The FCRA, also known as the Foreign Contribution (Regulation) Rules of 2011 has been amended. This amendment, also known as the ‘New Rules’, came into effect starting the 1st of July 2022. The government has made use of the powers that have been conferred to it under Section 48 of the FCRA 2010, in order to carry out its provisions.
The FCRA is responsible for regulating foreign donations. It also strives to ensure that foreign contributions don’t in any way affect the country’s internal security. The FCRA applies to activities within India, as well as to the citizens of the country. Such citizens who may be abroad, or branches of companies that are abroad but registered in India, also fall within the purview of this Act. Essentially, individuals, an undivided family that is Hindu, a registered company or an association are covered by this Act.
If you want to set up and expand your non profit in India, the FCRA has made the operating environment very challenging to navigate. Still, Seamless can help you. From advisory related to the optimal structure for your organisation to managing ongoing compliance and operations, Seamless has helped many non profit organisations – large and small – gain their foothold and further their mission in India, as well as other Asian countries.
What Are The Key Amendments And What Is Their Impact?
The FCRA has been amended, and it has made it easier among other things, to receive foreign contributions. By knowing what the amendments to this Act is, you can better use it to your advantage. The amendments made include:
1. Rule 6 – Formally Communicate Foreign Contributions From Any Relative
Any person receiving a foreign contribution in excess of Rs. ten lakhs1 or equivalent in a financial year from a relative must inform the Central Government within three months from the date of receipt of the contribution. The earlier rule provided for intimation in case of receipt of the contribution of more than Rs. one lakh within thirty days of receipt of such contribution.
2. Rule 9 – Applying to Obtain A Registration Or A Prior Permission In Order To Receive Foreign Contributions
The time period of intimating the government about the opening of an account for the purpose of utilising the foreign contribution after it has been received has been increased from fifteen days to forty-five days.
3. Rule 13 – Declaration of receipt of foreign contribution
The requirement by receivers of foreign contributions to furnish details of the same on their website every quarter has been omitted
4. Rule 17A – Changing Designated Bank Account, Aims, Name, Address, Objectives, Or Key Members of An Association
The new rule now gives associations forty-five days’ time, instead of the previously required fifteen days, to inform the government about changes in its bank account, name, address, aims, objectives or key members.
5. Rule 20 – Revision That Is Made Of An Order That was Passed By An Authority Who Is Competent, Under Section 32 of the FCRA
The application for revision of an order is passed by the competent authority electronically, in a form specified by the Central Government, as well as on paper.
Amendments When It Comes To Compounding Offences Under The FCRA, 2010
India’s Central Government has also revised the penalty that is payable when it comes to compounding offences under the FCRA. The maximum fine is related to failing to register or get prior consent for receiving a foreign contribution has increased. This has gone from 10% to 30%. The minimum fine continues to be around ₹1 lakh. The amendment has also made it so that offences associated with transferring or sub-granting money to other people can be compounded just once.
Organisations that are looking for end-to-end solutions when it comes to international operations can also benefit from working with Seamless. Seamless can enable entities to set up in India, or other Asian countries as well.
In lieu of the above amendments, the Central Government has reduced the compliance burden in the FCRA rules. In case there are contraventions that fall under the compoundable offence’s list, the penalties that can be imposed have also been reduced. The changes will certainly improve the processes however the operating environment for nonprofits operating in this sector still remains challenging as the legislature and the judiciary are aligned to take concrete steps towards curbing improper utilisation of foreign contributions coming into the country.
If you want to expand your organisation in India, or in other Asian countries, then Seamless can help you set your business up. Whether you want to work with non profits in India or establish your own entity in the country, Seamless can show you the way.
1One lakh is 100,000, which is more typically written as 1,00,000 in India.’