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THE FOREIGN CONTRIBUTION
(REGULATION) ACT, 2010
Dr. (CA) Manoj Fogla
Applicability of the Act
• Extends to whole of India,
• Every citizen of India outside India
• Associate branches or
subsidiaries outside India
• Person
Definition of ‘Person’ :
• ‘Person’ means an Individual, HUF,
Section 25 Company and Association
Who can or cannot receive
Person with definite purpose
Person for self consumption
Prohibited person
Under Section 2(h) FC means transfer, delivery or donation of any currency, article or security.
Except consultancy or commercial receipt.
Includes interest or any other income from FC funds for assets.
The Scope of Foreign
Contribution Redefined
The FCRA 2010 has defined a “foreign
company” under clause (g) of section 2
which does not include Indian companies.
However section 2 (j) which defines the term
“foreign source” includes an Indian company
under the category of foreign source if more than
50 % of its equity is held by foreigners.
Foreign Company &
Foreign Source
a. candidate for election.
b. correspondent, columnist, cartoonist, editor, owner, printer
or publisher of a registered newspaper.
c. Judge, Government servant or employee of any
corporation.
d. member of any legislature
e. political party or office-bearer thereof.
f. Organisation of a political nature.
g. Association or company engaged in broadcast of audio
or visual news.
h. Correspondent, columnist etc. related with the
company referred in clause (g)
PERSONS SPECIFICALLY DEBARRED FROM
RECEIVING FOREIGN CONTRIBUTION
Salary, wages or remuneration for services rendered
Funds received in the course of international trade
Payment received as an agent in relation to any
transaction with the central or state government.
Gift or presentation as a part of any Indian delegation
within the Government norms.
Gift from relative.
Normal remittance under FEMA 1999.
By way of Scholarship, stipend etc.”
EXCEPTIONS TO PERSONS
SPECIFICALLY DEBARRED
Political nature organisations are not eligible
for registration under FCRA. Such organisations can not apply even for prior permission as was allowed earlier.
CAN AN ORGANISATION OF POLITICAL
NATURE RECEIVE FOREIGN
CONTRIBUTION
having avowed political objectives
any Trade Union with political goals;
any voluntary action group with political objectives
Students Unions, Workers’ Unions, Youth Forums and
Women’s wing of a political party;
Farmers, workers, students, youth based on caste,
community, religion, language with political objective
Habitually engages in ‘bandh’ or ‘hartal’, ‘rasta roko’,
‘rail roko’ or ‘jail bharo’ in support of public causes.
Declaration of an organisation to be
of a Political nature
The Central Government may notify an organisation as of
political nature not being a political party.
An opportunity in writing shall be provided
The organisation may respond within a period of thirty
days from the date of the notice
Every order shall be made within a period of one hundred
and twenty days from the date of issue of notice.
Procedure to notify an Organisation
to be of Political nature
Section 8 of FCRA 2010 provides that FC funds
cannot be used for speculative business.
Rule 4 prohibits speculative activity including
investment
Restriction On Speculative Business
& Speculative Activity
Administrative expenses shall not
exceed 50% without prior approval.
Administrative expenses are not required
to be reported separately
Restriction On
Administrative Expenses
Salaries, wages, travel of Board / Trustees.
Expenses towards hiring and travel of personnel for
management of the activities
Consumables
cost of accounting for and administering funds;
expenses towards running and maintenance of vehicles;
cost of writing and filing reports;
legal and professional charges; and
rent & repair of premises and other utilities:
However it excludes expenditure directly towards activity
Administrative expenses
includes
Designated Bank Account.
Multiple Bank Account.
Change of Designated Bank Account
Permissible Transaction from Bank Account
Closing Balance of Multiple Bank Account
Transaction with domestic Bank Account
Depositing income / refund in Bank Account
Using Bank Account of Staff
Bank Account
Foreign contribution can be transferred to another
FCRA registered organisation. Such transfer is
subject to the condition that such organisation has
not been proceeded against under any provisions
of the Act.
Such transfer of foreign contribution shall be
reflected in the returns in Form FC-6
Transfer of FC funds to another FC
registered organisation
The person may apply to the Central Government in
Form FC-10 to transfer foreign contribution not
exceeding 10% of the total value of foreign
contribution received.
Transfer on prior approval only
Transfer of FC funds to another Non
FC registered organisation
FC-6, FC-7, FC-8
CA Certificate in all three
Income & Expenditure A/c.
Receipt & Payment A/c.
Balance Sheet
Certified copy of Bank Statement
Filing of Returns
Interest income & other income
First Recipient & Subsequent Recipient
Transfer to other NGOs
Revised Return
Marking Envelop ‘FCRA Wing’
FC 7 filing for each item
FC 7 - Subsequent Recipient
Filing of Returns - Issues
2% or Rs.10,000/- whichever is higher,
within 90 days.
3% or Rs.25,000/- whichever is higher,
90 to 100 days.
5% or Rs.50,000/- whichever is higher
180 days, plus Rs. 500 per day for every
day beyond 180 days.
Filing of Returns – Penalties for Delay
Renewal of registration of NGOs every 5 years.
Exemption for the first 5 years.
Apply in Form FC-5, six months before the date
of expiry of the certificate of registration.
NGO having multi-year project shall apply for
renewal 12 months before the date of expiry.
Detail of FC since inception
No recommendation from Magistrate required
Renewal Of Registration
Every 5 years
Suspension of Certificate
Pending cancellation of the certificate FCRA Dept. may
suspend of certificate for such period not exceeding 180
days as may be specified in the order
No Opportunity of being heard – Insaf Case
Impact of suspension of certificate :
receive any foreign contribution during the
suspension period of certificate with prior approval
Utilize upto 25% of funds with approval of central
government
Cancellation of Certificate
Violated any of the terms and conditions
It is necessary in the public interest to cancel
No reasonable activity for two consecutive year or has
become defunct.
Any false or incorrect information in the application form
Shall not be eligible for registration or grant or permission for a minimum period of 3 years.
Review/Appeal of Cancellation
Review within one year by the NGO/person
Review within one year by the FCRA Dept
1000 rupees fees with application in plain paper
Appeal to the High Court
Unlike FCRA 1976 there is no deemed
prior permission under FCRA 2010.
No“Deemed” Prior Permission
The Act provides power to notify such source(s) from
which foreign contribution shall be accepted with prior
permission only. It implies that the Central Govt. may
notify specific donors or countries from which foreign
funds could not be received or shall be received with prior
permission only.
Power To Prohibit Sources From
Which FC Can Be Accepted
After cancellation of registration certificate all the foreign
contribution and assets thereof shall vest with such
authority as may be prescribed.
The government authorities may take charge of the
foreign contribution and the FC assets till the registration
is restored.
Power To Manage FC After
Cancellation Of Certificate
Gift from Relatives exempted still to be reported in FC-1
excess of 1 lakh.
FC article upto Rs. 25000 exempted
Foreign Gifts
The Donor organisation should take an
written undertaking
Subsequent Recipient should be
proceeded against
Foreigners on board through prior permission only under the following category.
the foreigner is married to an Indian citizen;
the foreigner has been working in India for at least five years;
the foreigner has specialized knowledge the medical and health related fields
the foreigner is ex-officio in terms of an inter-governmental agreement;
the foreigner is an ex-officio from a multilateral body which is exempted from the definition of foreign source.
Foreigners on Board
Every person who has been granted registration
or prior permission shall maintain a separate set
of accounts and such statements should be
preserved for a period of 6 years.
Maintenance Of Account And
Preservation
Accrual or Cash ?
Method Of Accounting
All NGOs have to provide information in
Public domain if receipt exceeds `1 Crore.
Disclosure Of Information If
Receipt Cross 1 Crore
Audit of Accounts
Central government has a power to audit any premises at any reasonable time for the purpose of auditing the prescribed books of accounts .
A Gazetted officer or a officer holding Group A post can undertake the audit under central government.
All bank should report within 30 days if :
More than 1 Crore received in 30 days.
FC received without registration or prior permission.
Reporting By Bank
Change since the time of registration
Undertaking given
Issues at the time of renewal
Change in 50% of Board
The new Act allows compounding of offences
Compounding Of Offences
Miscellaneous Power to call for information or documents
Investigation powers are same as that of an officer in-charge at police station
CBI or any other agency investigating cases under the act to furnish quarterly return on progress on all cases.
No suit / other legal proceeding against any of the govt. agencies or their officers for acting in good faith in the pursuance of act.
Certain administrative powers to make rules.
Procedure for laying of rules in parliament.
Power to exempt organizations from of all or any provision of this act .
Not to apply to transactions between Government of India & foreign governments.
Not apply to Government Bodies.
Miscellaneous Certain administrative powers to
make rules.
Procedure for laying of rules in parliament.
Power to exempt organizations from of all or any provision of this act .
Not to apply to transactions between Government of India & foreign governments.
FORM PARTICULARS
Form FC- 1 Intimation of Central Government of receipt of Foreign contribution by way of gift from relative
Form FC-2 Application for seeking prior permission of the Central Government to accept foreign hospitality.
Form FC-3 Application for registration for the acceptance of foreign contribution.
Form FC-4 Application for Prior permission for acceptance of foreign contribution
Form FC-5 Application for seeking renewal of registration certificate
Form FC-6 Account of foreign contribution for the year .
Forms
FORM PARTICULARS
Form FC-7 Intimation about foreign contribution (Articles) Account
Form FC-8 Intimation about foreign contribution (securities) account
Form FC-9 Intimation to the Central Government of Receipt of foreign contribution received by a candidate for Election
Form FC-10 Application for seeking permission for transfer of foreign contribution to other registered / unregistered persons.
Forms