MHA Notifies Revised Penalty for Compounding of Offences under FCRA

The Central Government through Gazette Notification S.O.3025(E) dated 01.07.2022 in F. No. II/21022/23 (04)/2021-FCRA-III notified revised amount of penalty payable in case of compounding of offences and Officer competent for compounding under the Foreign Contribution (Regulation) Act, 2010 (‘FCRA’).

This notification supersedes the Gazette Notification S.O. 2291(E) issued on 05th June 2018 issued on the matter.

Summary of New Penalties introduced from 1st July, 2022 for Compounding of offences under FCRA, 2010

 

The Notification has so far notified 5 additional new offences eligible for compounding.

 

1. Offence:

 

Failure to intimate receipt of foreign contribution from foreign relative in Form FC-1 with 3 months

 

Penalty:

5% of FC received in a financial year

 

2. Offence: 

 

Failure to furnish Form FC-6D for changes in additional FC-utilisation Bank Account by FCRA registered entities 

 

Penalty: 

Rs. 10,000

 

3. Offence: 

 

Failure to furnish Form FC-6D for changes in additional FC-utilisation Bank Account by entities with prior FCRA permission: 

 

Penalty: 

Rs. 10,000

 

4. Offence:

 

Failure to furnish Forms FC-6A to FC-6E for intimating changes in name or address in Form FC-6A, changes in nature, objects and registration in Form FC-6B, changes in designated FCRA bank account in Form FC-6C, Changes in FCRA utilization Bank account in Form FC-6D or changes in members etc. in Form FC-6E within 45 days

 

Penalty:

Rs. 10,000 for each violation

 

5. Offence: 

 

Failure to publish annual audited FCRA accounts on website

 

Penalty:

Rs. 10,000

 

Summary of modifications in existing offences which can be compounded under FCRA, 2010

 

1. The maximum amount of penalty for receipt of foreign contribution (FC) without obtaining registration or prior permission is raised to 30% from 10%. However, the minimum amount of penalty is kept unchanged at Rs. 1,00,000/-.

 

2. Compounding of offence for transferring or sub-granting FCRA funds to any other person can be compounded only once.

The present notification lists 12 offences which can be compounded under the FCRA, 2010. The quantum of penalty amount for some of the offences mentioned in the erstwhile notification of 2018 has been increased. Certain new offences are also listed which are eligible for compounding.

The provisions of this notification shall come into effect from 1st July, 2022.

The details of offences which can be compounded under the FCRA, 2010 and the quantum of penalty to be paid as per the present Notification of 2021 effective from 1st July 2022 are given below-

Sl. No.	Offences under FCRA, 2010	Amount of Penalty	Remarks
1	Acceptance of hospitality	Rs. 10,000	No Change
2	Transferring FC to any other registered or unregistered person	Rs. 1,00,000 or 10% of FC transferred, whichever is higher	No change in the penalty but henceforth, this offence is compoundable only once.
3	More than 20% of FC incurred for Admin expenses	Rs. 1,00,000 or 5% of such excess FC utilised, whichever is higher	No Change
4	FC received without registration or prior permission	Rs. 1,00,000 or 30% of FC received, whichever is higher	Max amount increased from 10% to 30%
5(a)	Receiving FC amount in a bank account other than designated bank account	Rs. 1,00,000 or 5% of FC received in such account, whichever is higher	No Change
5(b)	Non-reporting of FC receipts in an account by Banks	Rs. 1,00,000 or 3% of FC received in such account, whichever is higher	No Change
5(c)	Receiving or depositing any amount other than FC in FCRA bank accounts	Rs. 1,00,000 or 2% of such FC deposit, whichever is higher	No Change
6	Non-furnishing of intimation of each FC receipts	Rs. 1,00,000 or 5% of FC received during the non-submission period, whichever is higher	No Change
7	Failure to maintain the accounts of FC receipts and records of FC utilized	Rs. 1,00,000 or 5% of FC received during the period of non-maintenance of accounts, whichever is higher	No Change
8	Failure to furnish Form FC-1 for receipt of FC from foreign relatives within the prescribed time	5% of FC received in the financial year	New offence inserted
9	Failure to furnish Form FC-6D regarding opening of FC utilization Bank account within the prescribed time	Rs. 10,000	New offence inserted
10	Failure to furnish Form FC-6D regarding opening of FC utilization Bank account within the prescribed time by a entity having prior permission	Rs. 10,000	New offence inserted
11	Failure to intimate changes in designated bank account, nature, key members, etc. in Form FC-6A to Form FC-6E within the prescribed time	Rs. 10,000 for each failure	New offence inserted
12	Failure to publish annual audited accounts on website within the prescribed time	Rs. 10,000	New offence inserted

Note: In all the cases above, the amount of penalty shall not exceed the amount of foreign contribution (FC) received.

It is further provided that application to compound the above-mentioned offences may be processed in physical or electronic form.

The Central Government has also issued another Notification GSR 506(E) on the even date to increase the time limit of various compliances under the FCRA, 2010 which came into effect on 1st July, 2022.

This Notification prescribing penalty for compounding of offences is issued under section 41(1) of the FCRA, 2010 and in supersession of the notification of the Government of India, Ministry of Home Affairs published in the Gazette of India, Extraordinary, Part-II, Section 3, Subsection (ii), vide S.O. 2291(E), dated the 5th June, 2018. 

It provides five additional offences eligible for compounding, all of such cases can be disposed of by the Director or Deputy Secretary in charge. It has continued all the offences as was notified by the notification of 2018.

Section 41(1) of the FCRA, 2010 provides that any offence punishable under FCRA, 2010 may be compounded by such officers or authorities as may be notified by the Central Government by notification in the Official Gazette for such sum as may be notified in this regard.

Rule 21 of Foreign Contribution (Regulation) Rules, 2011 prescribes the procedure for filing an application for compounding of an offence along with a fee of Rs. 3,000/-.

However, any offence shall be compounded before initiation of prosecution proceedings.

Under the law, all the offences are compoundable under FCRA. Only those offences which are punishable with imprisonment only are not compoundable.   

Compounding of offence means relieving the offender from imprisonment in lieu of payment of fees or penalty. The offence is settled by the government after payment of the requisite sum under the law.

Sub-section (2) of section 41 provides that compounding of a similar offence cannot be done within a period of three years from the date of compounding of the earlier offence. After three years, if the same offence is repeated, it shall be deemed to be a fresh offence. However, it should be noted that the government has the power to suspend or cancel the FCRA registration on frequent and repetitive violations.

However, the offence committed for transferring or sub-granting any foreign contribution to any other person in contravention of section 7 of the Act or any rule made thereunder shall be compoundable only once. It is immaterial whether such compounding was made for one or more than one transfers. There cannot be a second instance of compounding for the same offence related to the transfer or sub-granting of FC funds to any other person.

The five additional offences eligible for compounding are discussed below.

1. Entry 8 of the Table in the Notification describes the offence which can now be compounded. 

It states that any offence punishable under sections 3, 11 and 35 of the Act read with rule 6 for failure to intimate about receipt of foreign contribution within the prescribed time limit shall be compounded on payment of penalty of an amount equal to five per cent of such foreign contribution received in a financial year. These cases of compounding shall be disposed of by the Director or Deputy Secretary in charge.

Section 3 of the Act prohibits acceptance of foreign contribution by any candidate of election, journalist, correspondent, public servant, government servant, Judges, MLAs, political party, organisation of political nature, etc.

Section 11 makes it mandatory to obtain registration or prior permission from the Central Government before receiving the foreign contribution. In other words, section 11 prohibits acceptance of foreign contribution without obtaining registration or prior permission.

Section 35 provides for punishment by way of imprisonment for a term up to 5 years or with fine or with both to a person who accepts or assists in accepting foreign contribution in contravention of any provision of the FCRA, 2010.

Rule 6 of the FCR Rules, 2011 prescribes for furnishing of intimation regarding the details of foreign contribution received from any foreign relative to the Central Government in Form No. FC-1 if the amount of receipt exceeds Rs. 10 Lakh in a financial year within a period of 3 months from the date of receipt of such contribution. [The threshold limit of Rs. 10 lakh and time limit of 3 months is as per the amendment effective from 01.07.2022.]

Thus, if any person commits an offence which is punishable under section 3 or section 11 or section 35 of the Act or fails to intimate the receipt of FC in Form FC-1 within 3 months from the date of receipt of such contribution then the person can compound the case by paying penalty equal to 5% of the foreign contribution received in a financial year.

However, the amount of penalty as computed shall not exceed the value of the foreign contribution received.

2. Entry 9 and entry 10 of the Table in the Notification describe the offences which can now be compounded. 

It states that offence punishable under section 37, section 17 and section 19 of the Act read with clause (e) of sub-rule (1) of rule 9 for failure to intimate about the opening of account or accounts within the prescribed time shall be compounded on payment of penalty of ten thousand rupees per utilisation account for failure to intimate within the prescribed time. These cases of compounding shall be disposed of by the Director or Deputy Secretary in charge.

Section 37 of FCRA, 2010 provides for punishment by way of imprisonment for a term up to 1 year or with fine or with both to a person who fails to comply with any of the provisions of the Act for which no separate penalty is provided.

Section 17 of the Act mandates an FCRA registered entity or an entity with prior permission to receive foreign contribution only in the designated FCRA bank account. It also relaxes such entities to have another FCRA utilization bank account. However, no FC can be received in the utilization bank account, but FC received in the designated FCRA Bank account can be transferred to the FCRA utilization bank account.

Section 19 mandates an entity with FCRA registration or prior permission shall maintain an account of receipt of foreign contribution and a record of the utilization of foreign contribution in the prescribed form and manner.

Rule 9(1)(e) of the FCR Rules, 2011 prescribes furnishing an intimation for the opening of an additional FC-utilisation Bank Account for the purpose of utilisation of foreign contribution. 

Similarly, Rule 9(2)(e) of the FCR Rules, 2011 prescribes furnishing an intimation for the opening of an additional FC-utilisation Bank Account for the purpose of utilisation of foreign contribution in case of entities having prior permission.

The existing rules say a person may open one or more accounts in one or more banks for the purpose of utilising the foreign contribution after it has been received and, in all such cases, intimation in electronic form in Form FC-6D shall be furnished to the Secretary, Ministry of Home Affairs, New Delhi within 45 days of the opening of any account. This is applicable both for FCRA registration and FCRA prior permission.

Thus, if any person commits an offence which is punishable under section 37 or section 17 or section 19 of the Act or fails to intimate change in FCRA utilization bank account in Form FC-6D within 45 days then the person can compound the case by paying a penalty of Rs. 10,000 for each instance.

However, the amount of penalty as computed shall not exceed the value of the foreign contribution received.

3. Entry 11 of the Table in the Notification describes the offences which can now be compounded. 

It states that offence punishable under section 37, section 11 and section 17 of the Act read with rule 17A, for failure to intimate about details within the prescribed time shall be compounded on payment of penalty of ten thousand rupees for each violation of failure to intimate within the prescribed time. These cases of compounding shall be disposed of by the Director or Deputy Secretary in charge.

Section 37 of FCRA, 2010 provides for punishment by way of imprisonment for a term up to 1 year or with fine or with both to a person who fails to comply with any of the provisions of the Act for which no separate penalty is provided.

Section 11 makes it mandatory to obtain registration or prior permission from the Central Government before receiving the foreign contribution. In other words, section 11 prohibits acceptance of foreign contribution without obtaining registration or prior permission.

Section 17 of the Act mandates an FCRA registered entity or an entity with prior permission to receive foreign contribution only in the designated FCRA bank account. It also relaxes such entities to have another FCRA utilization bank account. However, no FC can be received in the utilization bank account, but FC received in the designated FCRA Bank account can be transferred to the FCRA utilization bank account.

Rule 17A of the FCR Rules, 2011 prescribes that any person who has been granted a certificate of registration under section 12 or prior permission under section 11 of the Act shall intimate the following changes in the prescribed form electronically within 45 days of such change-

Form No.	Intimation of Changes
FC-6A	Intimation - Change of name and/ or address within the State of the Association
FC-6B	Intimation - Change of nature, aims and objects and registration with local/relevant authorities in respect of the association
FC-6C	Intimation - Change of designated bank/ branch/ bank account number of designated FC receipt-cum-utilisation bank account
FC-6D	Intimation - Opening of additional FC-utilisation Bank Account for the purpose of utilisation of foreign contribution
FC-6E	Intimation - Change in original Key members of the association

 

Thus, if any person commits an offence which is punishable under section 37 or section 11 and section 17 of the Act or fails to intimate change in Form FC-6A to Form FC-6E within 45 days then the person can compound the case by paying a penalty of Rs. 10,000 for each instance.

However, the amount of penalty as computed shall not exceed the value of the foreign contribution received.

4. Entry 12 of the Table in the Notification describes the offences which can now be compounded. 

It states that offence punishable under section 37 and section 19 of the Act read with rule 13, for failure to place on website as prescribed in clause (a) of rule 13 within the prescribed time. shall be compounded on payment of penalty of ten thousand rupees for each violation. These cases of compounding shall be disposed of by the Director or Deputy Secretary in charge.

Section 37 of FCRA, 2010 provides for punishment by way of imprisonment for a term up to 1 year or with fine or with both to a person who fails to comply with any of the provisions of the Act for which no separate penalty is provided.

Section 19 mandates an entity with FCRA registration or prior permission shall maintain an account of receipt of foreign contribution and a record of the utilization of foreign contribution in the prescribed form and manner.

Rule 13 of the FCR Rules, 2011 prescribes publishing audited annual accounts including FCRA receipts and payments account, FCRA income and expenditure account and the FCRA Balance Sheet for every financial year on the official website of the entity or on the website as specified by the government within a period of 9 months from the closure of the financial year i.e. by 31st December. 

Thus, if any person commits an offence which is punishable under section 37 and section 19 of the Act and fails to publish the audited annual accounts of the entity on the website then the person can compound the case by paying a penalty of Rs. 10,000 for each violation.

However, the amount of penalty as computed shall not exceed the value of the foreign contribution received.

5. Modification of existing offence in Entry 4 of the Table in the Notification

Apart from the additional offences listed above, the new notification of 2022 has also increased the penalty for accepting foreign contribution in contravention of section 11 of the Act. Section 11 mandates receipt of foreign contribution only by a person registered under the FCRA or have obtained prior permission from the Central Government.

There is no change prescribed for the minimum amount of penalty of Rs. 1,00,000. However, the maximum amount of penalty is increased to 30% from 10% of the foreign contribution received.

It states that offence punishable under section 35 for accepting foreign contribution in contravention of section 11 of the Act may be compounded on payment of a penalty of one lakh rupees or thirty per cent. of the foreign contribution received, whichever is higher. These cases of compounding shall be disposed of by the Director or Deputy Secretary in charge.

However, the amount of penalty as computed shall not exceed the value of the foreign contribution received.

Read the full text of MHA Notification No. S.O.3025(E) dated 01.01.2022 on Penalty for Compounding of Offences under FCRA

MINISTRY OF HOME AFFAIRS 

NOTIFICATION 

New Delhi, the 1st July, 2022

S.O. 3025(E).—In exercise of the powers conferred by sub-section (1) of section 41 of the Foreign Contribution (Regulation) Act, 2010 (42 of 2010) and in supersession of the notification of the Government of India, Ministry of Home Affairs published in the Gazette of India, Extraordinary, Part-II, Section 3, Sub￾section (ii), vide S.O. 2291(E), dated the 5 th June, 2018, except as respects things done or omitted to be done before such supersession, the Central Government hereby specifies the officer in column (4) of the Table, who may, before institution of any prosecution under the said Act, compound the offences under the said Act specified in column (2), on payment of the amount specified in column (3), of the said Table, namely:- 

TABLE

Sr. No.	Offence	Amount of Penalty	Officer competent for compounding
(1)	(2)	(3)	(4)
1.	Offence punishable under section 35 for accepting any hospitality in contravention of section 6 of the Act.	Ten thousand rupees	Director, or as the case may be, the Deputy Secretary in-charge of the section responsible for the administration of the Act.
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: Provided that transfer of foreign contribution (inclusive of more than one instances of transfer, if any) shall be compoundable only once.	One lakh rupees or ten per cent. of such transferred foreign contribution, whichever is higher	Director, or as the case may be, the Deputy Secretary in-charge of the section responsible for the administration of the Act.
3.	Offence punishable under section 37 for defraying of foreign contribution beyond twenty per cent of the contribution received for administrative expenses in contravention of section 8 of the Act.	One lakh rupees or five per cent. of such foreign contribution so defrayed beyond the permissible limit, whichever is higher.	Director, or as the case may be, the Deputy Secretary in-charge of the section responsible for the administration of the Act.
4.	Offence punishable under section 35 for accepting foreign contribution in contravention of section 11 of the Act.	One lakh rupees or thirty per cent. of the foreign contribution received, whichever is higher.	Director, or as the case may be, the Deputy Secretary in-charge of the section responsible for the administration of the Act.
5.	Offences punishable under section 37 read with section 17 of the Act for- (a) receiving foreign contribution in any account other than specified account in his application for grant of certificate; (b) non-reporting the prescribed amount of foreign remittance or source and manner of such remittance by banks and authorised persons. (c) receiving and depositing any fund other than foreign contribution in the account or accounts opened for receiving foreign contribution or for utilising the foreign contribution.	One lakh rupees or five per cent. of the foreign contribution received in such account, whichever is higher; One lakh rupees or three per cent. of the foreign contribution received or deposited in such account, whichever is higher. One lakh rupees or two per cent. of such deposit, whichever is higher.	Director, or as the case may be, the Deputy Secretary in-charge of the section responsible for the administration of the Act. Director, or as the case may be, the Deputy Secretary in-charge of the section responsible for the administration of the Act. Director, or as the case may be, the Deputy Secretary in-charge of the section responsible for the administration of the Act.
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.	One lakh rupees or five per cent. of the foreign contribution received during the period of non submission, whichever is higher.	Director, or as the case may be, the Deputy Secretary in-charge of the section responsible for the administration of the Act.
7.	Offence punishable under section 37 for not maintaining the account and records of foreign contribution received and manner of its utilisation as required section 19 of the Act	One lakh rupees or five per cent. of the foreign contribution during the relevant period of non-maintenance of accounts, whichever is higher.	Director, or as the case may be, the Deputy Secretary in-charge of the section responsible for the administration of the Act.
8.	Offence punishable under sections 3, 11 and 35 of the Act read with rule 6 for failure to intimate about receipt of foreign contribution within the prescribed time limit.	Five per cent. of such foreign contribution received in a financial year.	Director, or as the case may be, the Deputy Secretary in-charge of the section responsible for the administration of the Act.
9.	Offence punishable under section 37, section 17 and section 19 of the Act read with clause (e) of sub-rule (1) of rule 9 for failure to intimate about opening of account or accounts within the prescribed time.	Ten thousand rupees per utilisation account for failure to intimate within the prescribed time.	Director, or as the case may be, the Deputy Secretary in-charge of the section responsible for the administration of the Act.
10.	Offence punishable under section 37, section 17 and section 19 of the Act read with clause (e) of sub-rule (2) of rule 9 for failure to intimate about opening of account or accounts within the prescribed time.	Ten thousand rupees per utilisation account for failure to intimate within the prescribed time.	Director, or as the case may be, the Deputy Secretary in-charge of the section responsible for the administration of the Act.
11.	Offence punishable under section 37, section 11 and section 17 of the Act read with rule 17A, for failure to intimate about details within the prescribed time.	Ten thousand rupees for each violation of failure to intimate within the prescribed time.	Director, or as the case may be, the Deputy Secretary in-charge of the section responsible for the administration of the Act.
12.	Offence punishable under section 37 and section 19 of the Act read with rule 13, for failure to place on website as prescribed in clause (a) of rule 13 within the prescribed time.	Ten thousand rupees for each violation.	Director, or as the case may be, the Deputy Secretary in-charge of the section responsible for the administration of the Act.

2. 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 received.

3. The application to compound offences specified above may be processed in physical or electronic form as may be specified by the Government.

[F. No. II/21022/23 (04)/2021-FCRA-III] 

V.S. RANA, Director (FCRA) 

Download MHA Notification No. S.O.3025(E) dated 01.01.2022 on Penalty for Compounding of Offences under FCRA in PDF format

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