FCRA amendment in Finance Bill

Why in News?

The Union government has proposed to amend the repealed Foreign Contribution Regulation Act (FCRA), 1976, retrospectively.




The Representation of the People Act and the FCRA bar political parties from receiving foreign funds.

In 2016, the government amended the FCRA through the Finance Bill route, allowing foreign-origin companies to finance non-governmental organisations and clearing the way for donations to political parties by changing the definition of foreign companies.

The amendment, though done retrospectively, only made valid the foreign donations received after 2010, the year when the 1976 Act was amended. The recent amendment  makes it applicable from 1976 onwards.


The Foreign Contribution (Regulation) Act,  consists of a framework for regulating and controlling the acceptance and utilization of foreign contribution and foreign hospitality.

The FCRA of 1976 defined a foreign company as one with over 50 per cent foreign ownership, thereby disallowing the companies owned by foreign nationals or Indian-origin people based abroad and with foreign citizenship to fund and influence political parties in India.

Penal Provision For Political Party

As per Section 29 B of Representation of the People Act 1951, any political party is prohibited from accepting a donation from foreign sources, However, the RP Act carries no penal provision in case a party is found guilty of accepting foreign funding.

Action against a political party can only be taken by the Home Ministry under FCRA or by CBDT by not giving them any tax exemption on the money received. The Election Commission has no role in this as the law only states what is a violation and the Commission has no powers to act in case of violation. The government is expected to act under other laws.


Source-The Indian Express.