FCRA

Q.1 What is foreign contribution?

Ans. As defined in Section 2(1) ( h) of FCRA, 2010, "foreign contribution" means the donation, delivery or transfer made by any foreign source, ─ (i) of any article, not being an article given to a person* as a gift for his personal use, if the market value, in India, of such article, on the date of such gift is not more than such sum** as may be specified from time to time by the Central Government by rules made by it in this behalf; (ii) of any currency, whether Indian or foreign; (iii) of any security as defined in clause (h) of section 2 of the securities Contracts(Regulation) Act, 1956 and includes any foreign security as defined in clause (o) of Section 2 of the Foreign Exchange Management Act, 1999. Explanation 1 – A donation, delivery or transfer or any article, currency or foreign security referred to in this clause by any person who has received it form any foreign source, either directly or through one or more persons, shall also be deemed to be foreign contribution with the meaning of this clause. Explanation 2 ‒ The interest accrued on the foreign contribution deposited in any bank referred to in sub-section (1) of Section 17 or any other income derived from the foreign contribution or interest thereon shall also be deemed to be foreign contribution within the meaning of this clause. Explanation 3 ‒ Any amount received, by an person from any foreign source in India, by way of fee (including fees charged by an educational institution in India from foreign student) or towards cost in lieu of goods or services rendered by such person in the ordinary course of his business, trade or commerce whether within India or outside India or any contribution received from an agent or a foreign source towards such fee or cost shall be excluded from the definition of foreign contribution within the meaning of this clause. * In terms of FCRA, 2010 "person" includes ‒ (i) an individual; (ii) a Hindu undivided family; (iii) an association; and (iv) a companyregistered under section 25 of the Companies Act, 1956. **The sum, as stated at (i) above, has been specified as Rs. 25,000/- vide the Foreign Contribution (Regulation) Amendment Rules, 2012 [G.S.R. 292 (E) dated 12th April, 2012].

Q.2 Whether earnings from foreign client(s) by a person in lieu of goods sold or services rendered by it is treated as foreign contribution?

Ans. No. As clarified at Explanation 3 above, foreign contribution excludes earnings from foreign client(s) by a person in lieu of goods sold or services rendered by it as this is a transaction of commercial nature.

Q.3 Section 2(c)(i) of repealed FCRA, 1976 inter alia defined foreign contribution as the donation, delivery or transfer made by any foreign source of any article, not given to a person as a gift for personal use, if the market value, in India, of such article exceeds one thousand rupees. What limit has been prescribed in FCRA, 2010 in respect of such articles?

Ans. The limit has been specified as Rs. 25000/- through insertion of the following Rule 6A in FCRR, 2011 vide the Foreign Contribution (Regulation) Amendment Rules, 2012 [G.S.R. 292 (E) dated 12th April, 2012]: "6A. When articles gifted for personal use do not amount to foreign contribution. - Any article gifted to a person for his personal use whose market value in India on the date of such gift does not exceed rupees twenty-five thousand shall not be a foreign contribution within the meaning of sub-clause (i) of clause (h) of sub-section (1) of section (2)."

Q.4 What is a foreign source?

Ans. Foreign source, as defined in Section 2(1) (j) of FCRA, 2010 includes:- (i) the Government of any foreign country or territory and any agency of such Government; (ii) any international agency, not being the United Nations or any of its specialized agencies, the World Bank, International Monetary Fund or such other agency as the Central Government may, by notification, specify in this behalf;(iii) a foreign company; (iv) a corporation, not being a foreign company, incorporated in a foreign country or territory; (v) a multi-national corporation referred to in sub-clause (iv) of clause (g); (vi) a company within the meaning of the Companies Act, 1956, and more than one-half of the nominal value of its share capital is held, either singly or in the aggregate, by one or more of the following, namely:- (A) the Government of a foreign country or territory; (B) the citizens of a foreign country or territory; (C) corporations incorporated in a foreign country or territory; (D) trusts, societies or other associations of individuals (whether incorporated or not), formed or registered in a foreign country or territory; (E) Foreign company; (vii) a trade union in any foreign country or territory, whether or not registered in such foreign country or territory; (viii) a foreign trust or a foreign foundation, by whatever name called, or such trust or foundation mainly financed by a foreign country or territory; (ix) a society, club or other association or individuals formed or registered outside India; (x) a citizen of a foreign country;” List of agencies of the United Nations, World Bank and some other International agencies/multilateral organisations

Q.5 Who can receive foreign contribution?
Ans. A ‘person’, as defined in Section 2(1)(m) with the exclusion of those mentioned in Section 3 of FCRA, 2010, having a definite cultural, economic, educational, religious or social programme can receive foreign contribution after it obtains the prior permission of the Central Government, or gets itself registered with the Central Government. Illustrative but not exhaustive lists of activities which are permissible and may be carried out by associations of different nature

1. Religious

 

    • Celebrations of religious functions/festivals etc.

 

    • Construction/repair/maintenance of places of worship, religious schools.

 

    • Education of priests and preachers; (dissemination of the message of good will etc. from their holy books).

 

    • Publication and distribution of religious books/ literature.

 

    • Maintenance of priests / preachers / other religious functionaries.

 

    • Any other activities related to the above.

2. Educational

 

    • Construction and maintenance of school/college.

 

    • Construction and running of hostel for poor students.

 

    • Grant of stipend/Scholarship/assistance in cash and kind to poor/deserving children.

 

    • Purchase and supply of educational material-books, notebooks etc.

 

    • Conducting adult literacy programs.

 

    • Conducting Research.

 

    • Education/Schools for the mentally challenged.

 

    • Non-formal education projects/coaching classes.

 

    • Any other activities related to the above.

3. Economic

Following activities (Not being commercial or profit making activities)

 

    • Micro-finance projects, including setting up banking co-operative and self-help groups.

 

    • Self-sustaining income generation projects/Schemes.

 

    • Agricultural activity.

 

    • Rural Development.

 

    • Animal husbandry projects.

 

    • Setting up and running handicraft centre/cottage and khadi industry/social forestry projects.

 

    • Vocational training, tailoring, motor repairs, computers etc.

 

    • Any other activities related to the above, not being commercial activities.

4. Social

 

    • Construction/Running of Hospital/dispensary/clinic.

 

    • Construction of community halls etc.

 

    • Construction and Management of old age home.

 

    • Welfare of the aged widows.

 

    • Construction and Management of Orphanage.

 

    • Welfare of the orphans.

 

    • Construction and Management of dharamshala /shelter.

 

    • Holding of free medical/health/family welfare/immunisation camps.

 

    • Supply of free medicine, and medical aids, including hearing aids, visual aids, family planning aids etc.

 

    • Provision of aids such as Tricycles, callipers etc. to the handicapped.

 

    • Treatment/Rehabilitation of drug addicts.

 

    • Welfare/Empowerment of women.

 

    • Welfare of children.

 

    • Provision of free clothing/food/to the poor. Needy and destitute.

 

    • Relief/Rehabilitation of victims of natural calamities.

 

    • Help to the victims of riots/other disturbances.

 

    • Digging of bore wells.

 

    • Sanitation including community toilets etc.

 

    • Awareness camp/Seminar/workshop/meeting/conference.

 

    • Providing free legal aid/Running legal aid centre.

 

    • Holding sports meet.

 

    • Awareness about Acquired Immune Deficiency Syndrome (AIDS)/Treatment and rehabilitation of persons affected by AIDS.

 

    • Welfare of the physically and mentally challenged.

 

    • Welfare of the Schedules Castes.

 

    • Welfare of the Scheduled Tribes.

 

    • Welfare of the Backward Classes.

 

    • Environmental programs.

 

    • Survey for Socio-economic and other welfare programs.

 

    • Preservation & maintenance of Wild Life.

 

    • Preservation of Natural Resources.

 

    • Awareness against social evils.

 

    • Rehabilitation of victims of heinous crimes.

 

    • Rehabilitation of beggars, bootleggers, child labour etc.

 

    • Creating awareness of Government schemes & Law to general public.

 

    • Any other activities related to the above.

5. Cultural

 

    • Celebration of national events (Independence/Republic day/festivals.

 

    • Theatre/Films etc.

 

    • Maintenance of places of historical and cultural importance.

 

    • Preservation of ancient/tribal art forms.

 

    • Preservation & promotion of Cultural Heritage & Literature of India.

 

    • Cultural shows.

 

  • Any other activities related to the above.