New Delhi: The Ministry of Home Affairs (MHA) has changed the penalty for various violations of the FCRA 2010 law related to receipt and use of foreign donations by NGOs. The ministry issued these orders on Monday using the powers given under Section 41(1) of this law. According to a gazette notification, this information has been received.
How much penalty for foreign funding violations?
- According to the newly amended provisions, if an organization spends more than 20 percent of the foreign donation on administrative expenses, which is a violation of Section 8 of the Act, then it will have to pay a fine of Rs 1 lakh or 5 percent of the amount spent in excess of the limit (whichever is higher).
- Diverting foreign funds into speculative or risky activities (which is a violation of Section 8(1) of the Act and Rule 4 of 2011) will now attract a fine of Rs 1 lakh or 30 per cent of the money invested in such activities (whichever is higher). Apart from this, the government will also recover the entire income earned from that activity (100 percent).
- If foreign donation was received for a specific purpose and it is used for some other purpose, a penalty of 30 percent or Rs 1 lakh (whichever is higher) will be imposed. Similarly, if an organization accepts, utilizes, or uses foreign donations in violation of the law for unregistered purposes or in a State/Union Territory, the same penalty will be imposed.
What are the rules for receiving foreign funds?
- In a separate notification issued on Monday, the government changed the rules related to receiving foreign funds. Under this, NGOs will have to select their objectives and areas of work from a pre-determined list while applying under the ‘Foreign Contribution (Regulation) Act, 2010’.
- The changed rules permit a variety of religious activities, but explicitly exclude religious conversion as a category eligible for registration under the Act.
- The ministry also said that if the key office bearers of an entity include foreign nationals other than persons of Indian origin, they “will not ordinarily be considered” for registration or prior approval to receive foreign funds under the Act.
- However, there is an exception to the changed rules. Under this, the Central Government can, through an order, specify such special cases or circumstances in which foreign nationals can be allowed to work as chief officers of an institution which seeks registration or prior approval under the Act.
Understand in easy language in pointers
- The government has made several important changes in the FCRA Rules 2011. Now NGOs and other organizations will have to exercise more accountability and strictness in taking and using foreign money.
- The definition of chief officer has been further broadened. Now it includes directors of the company, partners of the firm, trustees, Karta of Hindu Undivided Family (HUF), any person having control over the management of the organization.
- NGOs seeking registration for foreign funding will now have to clearly state for what purpose they will work and in which states or union territories they will work.
- Only those purposes have to be selected in the application which are given in the schedule of the government. These purposes mainly include religious, cultural, economic, educational and social activities.
- These changes have been made to make NGOs more transparent and accountable.
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