Explained: What is Foreign Contribution (Regulation) Act?

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News: Government of India has suspended the icences of 13 non-governmental organisations(NGOs) under the Foreign Contribution (Regulation) Act (FCRA), 2010.

Facts:

  • Foreign Contribution (Regulation) Act: It is an act of Parliament enacted in 1976 and amended in 2010 to regulate foreign donations and to ensure that such contributions do not adversely affect internal security.
  • Coverage: It is applicable to all associations, groups and NGOs which intend to receive foreign donations. 
  • Who cannot receive foreign donations? Members of the legislature and political parties, government officials, judges and media persons are prohibited from receiving any foreign contribution. 
    • However, in 2017 the FCRA was amended through the Finance Bill to allow political parties to receive funds from the Indian subsidiary of a foreign company or a foreign company in which an Indian holds 50% or more shares.
  • Registration: It is mandatory for all such NGOs to register themselves under the FCRA.The registration is initially valid for five years and it can be renewed subsequently if they comply with all norms. 
  • Purpose of Foreign contribution: Registered associations can receive foreign contributions for social, educational, religious, economic and cultural purposes.Filing of annual returns on the lines of Income Tax is compulsory. 
  • Ministry of Home Affairs(MHA) New Rules: In 2015, the MHA notified new rules which required NGOs to give an undertaking that the acceptance of foreign funds is not likely to prejudicially affect the sovereignty and integrity of India or impact friendly relations with any foreign state and does not disrupt communal harmony. 
    • It also said all such NGOs would have to operate accounts in either nationalised or private banks which have core banking facilities to allow security agencies access on a real time basis.