Not-for-profits Rejoice: Receiving Foreign Contributions Made Easy
The Foreign
Contribution (Regulation) Rules 2011
(“2011 Rules”)
has been amended by The Foreign Contribution (Regulation)
Amendment Rules, 2022; enforced from July 1, 2022.
Persons/associations
can receive up to 10 lakh INR (approx. $13000) and a
time of three months to declare if the same exceeds
the prescribed limit.
Registered entities
are not required to furnish intimation of quarterly
receipt of foreign contribution
The time limit for
intimating change of names, aims, objectives or
key members of the association has been increased
to 45 days.
The maximum fine for
receiving a foreign contribution without being registered
or receiving prior consent has increased from 10%
to 30%.
INTRODUCTION
The Foreign Contribution (Regulation)
Rules 2011 (“2011 Rules”)
has been amended by The Foreign Contribution (Regulation)
Amendment Rules, 2022 (“New Rules”)1
which came into effect on July 1st, 2022.
The Government in its powers conferred under Section
48 of Foreign Contribution (Regulation) Act, 2010
(“FCRA”) has amended
the rules under this Act for carrying out its provisions.
FCRA regulates foreign donations
and ensures that such contributions do not adversely
affect the internal security of the country. The
provisions of the Act apply to the territory of
India, to citizens of India who may be outside India
and to companies or their branches outside India
that are registered or incorporated in India. The
entities covered by the Act include an individual,
a Hindu undivided family, an association, or a registered
company.
KEY AMENDMENTS AND THEIR IMPACT
RULE
AMENDMENTS
IMPACT
Rule 6 - Intimation
of receiving foreign contribution from relatives
“In the Foreign
Contribution (Regulation) Rules, 2011 (hereinafter
referred to as the said rules), in rule
6, —
(i) for the words “one
lakh rupees”, the words “ten
lakh rupees” shall be substituted;
(ii) for the words “thirty
days”, the words “three months”
shall be substituted;”
Persons / associations
can receive up to 10 lakh INR (roughly $13000 equivalent)
and a time of three months to declare the
same under Form FC-1 if
the same exceeds the prescribed limit.
Rule 9 - Application
for obtaining 'registration' or 'prior permission'
to receive foreign contribution.
“In the said
rules, in rule 9,
(i) in sub-rule
(1), in clause (e), for the words “fifteen
days”, the words “forty-five
days” shall be substituted;
(ii) in sub-rule
(2), in clause (e), for the words “fifteen
days”, the words “forty five
days” shall be substituted;”
FCRA Registered persons / associations
(previously or presently) must submit Form
FC-6D within 45 days.
Rule 13 - Declaration
of receipt of foreign contribution.
“Declaration
of receipt of foreign contribution. - (a) …….
(b) Omitted”
Registered entities
are not required to furnish intimation of
quarterly receipt of foreign contribution.
Rule 17A - Change
of designated bank account, name, address,
aims, objectives or Key members of the association.
“In the said
rules, in rule 17A, for the words “fifteen
days”, the words “forty-five
days” shall be substituted;”
The time limit for intimating
changes under Forms FC-6A, FC-6B, FC-6C,
FC-6D or FC-6E is increased to 45 days.
Rule 20 - Revision
of an order passed by the competent authority
under Section 32 of the Act
“In the said
rules, in rule 20, for the words “on
a plain paper”, the words “in
such form and manner, including in electronic
form as may be specified by the Central
Government” shall be substituted.”
Application for revision
of an Order cannot be made on “a plain
paper”. It must be filed in the prescribed
format electronically.
Table 1: Denoting the 2022 amendments
in the governing rules and their impact
Key Amendments in Compounding
of Offences under FCRA, 2010
The Central Government2
further revised the penalty payable in case of compounding
of offences under FCRA. The maximum fine for receiving
a foreign contribution without being registered
or receiving prior consent has increased from 10%
to 30%. Though the minimum fine remains at INR 1 lakh (approx. $1300) it has not altered. The offence
of sub-granting or transferring FCRA money to any
other person may only be compounded once.
The following table shows the
offences which are compoundable under FCRA along
with the penalties for contravention of the provisions
of FCRA:
S. No.
Offence
Amount of Penalty
Officer competent
for Compounding
1
Offence punishable under
Section 35 for accepting any hospitality
in contravention of Section 6 (Intimation
of receiving foreign contribution from relatives).
INR 10,000 ($130)
Director / Deputy Secretary
in-charge
2
Offence punishable under
Section 37 for transferring any foreign
contribution to any other person in contravention
of Section 7 of the Act or any rule made
thereunder:
Provided that transfer
of foreign contribution (inclusive of more
than one instances of transfer, if any)
shall be compoundable only once.
INR 1 Lakh ($1300)
or ten percent (10%) of such transferred
foreign contribution, whichever is higher.
Director / Deputy Secretary
in-charge
3
Offence punishable under
Section 37 for defraying of foreign contribution
beyond twenty per cent of the contribution
received for administrative expenses in
contravention of Section 8 of the Act.
INR 1 Lakh ($1300)
or five percent (5%) of such foreign contribution
so defrayed beyond the permissible limit,
whichever is higher
Director / Deputy Secretary
in-charge
4
Offence punishable under
Section 35 for accepting foreign contribution
in contravention of Section 11(mandatory
registration or prior permission from the
Central Government before receiving foreign
contribution).
INR 1 Lakh ($1300)
or thirty percent (30%) of the foreign contribution
received, whichever is higher
Director / Deputy Secretary
in-charge
5
Offences punishable
under Section 37 read with Section 17 of
the Act for-
(a) receiving foreign
contribution in any account other than specified
account in his application for grant of
certificate;
(b) non-reporting the
prescribed amount of foreign remittance
or source and manner of such remittance
by banks and authorised persons.
(c) receiving and depositing
any fund other than foreign contribution
in the account or accounts opened for receiving
foreign contribution or for utilising the
foreign contribution.
INR 1 Lakh ($1300)
or five percent (5%) of the foreign contribution
received in such account, whichever is higher;
INR 1 Lakh ($1300)
or three percent (3%) of the foreign contribution
received or deposited in such account, whichever
is higher.
INR 1 Lakh ($1300)
or two percent (2%) of such deposit, whichever
is higher.
Director / Deputy Secretary
in-charge
6
Offence punishable under
Section 37 for non-furnishing of intimation
of the amount of each foreign contribution
received and the source from which and in
the manner in which, such foreign contribution
is received as required under Section 18
of the Act.
INR 1 Lakh ($1300)
or five percent (5%) of the foreign contribution
received during the period of non- submission,
whichever is higher.
Director / Deputy Secretary
in-charge
7
Offence punishable under
Section 37 for not maintaining the account
and records of foreign contribution received
and manner of its utilisation as required
Section 19 of the Act.
INR 1 Lakh ($1300)
or five percent (5%) of the foreign contribution
during the relevant period of non-maintenance
of accounts, whichever is higher.
Director / Deputy Secretary
in-charge
8
Offence punishable under
Sections 3, 11 and 35 of the Act read with
rule 6 for failure to intimate about receipt
of foreign contribution within the prescribed
time limit.
Five per cent (5%) of
such foreign contribution received in a
financial year
Director / Deputy Secretary
in charge
9
Offence punishable under
Section 37, Section 17 and Section 19 of
the Act read with clause (e) of sub-rule
(1) of rule 9 for failure to intimate about
opening of account or accounts within the
prescribed time.
INR 10,000 ($130)
per utilisation account for failure to intimate
within the prescribed time.
Director / Deputy Secretary
in charge
10
Offence punishable under
Section 37, Section 17 and Section 19 of
the Act read with clause (e) of sub-rule
(2) of rule 9 for failure to intimate about
opening of account or accounts within the
prescribed time.
INR 10,000 ($130)
per utilisation account for failure to intimate
within the prescribed time.
Director / Deputy Secretary
in charge
11
Offence punishable under
Section 37, Section 11 and Section 17 of
the Act read with rule 17A, for failure
to intimate about details within the prescribed
time
INR 10,000 ($130)
or thirty per cent (30%) for each violation
of failure to intimate within the prescribed
time
Director / Deputy Secretary
in-charge
12
Offence punishable under
Section 37 and Section 19 of the Act read
with rule 13, for failure to place on website
as prescribed in clause (a) of rule 13 within
the prescribed time.
INR 10,000 ($130)
for each violation.
Director / Deputy Secretary
in-charge
Table No. 2: Denoting the list
of amended compoundable offences and subsequent
penalties thereof
Conclusion
The 2022 amendments allow for
significant increase in quantum of permissible foreign
contributions. This allows for persons/associations
to receive more foreign contributions in a smoother
manner; and reduces time and management resources
spent in regulatory procedures. Additions in the
list of compoundable offences is an initial step
to encourage foreign contributions in India. The
FCRR aims at prohibiting utilisation of foreign
contribution for any activities detrimental to the
national interest. Nevertheless, the government,
while ensuring strict scrutiny of all foreign contributions
to India, has significantly smoothened the procedure
and the penalty for any lapses therein to ensure
that the same does not discourage the rate of foreign
contributions.
Thereby, as per the amended
rules, person’s/associations barred to receive
foreign contribution under Section 3, FCRA can receive
foreign contribution up to INR 10 lakh ($13000).
Entities can pay five percent (5%) of the foreign
contribution received and absolve their liability
under FCRA. Mandatory disclosures of quarterly updates
on the foreign contribution received are no longer
required.
With reference to amendments
to compoundable offences, the amount of penalty
computed with respect to any offence(s) thereof
shall not be more than the value of the foreign
contribution received. Lastly, the application to
compound offences specified above may be processed
in physical or electronic form as may be specified
by the Government.
The new amendments will lead
positive implications for not-for-profits receiving
foreign contributions in India. The compliance burden
has significantly reduced to allow them to structure
their resources and time for utilizing their foreign
contributions. The entities shall not be required
to report receiving any amount lesser than INR ten lakhs ($13000). Moreover, in case of any contraventions
falling under the list of compoundable offences,
the penalty imposed upon the entities has also been
reduced. Thereby, aiding not-for-profits in accepting
foreign contributions without any bureaucratic or
legal, regulatory delays.
Not-for-profits Rejoice: Receiving Foreign Contributions Made Easy
The Foreign
Contribution (Regulation) Rules 2011
(“2011 Rules”)
has been amended by The Foreign Contribution (Regulation)
Amendment Rules, 2022; enforced from July 1, 2022.
Persons/associations
can receive up to 10 lakh INR (approx. $13000) and a
time of three months to declare if the same exceeds
the prescribed limit.
Registered entities
are not required to furnish intimation of quarterly
receipt of foreign contribution
The time limit for
intimating change of names, aims, objectives or
key members of the association has been increased
to 45 days.
The maximum fine for
receiving a foreign contribution without being registered
or receiving prior consent has increased from 10%
to 30%.
INTRODUCTION
The Foreign Contribution (Regulation)
Rules 2011 (“2011 Rules”)
has been amended by The Foreign Contribution (Regulation)
Amendment Rules, 2022 (“New Rules”)1
which came into effect on July 1st, 2022.
The Government in its powers conferred under Section
48 of Foreign Contribution (Regulation) Act, 2010
(“FCRA”) has amended
the rules under this Act for carrying out its provisions.
FCRA regulates foreign donations
and ensures that such contributions do not adversely
affect the internal security of the country. The
provisions of the Act apply to the territory of
India, to citizens of India who may be outside India
and to companies or their branches outside India
that are registered or incorporated in India. The
entities covered by the Act include an individual,
a Hindu undivided family, an association, or a registered
company.
KEY AMENDMENTS AND THEIR IMPACT
RULE
AMENDMENTS
IMPACT
Rule 6 - Intimation
of receiving foreign contribution from relatives
“In the Foreign
Contribution (Regulation) Rules, 2011 (hereinafter
referred to as the said rules), in rule
6, —
(i) for the words “one
lakh rupees”, the words “ten
lakh rupees” shall be substituted;
(ii) for the words “thirty
days”, the words “three months”
shall be substituted;”
Persons/associations
can receive up to 10 lakh INR (roughly $13000 equivalent)
and a time of three months to declare the
same under Form FC-1 if
the same exceeds the prescribed limit.
Rule 9 - Application
for obtaining 'registration' or 'prior permission'
to receive foreign contribution.
“In the said
rules, in rule 9,
(i) in sub-rule
(1), in clause (e), for the words “fifteen
days”, the words “forty-five
days” shall be substituted;
(ii) in sub-rule
(2), in clause (e), for the words “fifteen
days”, the words “forty five
days” shall be substituted;”
FCRA Registered persons/associations
(previously or presently) must submit Form
FC-6D within 45 days.
Rule 13 - Declaration
of receipt of foreign contribution.
“Declaration
of receipt of foreign contribution. - (a) …….
(b) Omitted”
Registered entities
are not required to furnish intimation of
quarterly receipt of foreign contribution.
Rule 17A - Change
of designated bank account, name, address,
aims, objectives or Key members of the association.
“In the said
rules, in rule 17A, for the words “fifteen
days”, the words “forty-five
days” shall be substituted;”
The time limit for intimating
changes under Forms FC-6A, FC-6B, FC-6C,
FC-6D or FC-6E is increased to 45 days.
Rule 20 - Revision
of an order passed by the competent authority
under Section 32 of the Act
“In the said
rules, in rule 20, for the words “on
a plain paper”, the words “in
such form and manner, including in electronic
form as may be specified by the Central
Government” shall be substituted.”
Application for revision
of an Order cannot be made on “a plain
paper”. It must be filed in the prescribed
format electronically.
Table 1: Denoting the 2022 amendments
in the governing rules and their impact
Key Amendments in Compounding
of Offences under FCRA, 2010
The Central Government2
further revised the penalty payable in case of compounding
of offences under FCRA. The maximum fine for receiving
a foreign contribution without being registered
or receiving prior consent has increased from 10%
to 30%. Though the minimum fine remains at INR 1 lakh (approx. $1300) it has not altered. The offence
of sub-granting or transferring FCRA money to any
other person may only be compounded once.
The following table shows the
offences which are compoundable under FCRA along
with the penalties for contravention of the provisions
of FCRA:
S.No.
Offence
Amount of Penalty
Officer competent
for Compounding
1
Offence punishable under
Section 35 for accepting any hospitality
in contravention of Section 6 (Intimation
of receiving foreign contribution from relatives).
INR 10,000 ($130)
Director/Deputy Secretary
in-charge
2
Offence punishable under
Section 37 for transferring any foreign
contribution to any other person in contravention
of Section 7 of the Act or any rule made
thereunder:
Provided that transfer
of foreign contribution (inclusive of more
than one instances of transfer, if any)
shall be compoundable only once.
INR 1 Lakh ($1300)
or ten percent (10%) of such transferred
foreign contribution, whichever is higher.
Director/Deputy Secretary
in-charge
3
Offence punishable under
Section 37 for defraying of foreign contribution
beyond twenty per cent of the contribution
received for administrative expenses in
contravention of Section 8 of the Act.
INR 1 Lakh ($1300)
or five percent (5%) of such foreign contribution
so defrayed beyond the permissible limit,
whichever is higher
Director/Deputy Secretary
in-charge
4
Offence punishable under
Section 35 for accepting foreign contribution
in contravention of Section 11(mandatory
registration or prior permission from the
Central Government before receiving foreign
contribution).
INR 1 Lakh ($1300)
or thirty percent (30%) of the foreign contribution
received, whichever is higher
Director/Deputy Secretary
in-charge
5
Offences punishable
under Section 37 read with Section 17 of
the Act for-
(a) receiving foreign
contribution in any account other than specified
account in his application for grant of
certificate;
(b) non-reporting the
prescribed amount of foreign remittance
or source and manner of such remittance
by banks and authorised persons.
(c) receiving and depositing
any fund other than foreign contribution
in the account or accounts opened for receiving
foreign contribution or for utilising the
foreign contribution.
INR 1 Lakh ($1300)
or five percent (5%) of the foreign contribution
received in such account, whichever is higher;
INR 1 Lakh ($1300)
or three percent (3%) of the foreign contribution
received or deposited in such account, whichever
is higher.
INR 1 Lakh ($1300)
or two percent (2%) of such deposit, whichever
is higher.
Director/Deputy Secretary
in-charge
6
Offence punishable under
Section 37 for non-furnishing of intimation
of the amount of each foreign contribution
received and the source from which and in
the manner in which, such foreign contribution
is received as required under Section 18
of the Act.
INR 1 Lakh ($1300)
or five percent (5%) of the foreign contribution
received during the period of non- submission,
whichever is higher.
Director/Deputy Secretary
in-charge
7
Offence punishable under
Section 37 for not maintaining the account
and records of foreign contribution received
and manner of its utilisation as required
Section 19 of the Act.
INR 1 Lakh ($1300)
or five percent (5%) of the foreign contribution
during the relevant period of non-maintenance
of accounts, whichever is higher.
Director/Deputy Secretary
in-charge
8
Offence punishable under
Sections 3, 11 and 35 of the Act read with
rule 6 for failure to intimate about receipt
of foreign contribution within the prescribed
time limit.
Five per cent (5%) of
such foreign contribution received in a
financial year
Director/Deputy Secretary
in charge
9
Offence punishable under
Section 37, Section 17 and Section 19 of
the Act read with clause (e) of sub-rule
(1) of rule 9 for failure to intimate about
opening of account or accounts within the
prescribed time.
INR 10,000 ($130)
per utilisation account for failure to intimate
within the prescribed time.
Director/Deputy Secretary
in charge
10
Offence punishable under
Section 37, Section 17 and Section 19 of
the Act read with clause (e) of sub-rule
(2) of rule 9 for failure to intimate about
opening of account or accounts within the
prescribed time.
INR 10,000 ($130)
per utilisation account for failure to intimate
within the prescribed time.
Director/Deputy Secretary
in charge
11
Offence punishable under
Section 37, Section 11 and Section 17 of
the Act read with rule 17A, for failure
to intimate about details within the prescribed
time
INR 10,000 ($130)
or thirty per cent (30%) for each violation
of failure to intimate within the prescribed
time
Director/Deputy Secretary
in-charge
12
Offence punishable under
Section 37 and Section 19 of the Act read
with rule 13, for failure to place on website
as prescribed in clause (a) of rule 13 within
the prescribed time.
INR 10,000 ($130)
for each violation.
Director/Deputy Secretary
in-charge
Table No. 2: Denoting the list
of amended compoundable offences and subsequent
penalties thereof
Conclusion
The 2022 amendments allow for
significant increase in quantum of permissible foreign
contributions. This allows for persons/associations
to receive more foreign contributions in a smoother
manner; and reduces time and management resources
spent in regulatory procedures. Additions in the
list of compoundable offences is an initial step
to encourage foreign contributions in India. The
FCRR aims at prohibiting utilisation of foreign
contribution for any activities detrimental to the
national interest. Nevertheless, the government,
while ensuring strict scrutiny of all foreign contributions
to India, has significantly smoothened the procedure
and the penalty for any lapses therein to ensure
that the same does not discourage the rate of foreign
contributions.
Thereby, as per the amended
rules, person’s/associations barred to receive
foreign contribution under Section 3, FCRA can receive
foreign contribution up to INR 10 lakh ($13000).
Entities can pay five percent (5%) of the foreign
contribution received and absolve their liability
under FCRA. Mandatory disclosures of quarterly updates
on the foreign contribution received are no longer
required.
With reference to amendments
to compoundable offences, the amount of penalty
computed with respect to any offence(s) thereof
shall not be more than the value of the foreign
contribution received. Lastly, the application to
compound offences specified above may be processed
in physical or electronic form as may be specified
by the Government.
The new amendments will lead
positive implications for not-for-profits receiving
foreign contributions in India. The compliance burden
has significantly reduced to allow them to structure
their resources and time for utilizing their foreign
contributions. The entities shall not be required
to report receiving any amount lesser than INR ten lakhs ($13000). Moreover, in case of any contraventions
falling under the list of compoundable offences,
the penalty imposed upon the entities has also been
reduced. Thereby, aiding not-for-profits in accepting
foreign contributions without any bureaucratic or
legal, regulatory delays.
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