Background
Over the last two days we have shared with you salient features of the Foreign Contribution Regulation Bill 2010, that will replace the earlier FCRA 1976. For ease of reference, this communication puts together for your understanding some of the significant changes/amendments in the FC Regulation Bill, 2010. You will no longer need to refer to our earlier communication on this topic. Further information will be shared after the Rules have been framed by the government.
Introduction
The Foreign Contribution Bill 2010 was passed in the Rajya Sabha on 19th August 2010. The bill was introduced in The Lok Sabha on 27th August 2010 and it was passed the same day.
1. Effective Date
The new legislation though passed by the Parliament, it is yet to receive President’s assent. Then it will need to be notified in the Official Gazzette, and only after that it will become applicable. The date of publication in the notification will be the date of the Act becoming effective.
2. FCRA Registration to be renewed every five years
FCRA Registration Certificate is no longer permanent, but would need to be renewed every 5 years. The persons who are already having their Registration Certificate would also need to apply for renewal of registration after 5 years from the date the new S.11 (1) becomes effective – most likely the date the Act becomes effective.
It could mean that a large number of organisations presently already registered under FCRA would need to apply for renewal almost around the same period. Does our FCRA dept. has so much infrastructure / manpower to handle thousands (if not lakhs) of applications at the same time.
3. New requirements for Registration
Process for registration has been made far more rigorous.
Applicant
i. not be benami/fictitious
ii. not prosecuted / convicted for indulging in activities of conversion by inducement / force
iii. not prosecuted / convicted for creating communal tension or disharmony
In fact the above two conditions seem rather superfluous since subsequent sub-sections in the Act state that the applicant (in case of individual) or any of the office bearers of the applicant (in case of an organisation) should not been convicted / prosecuted for any offence ! Then why prescribe the above two provisions.
iv. not engaged in sedition or advocate violent methods
v. has not been found guilty of mis-utilisation /diversion of funds
vi. not likely to use the foreign contribution of for undesirable purposes
vii. not contravened any of the provisions of this Act
viii. has not been prohibited from accepting foreign contribution.
Earlier conditions that the foreign contribution should not affect prejudicially sovereignty, integrity, etc. have been retained.
In addition to above the person making application, should have taken reasonable level of activities in the field for which application is being made. In case of prior permission, the project for which permission is sought should be a reasonable project for the benefit of the society.
4. FCRA Bank accounts
Authorities have conceded futility of asking organisations to spend funds only from one account. Organisations receiving foreign contribution while still will need to receive / deposit the funds in the single FCRA registered bank account. However they will be allowed to transfer the funds to other bank accounts for the purposes of the utilisation. However these accounts must not have any local deposits. Thus in effect becoming a kind of subsidiary FCRA accounts, which will need to be disclosed in FC3.
This is an important change as it will make fund transfer to other remote locations easier as well as more transparent. This will also help in complying with several donors demand that their funds be not subsumed within other funds, which basically became impossible to comply with, as funds had to utilised from one FCRA account.
5. Intimation by Bankers
Banks would need to intimate receipt of any remittance above certain amount to the authorities. Govt. is yet to formulate rules to specify amount and the manner in which this intimation is to be done by the Bankers, however considering the statement made in the Lok Sabha by the Minister of State for Home, likely amount could be Rs 10 lakhs.
6. Intimation by recipients
Even the organaisations, person who have been registered under FCRA would need to intimate the Govt. about the FCRA amount. However the rules for specifying the amount and the manner is yet to be framed by the Govt.
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