TaxTMI 
TaxTMI 
Guidelines issued under Section 36(1)(a) of the Banking Regulation Act, 1949 -Implementation of the provisions of Foreign Contribution (Regulation) Act, 2010
X X X X Extracts X X X X
X X X X Extracts X X X X
....ines 3 Salient Features of the FCRA, 2010 3.1 Introduction to FCRA, 2010 3.2 Prohibition on Acceptance of Foreign Contribution 3.3 Restrictions on Acceptance of Foreign Hospitality 3.4 Registration for Acceptance of Foreign Contribution 3.5 Prohibitions and Restrictions on Receipt, Transfer, Utilization etc. of Foreign Contribution 3.6 Foreign Contribution to be Received through a Scheduled Bank 3.7 Maintenance of Accounts and Disposal of Assets 3.8 Powers of Inspections and Seizure 3.9 Miscellaneous Issues 4 Rules Framed under the Act and Reporting by Banks 1. Introduction 1.1 Government of India, Ministry of Home Affairs has published a Notification S.O. 909 (E) dated the 29th April, 2011, in the Official Gazette bringing into force the Foreign Contribution (Regulation) Act, 2010 ("the Act") with effect from May 1, 2011. A Gazette Notification G.S.R. 349 (E) dated the 29th April, 2011, has also been issued notifying the Foreign Contribution (Regulation) Rules, 2011 ("the Rules") made under Section 48 of the Act. The Rules have come into force simultaneously with the Act. With the coming into force of this Act, the Foreign Contribution (Regulation) Act, 19....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ecified in his/her application. It strictly prohibits the receipt or deposit of any other funds (other than foreign contribution) in such accounts. The Act mandates that every bank or authorized person in foreign exchange shall report to specified authority, the prescribed amount of foreign remittance, source and manner in which foreign remittance was received and other particulars in such form and manner as may be prescribed. Section 18 of the Act requires every person who has been granted a certificate of registration or prior permission under the Act to intimate the Central Government on the details provided therein in the manner stipulated therein. This intimation has to be accompanied by a copy of the statement indicating the particulars of foreign contribution received duly certified by an officer of the bank or authorized person in foreign exchange. 2.3 Associations which were granted certificates of registration or prior permission under Section 6 of the Foreign Contribution (Regulation) Act, 1976, will continue to be eligible to receive foreign contribution under the Act and such registration shall be valid for a period of five years from the date on which the Act came in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....) Correspondent, columnist, cartoonist, editor, owner, printer or publisher of a registered newspaper; (c) Judge, government servant or employee of any entity controlled or owned by the Government; (d) Member of any Legislature; (e) Political party or office bearers thereof; (f) Organisations of a political nature as may be specified; (g) Associations or companies engaged in the production or broadcast of audio news or audiovisual news or current affairs programmes through any electronic mode or form or any other mode of mass communication; (h) Correspondent or columnist, cartoonist, editor, owner of the association or company referred to in (g) above. The Act empowers the Central Government to specify organizations as organizations of political nature by publication in the Official Gazette. Foreign contribution can, however, be accepted by the above-mentioned persons in the following specific cases: (a) by way of salary, wages or other remuneration due to him or to any group of persons working under him, from any foreign source or by way of payment in the ordinary course of business transacted in India by such foreign source; or (b) by way of payment, in the cours....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mpowered to prohibit any person or organization not specified in the Act from accepting any foreign contribution and to require any person or class of persons, not specified in the Act to obtain prior permission of the Central Government before accepting any foreign hospitality. 3.4 Registration for Acceptance of Foreign Contribution Section 11 of the Act mandates that except as otherwise provided in the Act, no person having a definite cultural, economic, educational, religious or social program shall accept foreign contribution, unless such person obtains a certificate of registration from the Central Government. In case a person falling in the above category is not registered with the Central Government, it can accept foreign contribution only after obtaining prior permission of the Central Government. The Central Government can, by Notification in the Official Gazette, specify the person or class of persons who shall obtain its prior permission before accepting the foreign contribution, the areas in which such contribution shall be accepted, the purpose for which foreign contribution shall be utilised and the sources from which foreign contribution shall be accepted. The Cen....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n one or more banks for utilising the foreign contribution received by him. However, no funds other than foreign contribution shall be received or deposited in such account or accounts. The Act makes it mandatory for every bank or authorised person in foreign exchange to report to such specified authority (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. Every person who has been granted a certificate or given prior approval under the Act has to give, within such time and in such manner as may be prescribed, an intimation to the Central Government, and such other authority as may be specified by the Central Government, as to the amount of each foreign contribution received by it, the source from which and the manner in which such foreign contribution was received, and the purposes for which, and the manner in which such foreign contribution was utilised by him. Further, every person receiving foreign contribution has to submit a copy of a statement indicating therein the particulars of foreign contribution received, duly certified by an offi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ure of activities which would be treated as speculative activities, what constitutes administrative expenses, procedure for availing of foreign hospitality by specified categories of persons, procedure relating to application for obtaining 'registration' or 'prior permission' to receive foreign contribution, whom to make application for compounding, procedure for transferring foreign contribution to other registered or unregistered persons, the Forms to be used for various purposes etc. 4.2 Rule 13 of the said Rules mandates that in case a person who has been granted a certificate of registration or prior permission receives foreign contribution in excess of one crore rupees, or equivalent thereto, in a financial year, he/it shall place the summary data on receipts and utilisation of the foreign contribution pertaining to the year of receipt as well as for one year thereafter, in the public domain. 4.3 It is important to note that in terms of Rule 15, the amount of foreign contribution lying unutilised in the exclusive foreign contribution bank account of a person whose certificate of registration has been cancelled shall vest with the banking authority concerned ....