Judge, Government servant or employee of any corporation or any other body controlled or owned by the Government;
- (d) Member of any legislature;
- (e) Political party or office bearer thereof;
- (f) organization of a political nature as may be specified under sub-section (1) of Section 5 by the Central Government.
- (g) association or company engaged in the production or broadcast of audio news or audio visual news or current affairs programmes through any electronic mode, or any other electronic form as defined in clause (r) of sub-section (1) of Section 2 of the Information Technology Act, 2000 or any other mode of mass communication;
- (h) Correspondent or columnist, cartoonist, editor, owner of the association or company referred to in point (g).
- (i) Individuals or associations who have been prohibited from receiving foreign contribution.
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