Foreign Contribution Regulation Act 2010 (FCRA) | UPSC

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Foreign Contribution Regulation Act 2010 (FCRA) _ UPSC

Foreign Contribution Regulation Act 2010 (FCRA) | UPSC

      HEADLINES:

Foreign funds & NGOs

      WHY IN NEWS:

How does the Foreign Contribution (Regulation) Act control donations? Who comes under its ambit?

MINISTRY? :- Ministry of Home Affairs
SYLLABUS COVERED: GS 2 : Acts : Internal Security

      LEARNING: 

For PRELIMS go through this act carefully . It stands important till today !

For MAINS why FCRA has always been in controversies ? Can you mention few lacunae ? Let us dive in !

      ISSUE: 

The licences of 13 non-governmental organisations (NGOs) have been suspended under the FCRA 2010 this year.

  • Their FCRA certificates were suspended and bank accounts frozen.
  • The Ministry of Home Affairs (MHA) said it had received serious adverse inputs.
  • The working of several NGOs which come under the ambit of the FCRA in tribal areas.

FOREIGN CONTRIBUTION REGULATION ACT

WHAT IS THE FCRA?

  • DEFINITION : The FCRA regulates foreign donations and ensures that such contributions do not adversely affect internal security.
  • ENACTMENT : First enacted in 1976, it was amended in 2010 when a slew of new measures were adopted to regulate foreign donations.
  • APPLICATION : The FCRA is applicable to all associations, groups and NGOs which intend to receive foreign donations.
  • REGISTRATION : It is mandatory for all such NGOs to register themselves under the FCRA.

VALIDITY : The registration is initially valid for five years and it can be renewed subsequently if they comply with all norms. 

  • CONTRIBUTION : Registered associations can receive foreign contribution for social, educational, religious, economic and cultural purposes.
  • TAX NETS : Filing of annual returns, on the lines of Income Tax, is compulsory.
  • AMENDMENTS : In 2015, the MHA notified new rules, which required NGOs to give an undertaking that the acceptance of foreign funds is not likely to prejudicially affect the sovereignty and integrity of India.
  • BANKING : It also said all such NGOs would have to operate accounts in either nationalised or private banks which have core banking facilities to allow security agencies access on a real time basis.

WHO CANNOT RECEIVE FOREIGN DONATIONS?

  • OUT OF SCOPE : Members of the legislature and political parties, government officials, judges and media persons are prohibited from receiving any foreign contribution.
  • REPEALED FCRA : However, in 2017 the MHA amended the 1976-repealed FCRA law paving the way for political parties to receive funds from the Indian subsidiary of a foreign company or a foreign company in which an Indian holds 50% or more shares.

ALTERNATE WAYS OF RECEIVE FOREIGN FUNDS?

  • PRIOR PERMISSION : It is granted for receipt of a specific amount from a specific donor for carrying out specific activities or projects.

But the association should be registered under statutes such as the Societies Registration Act, 1860, the Indian Trusts Act, 1882, or Section 25 of the Companies Act, 1956.

  • DOCUMENTS NEEDED : A letter of commitment from the foreign donor specifying the amount and purpose is also required.

REGISTRATION SUSPENDED?

  • INITIAL SUSPENSION : The MHA on inspection of accounts and on receiving any adverse input against the functioning of an association can suspend the FCRA registration initially for 180 days.
  • NOTICE PERIOD : Until a decision is taken, the association cannot receive any fresh donation.
  • WITHHOLDING ACCOUNT : They cannot utilise more than 25% of the amount available in the designated bank account without permission of the MHA.
  • CANCELLATION : The MHA can cancel the registration of an organisation which will not be eligible for registration.

Alternatively grant of ‘prior permission’ for three years from the date of cancellation. 

SUSPENSIONS IN THE PAST

  • SUSPENSIONS : According to MHA data, since 2011, the registration of 20,664 associations was cancelled for violations such as misutilisation of foreign contribution.

OTHER REASONS : Non-submission of mandatory annual returns and diversion of foreign funds for other purposes were also the reasons . 

  • TOTAL REGISTRATIONS : As on September 11, there are 49,843 FCRA-registered associations.

      IASbhai WINDUP: 

BACKGROUND

  • The Foreign Contribution (regulation) Act, 2010 is an act of the Parliament of India, by the 42nd Act of 2010.
  • It is a consolidating act whose scope is to regulate the acceptance and utilisation of foreign contribution or foreign hospitality .

Individuals or associations or companies come under ambit of this act.

  • The act is to prohibit acceptance and utilisation of foreign contribution or foreign hospitality for any activities detrimental to the national interest .
  • It is designed to correct shortfalls in the predecessor act of 1976.
     SOURCES:THE HINDU & PIB | Foreign Contribution Regulation Act 2010 (FCRA) | UPSC

DISCOVER MORE : GS-2

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