FCRA Amend­ments to Help Both BJP & Congress

De­ci­sion taken af­ter se­ri­ous ob­jec­tions raised dur­ing in­ter-min­is­te­rial govt con­sul­ta­tions The amended act will in­crease the CSR fund kitty. This will help un­lock the unutilised CSR fund: Of­fi­cials

The Economic Times - - Pure Politics -

New Delhi: The cen­tral gov­ern­ment’s de­ci­sion to amend the For­eign Con­tri­bu­tion (Reg­u­la­tion) Act, 2010, through a pro­vi­sion in this year’s bud­get was taken af­ter se­ri­ous ob­jec­tions were raised dur­ing in­ter-min­is­te­rial gov­ern­ment con­sul­ta­tions at the highest lev­els.

The Min­istry of Home Af­fairs had in­vited sug­ges­tions on the pro­posed change in the def­i­ni­tion of ‘for­eign source’ in De­cem­ber and with­drew the move af­ter the gov­ern­ment re­alised it may fail a floor test in Par­lia­ment.

ET was the first to re­port on Oc­to­ber 22, 2015, that the gov­ern­ment planned to tweak­the­act­toeasethe­flowof do­na­tions from for­eign com­pa­nies in the name of cor­po­rate so­cial re­spon­si­bil­ity. The amend­ment in­tro­duced in the Finance Bill on Fe­bru­ary 29 gives a breather to both­theBJPandtheCon­gresss­in­ceitwill be ap­pli­ca­ble with ret­ro­spec­tive ef­fect from Septem­ber 26, 2010.

The two ma­jor po­lit­i­cal par­ties will be able to es­cape ju­di­cial scrutiny for re­ceiv­ing for­eign con­tri­bu­tions from Lon­don­head­quar­tered Vedanta Group, said an of­fi­cial­fa­mil­iar­withthea­mend­ments.In May 2014, the Delhi HC di­rected the gov­ern­ment and the EC to take ac­tion against the BJP and Congress based on a PIL filed by the As­so­ci­a­tion of Demo­cratic Rights. The two par­ties sub- se­quently moved the SC, which is­sued no­tices to the Cen­tre and the EC.

The 2010 Act re­stricts par­ties from ac­cept­ing con­tri­bu­tions from for­eign sources. There are also curbs on do­na­tions by com­pa­nies that are reg­is­tered in In­dia and ma­jor­ity-owned by for­eign­ers.

As per the amend­ment in the Finance Bill, this has now been mod­i­fied as: “Pro­vided that where the nom­i­nal value of share cap­i­tal is within the lim­its spec­i­fied for for­eign in­vest­ment un­der the For­eignEx­changeMan­age­men­tAct,1999, or the rules or reg­u­la­tions made there­un­der, then, notwith­stand­ing the nom­i­nal val­ueof share­cap­i­talof acom­pa­ny­be­ing more than one-half of such value at the time of mak­ing the con­tri­bu­tion, such com­pany shall not be a for­eign source.”

Of­fi­cials told ET that the amended act will in­crease the CSR fund kitty since un­der the Com­pa­nies Act, only In­dian com­pa­nies are re­quired to spend 2% of their profit on CSR. “This will also help un­lock the unutilised CSR fund.”

IN­CREASE CSR FUND KITTY

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OC­TO­BER 22, 2015

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