{"id":19587,"date":"2023-03-31T16:49:25","date_gmt":"2023-03-31T11:19:25","guid":{"rendered":"https:\/\/gstguntur.com\/?p=19587"},"modified":"2023-05-10T16:48:36","modified_gmt":"2023-05-10T11:18:36","slug":"the-foreign-contribution-regulation-act-2010-ca-final-law-study-material","status":"publish","type":"post","link":"https:\/\/gstguntur.com\/the-foreign-contribution-regulation-act-2010-ca-final-law-study-material\/","title":{"rendered":"The Foreign Contribution Regulation Act, 2010 \u2013 CA Final Law Study Material"},"content":{"rendered":"

The Foreign Contribution Regulation Act, 2010 \u2013 CA Final Law Study Material<\/a> is designed strictly as per the latest syllabus and exam pattern.<\/p>\n

The Foreign Contribution Regulation Act, 2010 \u2013 CA Final Law Study Material<\/h2>\n

Question 1.
\nState the persons who are prohibited from accepting foreign contribution under the FCRA, 2010.
\nAnswer:
\nPersons prohibited from accepting foreign contribution:
\nAs per Sec. 3 of FCRA, 2010, no foreign contribution shall be accepted by any:<\/p>\n

(a) candidate for election;
\n(b) correspondent, columnist, cartoonist, editor, owner, printer or publisher of a registered newspaper;
\n(c) Public servant, Judge, Government servant or employee of any corporation or any other body controlled or owned by the Government;
\nCorporation means a corporation owned or controlled by the Govt, and includes a Govt, company;<\/p>\n

(d) member of any Legislature;
\n(e) political party or office-bearer thereof;
\n(f) organisation of a political nature as may be specified u\/s 5 by the C.G.;
\n(g) association or company engaged in the production or broadcast of audio news or audio-visual news or current affairs programmers\u2019 through any electronic mode, or any other electronic form as defined in the IT Act, 2000 or any other mode of mass communication;
\n(h) correspondent or columnist, cartoonist, editor, owner of the association or company referred to in clause (g).<\/p>\n

Question 2.
\nWhether foreign remittances received from a relative are to be treated as foreign contribution as per FCRA, 2010? [RTP-May 18]
\nAnswer:
\nForeign remittances received from a relative:<\/p>\n

As per Sec. 4(e) of the Foreign Contribution Regulation Act, 2010 and Rule 6 of Foreign Contribution Regulation Rules, 2011, even the persons prohibited u\/s 3, i.e., persons not permitted to accept foreign contribution, are allowed to accept foreign contribution from their relatives.<\/p>\n

However, in terms of Rule 6 of Foreign Contribution Regulation Rules, 2011, any person receiving foreign contribution in excess of \u20b9 1 lakh or equivalent thereto in a financial year from any of his relatives shall inform the C.G. in prescribed Form within 30 days from the date of receipt of such contribution.
\nConclusion: Foreign remittances received from a relative is not treated as foreign contribution.<\/p>\n

\"The<\/p>\n

Question 3.
\nMr. Indian received foreign contribution of amount 1.10 lakh from his relative residing abroad. Examine whether Mr. Indian can accept foreign remittances as per provisions of the FCRA, 2010.
\n[MTP-March 18, Oct. 19]
\nAnswer:
\nForeign contribution from relative :<\/p>\n

As per Sec. 4(e) of FCRA, 2010 read with Rule 6 of FCRR, 2011, even the persons prohibited under section 3, i.e., persons not permitted to accept foreign contribution, are allowed to accept foreign contribution from their relatives.<\/p>\n

However, in terms of Rule 6 of FCRR, 2011, any person receiving foreign contribution in excess of \u20b9 1 lakh or equivalent thereto in a financial year from any of his relatives shall inform the C.G. in prescribed Form within 30 days from the date of receipt of such contribution.
\nConclusion: Mr. Indian can accept the foreign remittance from relative but he shall inform the C.G. of his receiving the foreign contribution of amount 1.10 lakh as foreign contribution is in excess of 1 lakh rupees.<\/p>\n

Question 4.
\nX, is an association having certificate of registration transfers the Foreign Contribution received by it to another organization? Whether X can validly transfer the foreign contribution. If yes, then what is the process to do so? Is there any restriction on transfer of funds to other organisations? [RTP-May 19]
\nAnswer:
\nTransfer of Foreign Contribution:<\/p>\n

As per Sec. 7 of FCRA, 2010 (as amended by FCR (Amendment) Act, 2020 w.e.f. 29.09.2020), no person who is registered and granted a certificate or has obtained prior permission under this Act; and receives any foreign contribution, shall transfer such foreign contribution to any other person.
\nConclusion: X cannot transfer the Foreign Contribution received by it to another organization.<\/p>\n

Question 5.
\nMr. Satish, General Secretary of a political party received an invitation from the American Labour Party. He wants to avail foreign hospitality. Define the term “foreign hospitality”. In the light of the provisions of the Foreign Contribution (Regulation) Act, 2010, decide whether he can avail it. Discuss also the exception, if any, under which the provisions of the said Act may be relaxed. [May 18 – New Syllabus (6 Marks)]
\nAnswer:
\nMeaning of Foreign Hospitality:
\nSection 2(i) of Foreign Contribution Regulation Act, 2010 defines the term “foreign hospitality” as any offer, not being a purely casual one, made in cash or kind by a foreign source for providing a person with the costs of travel to any foreign country or territory or with free boarding, lodging, transport or medical treatment.<\/p>\n

Restriction on acceptance of foreign hospitality:<\/p>\n

As per Section 6, no member of a Legislature or office-bearer of a political party or Judge or Government servant or employee of any corporation or any other body owned or controlled by the Government shall, while visiting any country or territory outside India, accept, except with the prior permission of the Central Government, any foreign hospitality.<\/p>\n

Conclusion: Mr. Satish is not allowed to avail foreign hospitality without the prior permission of Central Government (Ministry of Home Affairs).<\/p>\n

Exceptions:<\/p>\n

Section 6 provides that it shall not be necessary to obtain any such permission for an emergent medical aid needed on account of sudden illness contracted during a visit outside India.<\/p>\n

But, where such foreign hospitality has been received, the person receiving such hospitality shall give an intimation to the C.G. as to the receipt of such hospitality within one month from the date of receipt of such hospitality, and the source from which, and the manner in which, such hospitality was received.<\/p>\n

\"The<\/p>\n

Question 6.
\nMr. Peter, a Member of the Legislature in India, visited Sydney, Australia to attend World Trade Con-ference as a representative of Government of India after obtaining due permission of the Central Government as per the provisions of Foreign Contribution (Regulation) Act, 2010. His expenditure on foreign travel was borne by Bret Lee Limited, a foreign company. While attending the conference, Mr. Peter suddenly encountered chest pain and he was immediately admitted in the nearby hospital for medical care and treatment.<\/p>\n

The medical expenses of \u20b9 2,00,000 was borne by Bret Lee Limited. Mr. Peter seeks your advice about the procedure to be followed in the above situation under the provisions of Foreign Contribution (Regulation) Act, 2010. Please advise suitably.
\n[MTP-Oct. 18, RTP-Nov. 18]
\nAnswer:
\nRestrictions on Acceptance of foreign hospitality:<\/p>\n

As per Sec. 6 of the Foreign Contribution (Regulation) Act, 2010, no member of a Legislature or office-bearer of a political party or Judge or Government servant or employee of any corporation or any other body owned or controlled by the Government shall, while visiting any country or territory outside India, accept, except with the prior permission of the Central Government, any foreign hospitality.<\/p>\n

It is also provided that it shall not be necessary to obtain any such permission for an emergent medical aid needed on account of sudden illness contracted during a visit outside India, but, where such foreign hospitality has been received, the person receiving such hospitality shall give an intimation to the C.G. as to the receipt of such hospitality within 1 month from the date of receipt of such hospitality, and the source from which, and the manner in which, such hospitality was received by him.<\/p>\n

As per Rule 7 of Foreign Contribution (Regulation) Rules, 2011, in case of emergent medical aid needed on account of sudden illness during a visit abroad, the acceptance of foreign hospitality shall be required to be intimated to the Central Government within 60 days of such receipt giving full details including the source, approximate value in Indian Rupees, and the purpose for which and the manner in which it was utilized.
\nConclusion: Mr. Peter need to comply with the requirements as stated in Sec. 6 and Rule 7.<\/p>\n

Question 7.
\nAn Association registered under the Foreign Contribution (Regulation) Act, 2010 (the act) received donation from a club registered in Singapore. The Association proposes:
\n(i) To transfer 10% of the donation to “Home for Aged Society”, an unregistered person and 15% to “Welfare Club” a registered person under the Act,
\n(ii) To invest portion of the donation in Chits promising high returns.
\nIn the light of provisions of the Foreign Contribution (Regulation) Act, 2010 decide whether the association can carryout the above proposals and if so, state the procedures to be followed under the said Act?’ [Nov. 18-New Syllabus (6 Marks))
\nAnswer:
\nTransfer of Foreign Contribution to Others:<\/p>\n

As per Sec. 7 of FCRA, 2010 (as amended by FCR (Amendment) Act, 2020 w.e.f. 29.09.2020), no person who is registered and granted a certificate or has obtained prior permission under this Act; and receives any foreign contribution, shall transfer such foreign contribution to any other person.<\/p>\n

As per Sec. 8 of FCRA, 2010, any foreign contribution or any income arising out of it shall not be used for speculative business. As per Rule 4 of Foreign Contribution (Regulations) Rules, 2011, participation in any scheme that promises high returns like investment in chits or land or similar assets not directly linked to the declared aims and objectives of the organization or association is considered as speculative activity.<\/p>\n

Conclusion:<\/p>\n

    \n
  1. Transfer of 10% of the donation to “Home for Aged Society\u201d, an unregistered person cannot be made after obtaining approval of Central Government as per Rule 24.<\/li>\n
  2. Transfer of 15% to “Welfare Club\u201d a registered person under the Act, cannot be made.<\/li>\n
  3. Investment of the donation in Chits promising high returns is not allowed.<\/li>\n<\/ol>\n

    Question 8.
    \nA foreign co., Srikripa Ltd. established by few Indians in Singapore. Being a strong believer of Sai, the management of the company used to donate a huge amount to the sai trust, in Mumbai, India. Enumerate in the given situation whether the donation so made by Srikripa Ltd. is a foreign contribution. Is the acceptance of such donation by the Sai trust is valid. [MTP-March 19]
    \nAnswer:
    \nAcceptance of Foreign contribution from foreign source:<\/p>\n

    As per Sec. 2(1 )(h) of FCRA, 2010, “Foreign contribution\u201d means the donation, delivery or transfer made by any foreign source:<\/p>\n

      \n
    1. of any article, (except given as a gift for 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;<\/li>\n
    2. of any currency, whether Indian or foreign;<\/li>\n
    3. security and includes any foreign security under the Foreign Exchange Management Act, 1999.<\/li>\n<\/ol>\n

      As per explanation to the section, a donation, delivery or transfer of any article, currency or foreign security referred to in this clause by any person who has received it from any foreign source, either directly or through one or more persons, shall also be deemed to be foreign contribution within the meaning of this clause.<\/p>\n