Gifts exceeding Rs.1 Lac, received from relatives abroad, have to be reported to the Home Ministry under the FCRA Act 2010

Gifts exceeding Rs.1 Lac, received from relatives abroad, have to be reported to the Home Ministry under the FCRA Act 2010

FOREIGN CONTRIBUTION REGULATION ACT 2010.

Originally this Act was promulgated in 1976. However it was repealed and now it is known as the FCRA 2010 , with 54 sections, which has come into effect from May 1, 2011. This Act also has rules known as the FCR Rules, 2011 which have come into force simultaneously with FCRA, 2010 w.e.f 1st May, 2011.

The broad structure of the FCRA Act revolves around section 11 according to which any person [ Indl, HUF, Association i.e Trust, NGO or any Sec. 25 company] with a definite cultural, economic, educational religious or social program, if it desires to receive Foreign Contribution has to either take registration or specific prior permission u/s 11 from the Ministry of Home Affairs.

This takes to the understanding of the words " Person" & "Foreign contribution" & "Foreign source"

Sec. 2(1) (m) defines PERSON as including an Individual HUF, an association or Sec.25 company. Thus individual are covered under the FCRA Act. Even unregistered organizations with a definite cultural, economic, educational religious or social program are covered. In simple terms all NGO's are covered including religious entities.

Sec. 2(1)(h) of FCRA explains `Foreign Contribution' : means the donation, delivery or transfer made ( directly or through one or more persons ) 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 the rules made by it in this behalf.
(ii)    Of any CURERNCY ( Indian or foreign )
(iii)    Of any SECURITY incl foreign security


Sec. 2(1)(j) of FCRA explains that `foreign source' 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
(iii) A foreign company;
(iv) A corporation, not being a foreign company, incorporated in a foreign country or territory;
(v) a multi-national corporation { Place of work or operates business in 2 or more countries }
(vi) a Company within the meaning of the Companies Act, 1956, and more than 50% 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;

(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 of individuals formed or registered outside India;
(x) A citizen of a foreign country;
but does not include any foreign institution which has been permitted by the Central Government, by notification in the Official Gazette, to carry on its activities in India ;

As per Rule # 6 of the FCR Rules 2011, any person ( this includes Individual ) receiving foreign contribution ( articles or money ) in excess of Rs. 1 Lac or equivalent thereto, in a financial year from any of his relatives ( Refer sec. 6 of the Companies Act 1956 ) shall inform the Central Govt { The Secretary, Govt of India, Ministry of Home Affairs, FCRA Wing, Jaisalmer House, 26-Mansingh Road, New Delhi-110 011 } in Form No. FC-1 within 30 days of receipt of the said contribution.

Effectively this means that any Individual receiving any money as Gifts etc ( but other than as fees, export proceeds, ordinary course of business ) any from any relatives abroad, has to inform the Home Ministry of the same, within 30 days.

Going by the definition above, any NGO in India, receiving any donation from any such Indian company having more than more than 50% of its share capital, held by foreign companies, foreign citizens or foreign trusts has to take prior permission u/s 11 from the Ministry of Home. Many Indian companies have more than 50% foreign shareholding.

Definition of "Relative" as given in Section 6 of Companies Act, 1956. Also ref Sec. 2(41)
A person shall be deemed to be a relative of another, if, and only if :

(a) they are members of a Hindu undivided family ; or
(b) they are husband and wife ; or
(c) the one is related to the other in the manner indicated in Schedule IA (as under)
1. Father.
2. Mother (including step-mother).
3. Son (including stepson).
4. Son's wife.
5. Daughter (including step-daughter).
6. Father's father.
7. Father's mother.
8. Mother's mother.
9. Mother's father.
10. Son's son.
11. Son's son's wife.
12. Son's daughter.
13. Son's daughter's husband.
14. Daughter's husband.
15. Daughter's son.
16. Daughter's son's wife.
17. Daughter's daughter.
18. Daughter's daughter's husband.
19. Brother (including step-brother).
20. Brother's wife.
21. Sister (including step-sister).
22. Sister's husband.