These amendmentshave been brought to further tighten the rules and reporting Forms. The changes are applicable from the date of publication in the Gazette.
In earlier two posts, following topics have been covered:
- Key Functionaries and applicability of FCRA towards For-Profit entities
- Project-wise disclosure of Purpose&GeographicalAreas where projects are being implemented
In today’s posts we cover issues relating to
- Prohibiting foreign citizens as Board members / trustees, and
- FC to be used in India only.
Eligibility of Foreign citizens as Key Functionaries
- As a practice, FCRA Dept did not allow foreign citizens as Key Functionaries, though this was not specified anywhere in Act or Rules. FAQs did mention it, but considering FAQs do not have legal sanctity, the rule remained more of a practice and not a legislative provision.
- For first time, FCRA Dept has made it part of FCRA Rules 2011. Explanation 1 under Rule 9(5), has made it quite clear, that foreign nationals, other those of Indian origin (i.e. OCI card holder), shall not be considered eligible for grant of FCRA registration.
- However, the term used is ‘shall ordinarily not be considered eligible‘. This means, that scope exists for allowing such persons to be considered as key functionaries on case-to-case basis.
FC to be used for activities in India
- Under the same Rule [i.e. 9(5)], it has been clarified that the Foreign Contribution (FC) shall be utilized only for activities carried out in India. However, it has been added that this contribution should be on such activities which are in accordance with the association’s stated objectives and for the purposes for which it has been received.
- The term ‘activities carried out in India’ has created a number of doubts. Normally this term has been interpreted in accordance with S. 11(1) of Income Tax Act 1961, which states ‘…….to the extent to which such income is applied to such purposes in India….’. ‘Purposes’ has generally been interpreted as applied to objects, where benefit is received in India. Would activities carried out in India would mean that FC can be applied only for activities in India. For example, would NPO officials travelling abroad to attend meetings / make presentations, which ultimately help NPO create awareness about projects being implemented in India, would be treated as activities carried out outside India or would any activity which benefits Indian objectives would be considered as being carried out in India. This term is likely to cause a lot of heartburn as interpretations are likely to vary.
__
Socio Research & Reform Foundation (NGO)
512 A, Deepshikha, 8 Rajendra Place,
New Delhi – 110008