FCRA: Govt eases penalties for violating law, NGOs can now pay fines

Indian Express,June 07, 2018
By Rahul Tripathi


After a crackdown on NGOs for alleged violations of the Foreign Contribution (Regulation) Act, when more than 18,000 NGOs had licences cancelled or ceased to exist, the Home Ministry has relaxed penalties for contraventions under the Act.
Following an order Tuesday, offences under the Act can be compounded and NGOs will now face fines depending on the violations, which earlier could have meant suspension or cancellation of licences.
Sources in the Home Ministry said the new rules will not be applicable restrospectively.
Several top NGOs including those of social activist Teesta Setalvad, senior lawyer Indira Jaising, Greenpeace, Compassion International and Ford Foundation were under the scanner for alleged violations of the FCRA Act.
NGOs being investigated were charged for receiving foreign donations in one account and utilising funds from another account, spending it on purposes other than for what it was received, or not disclosing the manner in which funds were utilised, said officials.
In an order on June 5, the Ministry of Home Affairs (MHA) said that “for offence punishable under Section 37 for transferring any foreign contribution to any other person in contravention of Section 7 of the Act, a penalty of Rs 1 lakh or 10 per cent of such transferred foreign contribution, whichever is higher,” will have to be paid.
Similarly, for offences punishable under “Section 37 read with Section 17 of the Act for receiving foreign contributions in any account other than specified account, a fine of Rs 1 lakh or 5 per cent of the foreign contribution received in such account, whichever is higher can be paid as penalty.”
The MHA further said, “In case more than one offence has been committed by a person, the total amount of compounding for such offences shall not be more than the value of the foreign contribution involved.”
Under Section 37 of the FCRA Act, “Whoever fails to comply with any provision of this Act for which no separate penalty has been provided in this Act shall be punished with imprisonment for a term which may extend to one year, or with fine or with both.”
Earlier, NGOs could only get compounding of offences if they failed to file annual returns and the maximum penalty was either 10 per cent of the amount of foreign contribution received during a financial year or Rs 10 lakh, whichever was lesser, if they fail to furnish the annual return after two years and up to three years. The last amendments were done by the home ministry in June 2016.
As per the latest rules, “the receiving and depositing of any fund other than foreign contribution account or accounts opened for receiving foreign contributions or for utilising the foreign contribution will attract a penalty of Rs 1 lakh or 2 per cent of such deposit, whichever is higher.”
For an offence “punishable under Section 37 for defraying of foreign contribution beyond fifty per cent of the contribution received for administrative expenses in contravention of Section 8 of the Act, a fine of Rs 1 lakh or 5 per cent of such foreign contribution so defrayed beyond the permissible limit, whichever is higher,” can be paid, the order stated.
After the Centre’s crackdown, foreign funding of NGOs in the past four years witnessed a significant decline. “NGOs received Rs 6,499 crore in 2016-17, as compared to Rs 17,773 crore in 2015-16. The amount received during 2014-15 was Rs 15,299 crore,” said an MHA’s statement to Parliament.
In 2015, the CBI in its report to the Supreme Court had said that “less than 10 per cent out of the 29 lakh registered NGOs across the country file their annual income and expenditure statements.”
Reference:

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