In India, the foreign money that is receive in the form of philanthropy or humanitorian helps, as donation or any form of help. This money is regulated by the Foreign Contribution (Regulation) Act (FCRA). This act monitors all foreign fundings coming to the non-governmental organization. As, this is important because it protects the National security, as funds were should only use for social welfare rather than supporting any type of antisocial activity.
FCRA is applicable for the NGO (Non-governmental organization) of any type. They should register under the FCRA act and follow all the rules and regulations given by.
Who are eligible to recieve foreign funding under the FCRA act?
- Registered NGO working in the social issues like education, health, rural development, women empowerment and environmental protection.
- Charitable trust
- Educational instituitions
History of FCRA Act.
FCRA 1976
FCRA was first enacted in the year 1976 in an emergency period. This was implemented to prevent the foreign funding coming to the India for the prevention of interference in the political and social organization. This act was specially focus on regulating the foreign funding recieved and monitor the transactions.
FCRA 2010
Later when foreign funding started to increase even more. Government brings FCRA 2010 which is then replaced the 1976 FCRA act. It has stricter rules for recieving funding. It includes all NGO to register them under this act. Their registration is valid only for 5 years. Later they need to renew it. They have to file financial return as file tax at the end of financial year.
FCRA 2020
FCRA brings new rules in 2020 for recieving funds. This rules are that, every BGO will have to open bank account in New Delhi branch and recieve money only in this account. Second is they cant transfer their foreign fundings to the other organization it prevent use of money for personal expenses. All the key persons present in the organization should complete their adhar verification.
Compliance and Guidelines given on utilization of funds
Funds should recieve only in the FCRA account in SBI new Delhi branch. From there the fund will be transferred to the NGO specific bank account.
The FCRA set a limit of 20 percent spending on the recieved foreign funds on the administrative tasks, such as rent, bills and salaries. Remaining 80% of the fund should only use for their core social purpose only.
Any NGO recieving funds in their account will not transfer to any other NGO or any other account even if they also have FCRA approved account. Every NGO should utilize their fund separately under their organization only.
Every NGO will file their annual tax return at the end of financial year. Even if one organization does not receive funding for a year then also they should maintain record for that year and file a annual return.
Why FCRA is implemented so strictly?
- To prevent the uses of foreign funding in Indian Politics as supporting specific political party.
- To prevent money laundering and financial terrorism
- To utilize funds for the actual cause of the NGO specifically
- To prevent foreign interference in the sovereignty of India