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March 15, 2020

What are Offences, Penalties and Compounding under Foreign Contribution Regulation Act 2010

by facelesscompliance in Corporate Law

What are the offences and penalties under FCRA, 2010? Ans. Under section 41, the government has issued a gazette notification dated 5.06.2018 and 27.07.2018, which is highlighted as below

Sr. No. Offence Amount of Penalty
1, Offence  punishable   under section 35 for accepting any hospitality in contravention of section 6 of the Act. Rs. 10,000/-
2. Offence  punishable   under section 37 for transferring any foreign contribution to any other person in contravention of section 7 of the Act or any rule made thereunder. Rs. 1,00,000/- or 10% of such transferred foreign contribution, whichever is higher.
3. Offence punishable under section 37 for defraying of foreign beyond fifty per cent of the contribution received for administrative expenses in contravention of section 8 of the Act. Rs. 1,00,000/- or 5% of such foreign contribution so defrayed beyond the permissible limit, whichever is higher.
4. Offence punishable under section 35 for accepting foreign contribution in contravention of section 11 of the Act. Rs. 1,00,000/- or 10% of the foreign contribution, received, whichever is higher;
5. Offences punishable under section 37 read with section 17 of the Act for – (a) receiving foreign contribution in account in his application for grant of certificate; Rs. 1,00,000/- or 5% of the foreign contribution received in such account, whichever is higher;
  (b) non-reporting the prescribed or source           and                manner                of                such remittance by banks and authorised persons. Rs. 1,00,000/- or 3% of the foreign contribution received or deposited in such account, whichever is higher;
  (c) receiving & depositing any fund other than foreign contribution in the account or accounts opened for receiving foreign contribution or for utilizing the foreign contribution. Rs. 1,00,000/- or 2% of such deposit, whichever is higher;
6. Offence punishable under section 37 for non-furnishing of intimation of the amount of each foreign contribution received and the source from which and in the manner in which, such foreign contribution is received as required under section 18 of the Act. Rs. 1,00,000/- or 5% of the foreign contribution received during the period of non submission, whichever is higher.
7. Offence punishable under section 37 for not maintaining the account and records of foreign contribution received and manner of its utilisation on required section 19 of the Act. Rs. 1,00,000/- or 5% of the foreign contribution during the relevant period of non maintenance of accounts, whichever is higher.

The amount of penalty computed under column (3) of the Table in respect of any offence or offences referred to in column (2) thereof shall not be more than the value of the foreign contribution involved.

How to apply for compounding of an offence under FCRA, 2010?

An application for the compounding of an offence under section 41 of FCRA, 2010 is to be made to the Secretary, Ministry of Home Affairs, New Delhi on a plain paper along with a fee of Rs.1000/- (One Thousand only) in the form of a demand draft or a banker’s cheque in favour of the “Pay and Accounts Officer, Ministry of Home Affairs”, payable at New Delhi.

What if the person is unwilling or unable to pay the penalty imposed?

In the event of failure to pay the penalty, for whatever reason, necessary action for prosecution of the person shall be initiated.

Which are the investigating agencies for investigating and prosecuting a person for violation of FCRA?

The Central Bureau of Investigation or the investigating agencies (Crime Branch) of the State Governments, cause of action of which arises in their respective States, are the designated agencies for investigating and prosecuting a person for violation of FCRA.

Suspension and Cancellation of Registration under Foreign Contribution Regulation Act 2010

Can the Government cancel the certificate of registration granted to a person under FCRA?

Yes. Central Government may cancel the certificate as per the provisions of section 14 of the FCRA, 2010. NOTE – Any person whose certificate has been cancelled under this section shall not be eligible for registration or grant of prior permission for a period of three years from the date of cancellation of such certificate

Can the Government suspend the certificate of registration granted to person under FCRA?

Yes. Central Government may suspend the certificate as per the provisions of section 13 of the FCRA, 2010 for a period not exceeding one hundred and eighty days.

What are the consequences of suspension of the registration certificate granted to a person under FCRA?

A person whose FCRA registration certificate has been suspended shall:-

(a) not receive any foreign contribution during the period of suspension of certificate; provided that the central government specifically approves it on a case by case basis

(b) not utilize the unutilized FC in his custody without the prior approval of the Central Government. Even in this case, only up to twenty-five per cent of the unutilised amount may be spent, with the prior approval of the Central Government, for the declared aims and objects for which the foreign contribution was received. The remaining seventyfive per cent of the unutilised foreign contribution shall be utilised only after revocation of suspension of the certificate of registration.