FCRA

CA. A. JOSEPH ARPUTHARAJ, BBA., FCA., GCMA., LLB., DISA (ICAI).,

PANRUTI, CUDDALORE DISTRICT
9842677056
 FCRA
FCRA STORM (புயல்)
ANOTHER FATAL BLOW TO INDIAN NGOS
CHOKING NGO SECTOR WITH FCRA AMENDMENT
CRACKDOWN ON NGOS
 FOREIGN CONTRIBUTION REGULATION ACT,
1976
• THIS ACT WAS ENACTED IN THE YEAR 1976, DURING EMERGENCY BY THE THEN
PRIME MINISTER INDIRA GANDHI.
• IT WAS ENACTED TO REGULATE THE ACCEPTANCE AND UTILISATION OF FOREIGN
CONTRIBUTION OR FOREIGN HOSPITALITY BY CERTAIN CATEGORIES OF PERSONS
OR ASSOCIATIONS
• RECEIVED THE ASSENT OF THE PRESIDENT ON MARCH 31, 1976, PUBLISHED IN
THE GAZETTE OF INDIA, EXTRA., PART II, S. 1, DT. 31ST MARCH, 1976, PP. 445-58.
 ISSUES NOT ADDRESSED IN THE ORIGINAL
ACT

THE DEFINITION OF "POLITICAL PARTY", AS CONTAINED IN THE ACT, DID NOT

INCLUDE POLITICAL PARTIES IN THE STATE OF JAMMU AND KASHMIR AND
POLITICAL PARTIES WHICH ARE NOT COVERED BY THE ELECTION SYMBOLS
(RESERVATION AND ALLOTMENT) ORDER, 1968.
 ISSUES NOT ADDRESSED IN THE ORIGINAL
ACT

SECTION 6(1) OF THE ACT PROVIDED THAT EVERY ASSOCIATION HAVING A

DEFINITE CULTURAL, ECONOMIC, EDUCATIONAL, RELIGIOUS OR SOCIAL
PROGRAMME, MAY RECEIVE FOREIGN CONTRIBUTION, BUT WAS REQUIRED TO
SEND INTIMATION REGARDING SUCH RECEIPT TO THE CENTRAL GOVERNMENT
WITHIN SUCH TIME AND IN SUCH MANNER TO BE PRESCRIBED BY THE RULES
MADE UNDER THE ACT.
IT HAD BEEN OBSERVED THAT A NUMBER OF ASSOCIATIONS HAD NOT SENT SUCH
INTIMATION.
 ISSUES NOT ADDRESSED IN THE ORIGINAL
ACT

THE ACT ONLY ENABLED THE CENTRAL GOVERNMENT TO INSPECT THE ACCOUNTS
OF CERTAIN PERSONS OR ASSOCIATIONS. IT DID NOT PROVIDE FOR ANY POWER TO
AUDIT THE ACCOUNTS OF ANY ORGANIZATION IF IT IS CONSIDERED NECESSARY
TO DO SO
 FOREIGN CONTRIBUTION REGULATION
(AMENDMENT) ACT, 1985
• RECEIVED THE ASSENT OF THE PRESIDENT ON JANUARY 31, 1985 AND PUBLISHED
IN THE GAZETTE OF INDIA, EXTRA., PART II, S. 1, DT. 1ST FEBRUARY, 1985, PP. 1-4.
 FOREIGN CONTRIBUTION REGULATION
(AMENDMENT) ACT, 1985
• THE DEFINITION OF "FOREIGN CONTRIBUTION", AS CONTAINED IN THE ACT,
INCLUDED ONLY THE DONATION, DELIVERY OR TRANSFER MADE BY ANY
FOREIGN SOURCE. IT DID NOT INCLUDE DONATION OR CONTRIBUTION RECEIVED
BY AN ORGANISATION FROM ANOTHER ORGANISATION FROM OUT OF FOREIGN
CONTRIBUTION RECEIVED BY THE LATTER ORGANISATION.
• THE DEFINITION WAS ENLARGED TO INCLUDE SUCH CONTRIBUTIONS ALSO FOR
THE PURPOSE OF TRACING THE UTILISATION OF FOREIGN CONTRIBUTION DOWN
THE LINE.
 FOREIGN CONTRIBUTION REGULATION
(AMENDMENT) ACT, 1985
• COMPULSORY REGISTRATION
• SPECIALLY FOR THE PURPOSE
• THE AMOUNT OF FOREIGN CONTRIBUTION RECEIVED BY THEM,
• THE SOURCE FROM WHICH AND
• THE MANNER IN WHICH SUCH FOREIGN CONTRIBUTION WAS RECEIVED BY THEM, ETC.
• WHERE ANY REGISTERED ASSOCIATION DOES NOT ACCEPT FOREIGN CONTRIBUTION THROUGH THE SPECIFIED BRANCH OF A
SPECIFIED BANK OR DOES NOT SUBMIT INTIMATIONS, ETC., IN TIME, THE CENTRAL GOVERNMENT HAS BEEN EMPOWERED TO
DIRECT THAT SUCH ASSOCIATION SHALL NOT ACCEPT FOREIGN CONTRIBUTION WITHOUT PRIOR PERMISSION.
• A NEW SUB-SECTION (1-A) HAD ALSO BEEN INCLUDED IN THIS SECTION TO PROVIDE THAT AN ASSOCIATION NOT SO REGISTERED
WITH THE CENTRAL GOVERNMENT SHALL OBTAIN PRIOR PERMISSION OF THE CENTRAL GOVERNMENT BEFORE ACCEPTING ANY
FOREIGN CONTRIBUTION AND ALSO GIVE INTIMATION TO THE CENTRAL GOVERNMENT AS TO THE AMOUNT OF CONTRIBUTION
RECEIVED BY IT.
FOREIGN CONTRIBUTION (MANAGEMENT AND
CONTROL) BILL
• BILL INTRODUCED IN 2005 - THE BILL LAPSED.
FOREIGN CONTRIBUTION (REGULATION) BILL

• ANOTHER BILL INTRODUCED ON 18-12-2006 IN RAJYA SABHA

• RS DIRECTED IT TO A PARLIAMENTARY COMMITTEE HEADED BY SUSHMA
SWARAJ
• THE ACT CAME INTO FORCE IN THE YEAR 2010 AND RULES CAME INTO FORCE IN
THE YEAR 2011
FOREIGN CONTRIBUTION (REGULATION) ACT,
2010
• THE ACT CAME INTO FORCE IN THE YEAR 2010 AND RULES CAME INTO FORCE IN
THE YEAR 2011
- THIS IS THE ACT WHICH IS NOW IN EXISTENCE
- THIS ACT CAME INTO EXISTENCE IN CONGRESS PERIOD.
- MANY AMENDMENTS WERE MADE TO RULES – THOSE ARE MOSTLY
PROCEDURAL.
FOREIGN CONTRIBUTION (AMENDMENT) ACT,
2020
• IF THERE IS AN AMENDMENT, IT SHOULD ADDRESS ANY MISCHIEF OR
SHORTCOMINGS OF THE EXISTING ACT.
FOREIGN CONTRIBUTION (AMENDMENT) ACT,
Section
2020 Existing Amended  
       
3(1)(c) Judge, Government public servant, Judge, Public servant u/s.
Servant or employee of Government servant or 21 of IPC covers
any corporation or any employee of any the rest of the
other body controlled or corporation or any other persons noted in the
owned by the body controlled or amended section.
Government owned by the Redundancy
Government  
Q.9 Whether Government servants, Judges and employees of a Government
owned/controlled company/body can be on the executive committees/boards of an
association? Ans. Yes. The legal entity of a 'person' under FCRA, 2010 is distinct from
an individual person. Therefore, individuals who cannot receive foreign contribution
may happen to be on the executive committees/boards of such an association.
FOREIGN CONTRIBUTION (AMENDMENT) ACT,
2020

7 ~ UNLESS such other "7. No person who— (a) No pooling and

person is also registered is registered and granted dividing
or has obtained PP a certificate or has
Provided transfer can be obtained prior permission
made to unregistered or under this Act; and (b)
without pp on prior receives any foreign
approval from contribution, shall
Government transfer such foreign
contribution to any other
person
 FOREIGN CONTRIBUTION (AMENDMENT) ACT,
2020
8(1) 50% 20% Admin Expenses.

Comments of Having regard to the two opposing viewpoints on the proposed

Parliamentary
Committee headed by cap on administrative expenditure and also having regard to
Sushma Swaraj (18-12- the various pros and cons of the matter, the consensus in the
2006)
Committee was in favour of endorsing the provision of the
ceiling of fifty percent, of foreign contribution received in a
financial year, to meet administrative expenses, which
according to the Committee is a reasonable restriction. 
 FOREIGN CONTRIBUTION (AMENDMENT) ACT,
11 (1) & (2) Provision to SS 2 -
2020
- Summary Enquiry 11 (1) & (2)
Should not utilize for PP Cases only
the unutilized (Not for registered
amount without organisations)
permission from  
government if found - if found guilty
guilty of violation of applies for both
any provisions of Registered and PP
FCRA 1976 or FCRA cases
2010
 FOREIGN CONTRIBUTION (AMENDMENT) ACT,
12 & 17  
2020
‘(1A) Every person who Encoding a
makes an application procedure.
under sub-section (1)
shall be required to open
‘‘FCRA Account’’ in the
manner specified in
section 17 and mention
details of such account
in his application.’

Already we applied for FCRA registration or for PP only after opening a special account for this purpose.
This has been encoded in this section.
 FOREIGN CONTRIBUTION (AMENDMENT) ACT,
12 A  
2020
- Prior Permission  This has no
- Prior Approval impact on the
- Fresh Registration organisation.
- Renewal
 
Aadhaar/Passport/O
CI Card

Member of Parliament asks why should one be afraid or ashamed to provide his
Aadhaar details?
 FOREIGN CONTRIBUTION (AMENDMENT) ACT,
13 (1)
2020
Registration can be Registration can be No Major
suspended for a suspended for a Impact.
period of 180 Days Period of 180+180
(During which days (During which
period the FC funds period the FC funds
can be utilised as can be utilised as
permitted by the permitted by the
Government) Government)

தலைக்குமேலே வெள்ளம் போனால் சான் என்ன முழம்

என்ன ?
 FOREIGN CONTRIBUTION
14 14(1) Suo moto
(AMENDMENT)
14A Cancellation on
cancellation of Registration application by the created out ofACT,
IN both cases assets
FC will vest
by the Government
2020Organisation with the appointed
authority. The authority
may manage the affairs
of the Organisation –
Assets will be returned in
case registration is
restored (Which will not
be the case in voluntary
surrender of registration)

Doctrine of Lapse - Lord Dalhousie

Doctrine of unjust enrichment - The concept of unjust enrichment was defined by the Court as the
unjust retention of a benefit to the loss of another or the retention of money or property of another against the
fundamental principles of justice or equity and good conscience. A person is enriched if he has received a
benefit, and he is unjustly enriched if retention of the benefit would be unjust. Unjust enrichment of a person
occurs when he has and retains money or benefits which in justice and equity belong to another.

SHOULD NOT PARALLEL WITH CHAPTER XII-EB (ACCRETED INCOME)

FOREIGN CONTRIBUTION
16   (AMENDMENT)
Enquiry ACT,
Already
2020
before happening
renewal

Even before the Amendment Act, the Department has started to launch enquiry
before renewal of fc registration.
 FOREIGN CONTRIBUTION
17  
(AMENDMENT)
Account in SBI, Delhi
for existing FCACT,
It might not be a problem
Registered

2020 NGOs as the process may

be simple.
- Just a mandate that
once a credit is made in
the Delhi FCRA account,
that it should be
transferred to the FCRA
maintained by the
Organisations will ease
the process.
- New account opening in
the delhi branch will be
futile if registration or PP
is not granted.

This is an administrative procedure. It will not affect the functioning of the

NGO. It has been specified by the Government by a Notification dated 07-10-
2020 that the Account should be opened in New Delhi Main Branch of SBI,
located at No. 11, Samsad Marg, New Delhi – 110001.
FOREIGN CONTRIBUTION (AMENDMENT) ACT,
2020

Question:
What will happen to continuing projects? Can we receive FC funds in the
current designated account?
Yes you can continue the existing projects. FC funds can be received in the
current designated account till 7th of October, 2020. (Notification in this regard
has been issued by the central government announcing SBI, New Delhi Main
Branch as the designated branch for first receipt of FC) Now it is better to wait
for the announcement of procedures to open a FCRA account in New Delhi
Branch of SBI.
FOREIGN CONTRIBUTION (AMENDMENT) ACT,
2020

Question:
What will happen to organisations which has persons prohibited from receiving
FC in their Management committee or as one of their trustees? Should they
resign in order that the trust may continue receiving FC?
In FAQ by the Ministry, it has been explained that organisation is a different
person from the individuals who are part of the organisation. Hence there is no
need for persons who are covered by the new definition to resign from the
organisation having FC Registration. The department may come with a new
FAQ.
FOREIGN CONTRIBUTION (AMENDMENT) ACT,
2020

Question:
How do I open an account in the designated branch of SBI in New Delhi?

A separate notification specifying the procedure of opening of FCRA account is

expected from the home ministry at the earliest without affecting the ongoing
projects of NGOs
FOREIGN CONTRIBUTION (AMENDMENT) ACT,
2020
To summarise:
Amendments affecting the NGOs are

- Ban on transfer of FC funds from one organisation to another

- Vesting of FC property of FC Surrendering organisations with the govt.
- Restriction of Admin Expenses (from 50% to 20%)

Procedural amendment which do not adversely affect NGOs

- FCRA Account in SBI, New Delhi Main Branch
- Provision of Aadhaar
- 180 days to additional 180 days
 FOREIGN CONTRIBUTION (AMENDMENT) ACT,
2020
If you have any specific questions, you are advised to
approach your CA. You may also email your queries
to my whatsapp 9842677056

TRUSTS and Societies in TN have another Act in Queue of which we

should be more concerned. It is Tamilnadu Public Charitable Trusts
Bill, 2020
We shall discuss about this bill in the next video.
FOREIGN CONTRIBUTION (AMENDMENT) ACT,
2020

End of Session
Thank you.