New Penalties to compound FCRA offences

Ministry of Home Affairs has issued Notification dated 5^th June, 2018 S.O. 2291(E) listing offences which hitherto were not compoundable (e.g. defraying of foreign contribution beyond fifty per cent of the contribution received for administrative expenses). 

For virtually every offence (save the offence of accepting any foreign hospitality in contravention of FCRA where penalty is Rs. 10,000/) the minimum penalty is a sum of Rs. 100,000/-. 

The Notification also lists officers competent for compounding such offences. In all cases it is the Director, or as the case may be, the Deputy Secretary in-charge of the section responsible for the administration of the Act.

The Notification can be seen or downloaded at:

https://mha.gov.in/sites/default/files/Compoundingnotification06062018.pdf

This latest Notification of 5^th June 2018 is in suppression of the notifications of the Ministry of Home Affairs Numbers S.O. 1976(E), dated the 26th August, 2011 and S.O. 2133(E), dated the 16th June, 2016. Under these earlier Notifications offences which could be compounded were limited. However, penalties were lower, especially with regard to late filing of returns.

Implications

1. Whoever accepts, or assists any person, political party or organization in accepting, any foreign contribution or any currency or security from a foreign source, in contravention of any provision of FCRA or any Rule or Order made there under, shall be punished with imprisonment for a term which may extend to five years, or with fine, or with both.

This offence can now be compounded with a penalty of Rs. 10,000/-

2. No person who is registered and granted a certificate under FCRA or has obtained prior permission under this FCRA and receives any foreign contribution, shall transfer such foreign contribution to any other person unless such other person is also registered and had been granted the certificate or obtained the prior permission under this Act.

Contravention of this provision can be now compounded with a penalty of Rs. 1,00,000/- or 10% of such transferred foreign contribution, whichever is higher.

3. Organisations registered under FCRA or having prior permission are required not to defray as far as possible such sum, not exceeding fifty per cent of such contribution, received in a financial year, to meet administrative expenses, without prior permission of MHA.

Contravention of this provision can now be compounded with penalty of Rs. 1,00,000/- or 5% of such foreign contribution so defrayed beyond the permissible limit, whichever is higher.

4. No person having a definite cultural, economic, educational, religious or social programme shall accept foreign contribution without either having prior permission or registration under FCRA.

Contravention of this provision can now be compounded with penalty of Rs. 1,00,000/- or 10% of the foreign contribution received, whichever is higher.

5 a. All foreign contributions must be received only in the FCRA Bank account specified in the application for grant of prior permission or registration certificate under FCRA. Receiving foreign contribution in any account other than the specified account is an offence.

This offence can now be compounded with penalty of Rs. 1,00,000/- or 5% of the foreign contribution received in such account, whichever is higher.

5b. Not reporting the prescribed amount of foreign remittance or source and manner of such remittance by banks and authorized persons too is an offence but now compoundable with penalty Rs. 1,00,000/- or 3% of the foreign contribution received or deposited in such account, whichever is higher.

5c. Receiving & depositing any fund other than foreign contribution (local or non FC funds) in the account or accounts opened for receiving foreign contribution or for utilizing the foreign contribution is also an offence, but, now compoundable with penalty of Rs. 1,00,000/- or 2% of such deposit, whichever is higher

6. Organisations are required to intimate the amount of each foreign contribution received and the source from which and in the manner in which, such foreign contribution is received both quarterly as also by filing annual return in Form FC 4.

Failure to comply can now be compounded with penalty of Rs. 1,00,000/- or 5% of the foreign contribution received during the period of non submission, whichever is higher.

7. Every organization which has prior permission or registration under FCRA is required to maintain books of account and records of foreign contribution received and manner of its utilization.

Contravention of this provision can now be compounded with penalty of Rs. 1,00,000/- or 5% of the foreign contribution during the relevant period of not maintaining accounts, whichever is higher.

In case of multiple offences

MHA has clarified that in case more than one offence has been committed by a person/organisation, the total amount of compounding for such offences shall not be more than the value of the foreign contribution involved.