The Foreign Contribution (Regulation) Act, 2010 (‘Act’) was enacted to consolidate the laws regulating the acceptance and utilization of foreign contribution or foreign hospitality. In the year 2011, the Ministry of Home Affairs (‘MHA’) issued Guidelines for consideration of proposals for acceptance of foreign hospitality under the Act through an Office Memorandum. Over the years, there have been numerous amendments in the Act and the Foreign Contribution (Regulation) Rules, 2011 (‘Rules’).
In order to streamline the amendments brought in the Act and the Rules made thereunder with the Guidelines issued in the year 2011, MHA has issued revised Guidelines for consideration of proposals for acceptance of foreign hospitality under the Act.
Certain key provisions amended to do away with the existing ambiguity are as follows:
- Definition of Foreign Source
Foreign Company shall not be considered as a Foreign Source where the nominal value of share capital is within the limits specified for foreign investment under the Foreign Exchange Management Act, 1999 (42 of 1999), or the rules or regulations made thereunder, notwithstanding the fact that the nominal value of share capital of a company being more than one-half of such value held by a Foreign Company, at the time of making the contribution
- Central Government to prohibit receipt of foreign contribution
Revised guidelines include widening of the powers of the Central Government as provided under Section 9 of the Act, The revised guidelines incorporate entire set of powers under Section 9 of the Act, whereby the Central Government has the power to prohibit or to seek permission on acceptance of any foreign contribution or direct furnishing of information on such foreign contribution by any such person not provided under relevant provisions of the Act.
- Submission of application for the grant of permission
Each application submitted for grant of permission to accept foreign hospitality, should be complete in all respects. Further, it should be submitted in online portal ordinarily two weeks before the proposed date of onward journey.
Conclusion: The Changes have been brought about to streamline the amendments brought in the Act and the Rules with the Guidelines issued in the year 2011.
Link of the Guidelines for consideration of proposals for acceptance of foreign hospitality under the Foreign Contribution (Regulation) Act, 2010 is as follows- https://fcraonline.nic.in/home/PDF_Doc/Guid-ForeignHospitality.pdf
PDF version is attached: https://www.dpncindia.com/blog/wp-content/uploads/2022/12/Revised-Guidelines-FCRA.pdf
The information contained herein is based on the Office Memorandum presented by MHA on November 21, 2022. While the information is believed to be accurate to the best of our knowledge, we do not make any representations or warranties, express or implied, as to the accuracy or completeness of this information. Recipients should conduct and rely upon their own examination and analysis and are advised to seek their own professional advice. This note is not an offer, invitation, advice or solicitation of any kind. We accept no responsibility for any errors it may contain, whether caused by negligence or otherwise or for any loss, howsoever caused or sustained, by the person who relies upon it.