The Foreign Contribution (regulation) Act, 2010

It extends to the whole of India, and it shall also apply to—
(a) citizens of India outside India; and
(b) associate branches or subsidiaries, outside India, of companies or bodies corporate, registered or incorporated in India.
  • Every person who has been granted a certificate or given prior permission shall receive foreign contribution in a single account only through such one of the branches of a bank.
  • No funds other than foreign contribution shall be received or deposited in such account or accounts.
  • However, such person may open one or more accounts in one or more banks for utilising the foreign contribution received by him.
Who can accept Foreign Contribution?
  • Organizations working for definite cultural, social, economic, educational or religious programs can accept foreign contribution but first, they’ve to get permission from the Ministry of Home Affairs.
  • They also have to maintain a separate account book listing the donation received from foreigners and get it audited by a Chartered Accountant and submit it to Home Ministry every year.
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Prohibition to accept foreign contribution.
  • No foreign contribution shall be accepted by any—
(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 or any other body controlled or owned by the Government;
(d) member of any Legislature;
(e) political party or office-bearer thereof;
(f) organisation of a political nature;
(g) association or company engaged in the production or broadcast of audio news or audio visual news or current affairs programmes through any electronic mode;
  • No person who receives foreign contribution as per provisions of this Act, shall transfer to other person unless that person is also authorized to receive foreign contribution as per rules made by the Central Government.
  • Foreign contribution shall be utilized for the purpose for which it has been received and such contribution can be used for administrative expenses up to 50% of such contribution received in a financial year.
  • However, administrative expenses exceeding fifty per cent of the contribution to be defrayed with the prior approval of the Central Government.
Why is FCRN Act in news in the recent past?
  • The original provision in the FCRA declared that any company with over 50% FDI was a foreign entity.
  • And, the Representation of the People Act and the FCRA bar political parties from receiving foreign funds.
  • The government has amended (retrospectively) the FCRA, allowing foreign-origin companies to finance non-governmental organisations and thus political parties by changing the definition of “foreign companies”.
Foreign Exchange Management Act (FEMA) 
• It was introduced to consolidate and amend the law relating to foreign exchange with the objective of facilitating external trade and payments. 
• Certain NGOs are also registered under FEMA come under Ministry of Finance. 
Other regulations 
• Labour Laws: Any NGO employing more than 20 employees must comply with the Employees’ Provident Fund (compliance is voluntary if an NGO has less than 20 employees). 
• GST laws: It would apply if turnover of goods or commercial services exceeds a sum of two million Indian rupees in any fiscal year. 
• Accreditation: Recently, New accreditation guidelines for NGOs had been formed on the basis of recommendations of Vijay Kumar Committee 
o NITI Aayog has been appointed as the nodal agency for the purpose of registration and accreditation of NGOs seeking funding from Government. 

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