Mysteries of FCRA 2010
‘Foreign company’ &
‘Multi National Company’ continue to be treated as ‘foreign
source’
In
the previous issue of our newsmagazine we had in our article titled:
“Who is “Foreign & Who Is Not? Mysteries of FCRA 2010” made
it clear that the recent amendment under Finance Act 2016 is specific
only to sub-clause (vi) of Section 2(1) (j) and therefore companies
within the meaning of the Indian Companies Act where more than
one-half of the nominal value of its share capital is held, either
singly or in the aggregate, by FIIs or FDIs will no longer be treated
as ‘foreign source’. However a ‘Foreign company’ or ‘Multi
National Company’ (MNC) will continue to be treated as ‘foreign
source’.
the previous issue of our newsmagazine we had in our article titled:
“Who is “Foreign & Who Is Not? Mysteries of FCRA 2010” made
it clear that the recent amendment under Finance Act 2016 is specific
only to sub-clause (vi) of Section 2(1) (j) and therefore companies
within the meaning of the Indian Companies Act where more than
one-half of the nominal value of its share capital is held, either
singly or in the aggregate, by FIIs or FDIs will no longer be treated
as ‘foreign source’. However a ‘Foreign company’ or ‘Multi
National Company’ (MNC) will continue to be treated as ‘foreign
source’.
However,
some professionals continue to hold the view
that since the intent of the Parliament was to take all foreign
companies out of the purview of FCRA 2010, contributions from MNCs
and foreign companies are no longer deemed foreign contribution.
some professionals continue to hold the view
that since the intent of the Parliament was to take all foreign
companies out of the purview of FCRA 2010, contributions from MNCs
and foreign companies are no longer deemed foreign contribution.
We
are of the view that unless Parliament specifically amends sub-clause
(iii) (foreign company) and sub-clause (v) (multinational
corporation) of Section 2(1)(j), both foreign companies and MNCs
should be treated as ‘foreign source’ under FCRA 2010.
are of the view that unless Parliament specifically amends sub-clause
(iii) (foreign company) and sub-clause (v) (multinational
corporation) of Section 2(1)(j), both foreign companies and MNCs
should be treated as ‘foreign source’ under FCRA 2010.
The
Finance Minister’s speech only highlights the more important
proposals of the budget. Those
are not the enactments by the Parliament. The law, as enacted, is
what is contained in the Finance Act. Only after it is legislated
upon by the Parliament, that a proposal constitutes the authoritative
expression of the legislative will of Parliament!
Finance Minister’s speech only highlights the more important
proposals of the budget. Those
are not the enactments by the Parliament. The law, as enacted, is
what is contained in the Finance Act. Only after it is legislated
upon by the Parliament, that a proposal constitutes the authoritative
expression of the legislative will of Parliament!
Even
recently, the Supreme Court of India
in the case of Amin Merchant vs. Chairman, Central Board of Excise &
Revenue (Civil Appeal Nos. 4676 – 4677 of 2013) has observed: “The
speech of the Finance Minister and the financial/budget proposals
duly passed by Parliament are two separate and distinct documents;
the law as enacted is what is contained in the Finance Act after it
is legislated upon by the Parliament. Budgetary proposals constitute
legislative material antecedent to the enactment of law. The Finance
Minister’s speech only highlights the more important proposals of
the budget. Those are not the enactments by the Parliament. The law
as enacted is what is contained in the Finance Act.”
recently, the Supreme Court of India
in the case of Amin Merchant vs. Chairman, Central Board of Excise &
Revenue (Civil Appeal Nos. 4676 – 4677 of 2013) has observed: “The
speech of the Finance Minister and the financial/budget proposals
duly passed by Parliament are two separate and distinct documents;
the law as enacted is what is contained in the Finance Act after it
is legislated upon by the Parliament. Budgetary proposals constitute
legislative material antecedent to the enactment of law. The Finance
Minister’s speech only highlights the more important proposals of
the budget. Those are not the enactments by the Parliament. The law
as enacted is what is contained in the Finance Act.”
Where
Finance Act 2016 is concerned, Parliament has amended
only sub-clause (vi) of Section 2(1) (j) and NOT specifically amended
sub-clause (iii) (foreign company) and sub-clause (v) (multinational
corporation) of Section 2(1) (j) and therefore we request
organisations registered under FCRA 2010 to exercise care and
caution.
Finance Act 2016 is concerned, Parliament has amended
only sub-clause (vi) of Section 2(1) (j) and NOT specifically amended
sub-clause (iii) (foreign company) and sub-clause (v) (multinational
corporation) of Section 2(1) (j) and therefore we request
organisations registered under FCRA 2010 to exercise care and
caution.