Save Rs 499 on a 2-Year Ad-Free CAclubindia Pro Membership. Subscribe Now!

Applicability of FCRA in case of CSR contribution made by Wholly owned Subsidiary of foreign company

1524 views

Save Share

Radhika Sharma

Student CS

30 Points Posted on 12 January 2023

An Indian company which is a wholly owned subsidiary of a foreign company wants to make a CSR contribution. Is the Foreign Contribution and Regulation Act (FCRA) applicable to such Indian company and any contribution made by such Indian company will be considered as Foreign contribution as per FCRA ? Whether the Indian company falls under the definition of Foreign company as per FCRA ?

Replies (2)

Quick Summary

This discussion explores whether the Foreign Contribution and Regulation Act (FCRA) applies to CSR contributions made by an Indian company that is a wholly owned subsidiary of a foreign entity. It clarifies that such contributions are generally considered foreign contributions under FCRA, and the Indian subsidiary may be defined as a 'foreign company' if foreign ownership or control exceeds 50%. However, an amendment via the Finance Act 2016 may exempt these companies if foreign investment complies with FEMA regulations.

Gourob

service

25 Points Posted on 13 January 2023

As per the FCRA, any contribution made by a company which is owned or controlled by a foreign source, shall be considered as foreign contribution. So, in case of Indian company which is a wholly owned subsidiary of a foreign company, the contribution made by such Indian company will be considered as foreign contribution as per FCRA.

The Indian company would fall under the definition of a "foreign company" as per FCRA, if more than 50% of its share capital is held by a foreign company or individual, or if the management and control of the company is in the hands of a foreign company or individual.

Joy Kumar jain

Managing Director

24 Points Posted on 27 April 2023

There is an amendment made vide the Finance Act 2016 to exclude Indian companies which are subsidiaries of foreign companies if the foreign investment is within the limits laid down under FEMA rules and Regulations.