CA FINAL (NEW) - ECONOMIC LAW

FOREIGN CONTRIBUTION REGULATION ACT, 2010

COMPILATION

Mtp 1

Mr. Indian received foreign contribution of amount 1.10 lakh from his
relative residing abroad. Examine whether foreign remittances
received by Mr. Indian to be treated as foreign contribution as per
the FCRA, 2010. (3 marks)

Answer

No. As per Section 4(e) of FCRA, 2010 read with Rule 6 of FCRR, 2011,
even the persons prohibited under section 3, i.e., persons not
permitted to accept foreign contribution, are allowed to accept
foreign contribution from their relatives. However, in terms of
Rule 6 of FCRR, 2011, any person receiving foreign contribution
in excess of one lakh rupees or equivalent thereto in a financial
year from any of his relatives shall inform the Central
Government in prescribed Form within thirty days from the
date of receipt of such contribution.

So Mr. Indian shall inform the Central Government of his

receiving of the foreign contribution of 1.10 lakh from his
relative due to receiving of foreign contribution in excess of 1 lakh
rupees.

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Mtp 2

In the light of the Foreign Contribution Regulation Act, 2010, state

whether foreign contribution be received in and utilised from multiple
Bank Accounts? (3 Marks)

Answer

As per section 17 of the FCRA, 2010, the foreign contribution

should be received only in the exclusive single foreign contribution
account of a Bank (also called designated FC account), as
mentioned in the order for registration or prior permission
granted and should be separately maintained by the associations.
However, one or more accounts (called Utilization Account) in one or
more banks may be opened by the association for ‘utilising’ the foreign
contribution after it has been received in the designated FCRA bank
account, provided that no funds other than that foreign contribution
shall be received or deposited in such account or accounts and in
all such cases, intimation is to be given online within 15 days of
opening of such account.

Rtp may 18

(i) Discuss whether foreign remittances received from a relative are

to be treated as foreign contribution as per the FCRA, 2010?

(ii) In the light of the Foreign contribution Regulation Act, 2010, discuss
whether foreign contribution be received in and utilised from multiple
Bank Accounts?

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Answer

(i) No. As per Section 4(e) of the Foreign Contribution Regulation Act,
2010 and Rule 6 of Foreign Contribution Regulation Rules, 2011,
even the persons prohibited under section 3, i.e., persons not
permitted to accept foreign contribution, are allowed to accept
foreign contribution from their relatives. However, in terms of Rule 6 of
Foreign Contribution Regulation Rules, 2011, any person receiving
foreign contribution in excess of one lakh rupees or equivalent
thereto in a financial year from any of his relatives shall inform
the Central Government in prescribed Form within thirty days
from the date of receipt of such contribution.

(ii) The foreign contribution should be received only in the

exclusive single foreign contribution account of a Bank (also called
designated FC account), as mentioned in the order for registration or
prior permission granted and should be separately maintained by
the associations. However, one or more accounts (called Utilization
Account) in one or more banks may be opened by the association for
‘utilising’ the foreign contribution after it has been received in the
designated FCRA bank account, provided that no funds other than
that foreign contribution shall be received or deposited in such
account or accounts and in all such cases, intimation is to be given online
within 15 days of opening of such account.

Rtp nov 18

Mr. Peter, a Member of the Legislature in India, visited Sydney, Australia

to attend World Trade Conference as a representative of
Government of India after obtaining due permission of the Central

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Government as per the provisions of Foreign Contributors
(Regulation) Act, 2010. His expenditure on foreign travel was borne by
Bret Lee Limited, a foreign company. While attending the conference,
Mr. Peter suddenly encountered chest pain and he was immediately
admitted in the nearby hospital for medical care and treatment.
The medical expenses of ` 2,00,000/- was borne by Bret Lee Limited.
Mr. Peter seeks your advice about the procedure to be followed in
the above situation under the provisions of Foreign Contribution
(Regulation) Act, 2010. Please advise suitably.

Answer

Section 6 of the Foreign Contribution (Regulation) Act, 2010 prescribes

that no member of a Legislature shall while visiting any country accept,
except with the prior permission of the Central Government for any
foreign hospitality. Foreign Hospitality [as per section 2(m)] means
any offer not being a purely casual one, made in cash or kind by a
foreign source for providing a person with the costs of travel to
any foreign country with free boarding lodging or medical
treatment. Therefore, prior approval is required from Central
Government for the medical expenses. Provided that it shall not
be necessary to obtain any such permission for an emergent
medical aid needed on account of sudden illness contracted during
a visit outside India, but where such foreign hospitality has been
received, the person receiving such hospitality shall give, within one
month from the date of receipt of such hospitality an intimation to the
Central Government as to the receipt of such hospitality, and the source
from which and the manner in which such hospitality was received by
him.

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As per Rule 7 of Foreign Contribution (Regulation) 2011, foreign
hospitality may be received by member of Legislature in the following
manner.

In case of emergent medical aid needed on account of sudden illness

during a visit abroad, the acceptance of foreign hospitality shall be
required to be intimated to the Central Government within sixty
days of such receipt giving full details including the source,
approximate value in Indian Rupees, and the purpose for which and the
manner in which it was utilized.

Hence, Mr. Peter has to follow the above procedure.

May 18 Sugg Ans

Mr. Satish, General Secretary of a political party received an invitation

from the American

Labour Party. He wants to avail foreign hospitality. Define the

term "foreign hospitality". In the light of the provisions of the
Foreign Contribution (Regulation) Act, 2010, decide whether he can
avail it. Discuss also the exception, if any, under which the provisions of
the said Act may be relaxed. (6 Marks)

Answer

Definition of “Foreign Hospitality”

“Foreign hospitality” means any offer, not being a purely casual one,
made in cash or kind by a foreign source for providing a person
with the costs of travel to any foreign country or territory or with

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free boarding, lodging, transport or medical treatment. [Section 2(i) of
the Foreign Contribution (Regulation) Act, 2010]

Whether Mr. Satish can avail foreign Hospitality?

As per Section 6 of the Act, Office bearers of political parties require

prior approval from Ministry of Home Affairs before accepting
Foreign Hospitality. In the instant case, Mr. Satish, General
Secretary of a political party, before availing foreign hospitality shall
require prior approval from Ministry of Home Affairs.

Exceptions:

It shall not be necessary to obtain any such permission for an

emergent medical aid needed on account of sudden illness
contracted during a visit outside India. But, where such foreign
hospitality has been received, the person receiving such hospitality
shall give an intimation to the Central Government as to the
receipt of such hospitality within one month from the date of
receipt of such hospitality, and the source from which, and the
manner in which, such hospitality was received.

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