Penalties for Violation of FCRA Regulations

The Ministry of Home Affairs on July 1 notified certain offences under the Foreign Contribution (Regulation) Act 2010. Any person will be punishable under the FCRA act, if he/she is knowingly – 

• Provides false information under sub-section (c) of section 9 or section 18. 
• Seeks prior permission or registration by means of fraud, false representation or concealment of material fact.

The person will be liable to imprisonment for a term which can extend to six months or fine or both. Other cases in which an NGO will be punishable and penalties for violating the FCRA provisions are mentioned below.

Cases in Which Rules and Regulations of FCRA are Violating

All the NGOs that are receiving foreign contributions should check their activities and provisions of FCRA, so they NGO can avoid those mistakes. The following are the severe cases or offences which are subject to penalties and punishments:

• Accepting foreign contributions without FCRA registration or prior permission.
• Have FCRA registration but receive foreign contributions in different bank accounts.
• Not filing annual returns in prescribed form.
• Filing false information in the annual return. 
• Having FCRA registration and prior permission but not keeping the account information and maintaining books of accounts.
• Receiving foreign contributions on behalf of other NGO not having a FCRA registration.
• Not filing NIL return in the year when foreign contribution is not received.
• Using funds for any other purpose and not the main purpose for which the donation was received.
• Not maintaining the separate books of accounts.
• Mixing the foreign funds with local funds.

Who is Liable for Penalty?

The following persons are liable for penalties and punishable depending on the nature of the offences:

• Non-governmental Organization (NGO)
• Chief Functionary
• Governing Body Members
• Other Officers
• Other Persons Who Indulge

Seizure and Confiscation

 In case of contravention the Central Government has a power of seizing and confiscating currency and articles under FCRA. The provisions are made under the relevant sections:

Section 16

Any gazetted officer, authorised by the Central Government through a general or special order. If the officer found that a person possessed or controlled any article exceeds a value of rupees one thousand in value or currency, whether Indian or foreign. In relation to any provision of the act, or is being contravened, the officer has a right to seize such article or currency.

Section 28

Under Section 25 if any currency, security, article is seized then it is liable to confiscation. Also, If such article, security, or currency is adjudged under section 29 for violation of the act.

Section 29

1. Any confiscation referred to in section 28 can be adjudged—

• Without limit, by the Court of Session within the local limits of whose jurisdiction the seizure was made.
• Subject to such limits as may be prescribed, by such officer, not below the rank of an Assistant Sessions Judge, as the Central Government may, by notification in the Official Gazette, specify on this behalf.

2. When an adjudication under sub-section (1) is concluded by the Court of Session or Assistant Sessions Judge. The Sessions Judge or Assistant Sessions Judge may make such an order as he thinks fit for the disposal by confiscation or delivery of seized articles or currency or security.

Section 30

No order of adjudication of confiscation will be made unless a reasonable opportunity of making a representation is provided to the person from whom the article, currency, or security has been seized.

Penalties for Violating FCRA Regulations

For accepting foreign contributions without obtaining the FCRA registration certificate from the Central Government is punishable under section 11 of the Act. The amount of penalty is Rs. 1 lakh or 30% of the foreign contribution received, whichever is higher.

Earlier the penalty amount prescribed under the section was Rs. 1 lakh or 10% of the foreign contribution received, whichever is higher. Further, the new FCRA online services states the following penalties:

• Every year, the total foreign contribution received has to be intimate to the authority within a prescribed time limit. In case of a failure, a 5% penalty has to be paid for such foreign contribution.
• In case of failure to notify about the opening of account within a specified time period, it is punishable under sections 37, 17, and 19 of the Act. Penalty of Rs. 10,000 per utilisation account will be imposed.
• A failure placed on the website as prescribed in clause (a) of rule 13 if not intimate within the prescribed time. Penalty of Rs. 10,000 will be imposed under sections 37 and 19 of the Act read with rule 13 of the Foreign Contribution (Regulation) Rules, 2011.

Note: The amount of penalty should not be more than the amount received as a foreign contribution. 

Conclusion

To conclude, if an NGO violates the rules and provisions of FCRA then action will be taken against them and they are liable for the punishment. Any NGO that receives foreign contributions must complete the FCRA registration in the first place. So, comply with the rules and regulations of FCRA to avoid any chance of violation.

Author: Dushyant Sharma

Hey there, I'm Dushyant Sharma. With the extensive knowledge I've gained in past 8 years, I have been creating content on various subjects such as banking, insurance, telecom, and all the important registration and licensing processes for various companies. I'm here to help everyone with my expertise in these areas through my articles.