What is Foreign Contribution and what is a Foreign Source
- Is a gift or an article given to any person in India, given that the current market value of the gift/article is not more than the sum specified by the Government of India.
- Is any currency, be it Indian or foreign
- Is any security defined under the Clause (h) of the Securities Contracts Regulation Act 1956.
In general definition, a foreign contribution is any donation or money or gift or article given to any person who has received it from a foreign source, either directly or indirectly. Other definition defines foreign contribution as any monetary or valuable contribution given by a foreigner to an Indian, by way of fee or cost of goods or services rendered by the person for his business, trade or commerce.Apparently, foreign contribution means any donation delivery or money transfer done by any foreign sources. The clause (j) of section 2(1) describes the foreign sources. According to this clause, a foreign source is
- The government of any foreign country or any organization associated with the government
- Any agency located in any other country except India, or World Bank, International Monetary Fund or any such agency working with the government
- Any company having its registered office located in a foreign country
- A multinational company having its offices located in other countries
- A company having more than half of its value held by the Government of a Foreign Country, a citizen of Foreign Country, another company in Foreign Country or a trust or society located in foreign country.
However, the definitions and guidelines for Foreign Contribution and Foreign Source have been modified in the Act 2010. Earlier, any gift for personal use with value more than Rs. 1000 was exempt, but now the government can revise the limits time to time. Currently, the value limit for such gifts or articles is set as Rs. 100,000.
Understanding the meanings of foreign contribution and foreign source is necessary before receiving any funds from the foreign sources. Company-registration.in helps you with understanding the meanings of these terms well and get the benefit of them.
Posted by Anita Aswal - 17th June 15