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The Ministry of Law and Justice notified the Foreign Contribution (Regulation) Amendment Act, 2020 (FCRA Amendment Act) which amends the existing provisions of the Foreign Contribution Regulation Act, 2010 (FCRA) and is notified with effect from 29th September 2020. FCRA Amendment Act seeks to streamline the foreign fund received by the NGO and ensure that the funds are utilized in the effective manner.

Amendments Foreign Contribution (Regulation) Act (FCRA)

Key changes introduced by the Amendment Act have been discussed hereunder

S. No. Particulars Section/Provision Old Provision Amended Provision Remarks
1. Prohibition on receiving Foreign Contribution Section 3 (C) Judge, Government servant or employee of any corporation or any other body controlled or owned by the Government. Public servant, Judge, Government servant or employee of any corporation or any other body controlled or owned by the Government. FCRA Amendment Act has amended this section and added "public servants" (as defined under Indian Penal Code 1860) in this list and also clarified that the term Corporation includes the Government Company as defined in clause (45) of section 2 of the Companies Act, 2013.
2. Prohibition on transferring Foreign Contribution Section 7 (substituted) No person who- (a) is registered and granted a certificate or has obtained prior permission under this Act; and (b) receives any foreign contribution, shall transfer such foreign contribution to any other person unless such other person is also registered and has been granted the certificate and obtained the prior permission under this act. No person who- (a) is registered and granted a certificate or has obtained prior permission under this Act; and (b) receives any foreign contribution, shall transfer such foreign contribution to any other person. FCRA Amendment Act has completely prohibited transfer of Foreign Contribution
3. Restriction on utilization of funds on Administrative expenses Section 8 Administrative expenses exceeding fifty percent of such contribution may be defrayed with prior approval of the Central Government Administrative expenses exceeding twenty percent of such contribution may be defrayed with prior approval of the Central Government. FCRA Amendment Act restricted the utilization of Foreign contribution towards Administrative expenses from 50% to 20%
4. Powers to the Central Government Proviso to Section 11 (2) (Substituted) If any person found guilty for violation of any provision of FCRA Act, then, the unutilized or unreceived amount of foreign contribution shall not be utilized or received, as the case may be, without the prior approval of Central Government Provided that the Central Government, on the basis of any information or report, and after holding a summary inquiry, has reason to believe that a person who has been granted prior permission has contravened any of the provisions of this Act, it may, pending any further inquiry, direct that such person shall not utilise the unutilised foreign contribution or receive the remaining portion of foreign contribution which has not been received or, as the case may be, any additional foreign contribution, without prior approval of the Central Government. Provided further that if the person referred to in sub-section (1) or in this sub-section has been found guilty. Further powers have been granted to Central Government to restrict the usage of Foreign Contribution. If the Government finds that the recipient, prima-facie contravening any of the provisions of this act. It may restrict usage of unutilised foreign contribution or restrict the unreceived amount of foreign contribution based on an inquiry and summary report.
5. Suspension of Certificate Section 13 (1) "for such period not exceeding one hundred and eighty days as may be specified "for a period of one hundred and eighty days, or such further period, not exceeding one hundred and eighty days, as may be specified. FCRA Amendment Act have extended the powers to the Central Government to Suspend the Certificate from 180 days to 180 days + such further period (not exceeding 180 days) on any grounds as it deemed fit.
6. Surrender of Certificate Section 14 A (Newly Inserted) No Provision The Central Government may permit any person to surrender the certificate granted under this Act, if, after making such inquiry as it deems fit, it is satisfied that such person has not contravened any of the provisions of this Act, and the management of foreign contribution and asset, if any, created out of such contribution has been vested in the authority. FCRA Amendment Act introduced the provision for 'Surrender of Certificate.'
7. Renewal of Certificate Section 16 (1) No Provision Provided that the Central Government may, before renewing the certificate, make such inquiry, as it deems fit, to satisfy itself that such person has fulfilled all conditions specified thereunder. FCRA Amendment Act have extended the powers to the Central Government to carry such enquiry as it deems fit prior to renewing the Certificate.
8 Foreign contribution through scheduled bank Section 17 Fully Substituted Foreign contribution to be received only in an account designated as "FCRA Account" by the bank, which shall be opened in such branch of the State Bank of India at New Delhi, as the Central Government may, by notification, specify in this behalf. Provided that such person may also open another ''FCRA Account'' in any of the scheduled bank of his choice for the purpose of keeping or utilising the foreign contribution which has been received from his ''FCRA Account.'' Provided further that such person may also open one or more accounts in one or more scheduled banks of his choice to which he may transfer for utilising any foreign contribution. Provided also that no funds other than foreign contribution shall be received or deposited in any such account. (2) The specified branch of the State Bank of India at New Delhi or the branch of the scheduled bank where the person has opened his foreign contribution account or the authorised person in foreign exchange, shall report to such authority as may be specified,- (a) the prescribed amount of foreign remittance; (b) the source and manner in which the foreign remittance was received; and (c) other particulars, in such form and manner as may be prescribed.' FCRA Amendment Act has provided that foreign contribution can only be received in an account designated as "FCRA account", opened with the prescribed branch of the State Bank of India New Delhi. No funds other than foreign contribution can be received or deposited in the FCRA account. other FCRA accounts (in addition to the FCRA account in the State Bank of India's prescribed branch) may be opened in any scheduled bank for keeping or utilising the received foreign contribution.
9 Power of Central Government to require Aadhaar number, etc., as identification document Section 12 A New Inserted The Central Government may require that any person who seeks prior permission or prior approval under this act to make an application for grant of certificate or for renewal of certificate shall provide as identification document, the Aadhaar number of all its office bearers or Directors or other key functionaries or a copy of the Passport or Overseas Citizen of India Card, in case of a foreigner FCRA Amendment Act has mandatorily require the Aadhar Number of all the office bearers of the Applicant and a copy of passport or OCI card in case of foreigner
 
 

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Disclaimer: The entire contents of this document have been prepared based on relevant provisions and as per the information existing at the time of the preparation. Although care has been taken to ensure the accuracy, completeness, and reliability of the information provided, I assume no responsibility, therefore, users of this information are expected to refer to the relevant existing provisions of applicable Laws. The user of the information agrees that the information is not a piece of professional advice and is subject to change without notice. I assume no responsibility for the consequences of the use of such information.

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