COVID-19 relief | National

FCRA rules hit overseas COVID aid to hospitals, NGOs

Indian entities, including hospitals and charitable trusts, hoping to receive COVID-19 relief material from overseas individual donors or donor agencies, could be in trouble, unless they are registered under the Foreign Contribution Regulation Act (FCRA) with a stated objective involving provision of medical care. 

On May 3, the government permitted imports without GST levies for pandemic relief material donated from abroad for free distribution in the country, delegating States to certify the entities that will receive such imports. However, no exemption has been granted from the FCRA law that requires any domestic entity receiving foreign material or cash donations to have requisite approvals from the Ministry of Home Affairs. 

Sources said this ambiguity and the prospect of facing prosecution under the FCRA Act’s strict provisions is jeopardising some large donors’ plans to buy equipment like oxygen plants and concentrators for Indian hospitals and smaller charities, and informal groups of persons working in rural areas with weaker health infrastructure. 

In the case of a large hospital, where nearly two dozen patients died after oxygen supplies were not replenished in a timely manner, foreign donors are keen to donate an oxygen production plant on its premises, but the lack of an FCRA nod is holding up the process. As FCRA approvals take a lot of time, the government needs to urgently grant an exemption for all such donations, tax and legal experts told The Hindu.  

“The notification would not meet the intended objective, in the sense that no entity can receive foreign aid in cash, medicines or equipment to save lives, without an FCRA registration. Moreover, the intended use of such foreign contribution should also match the specified objective of the trust at the time of FCRA registration,” said Gaurav Gupta, a Delhi-based lawyer who is privy to several similar cases. 

In additionamendments to the FCRA law introduced last September, prohibit any entity receiving foreign contributions for transferring such foreign contribution to any other person, which would make it difficult even for FCRA-registered entities to pass on the relief material to patients or smaller NGOs, groups working on the ground on a pan-India basis. This could be particularly restrictive in the case of donations of critical medicines whose prices have shot up in the country, that donors may be able to secure cheaper from abroad. 

“The FCRA law does not provide any blanket exemption for imports exempted by the Central Government, so no such exemption is available for importers of such COVID aid. It is advisable that the Centre issues a clarification exempting the receiver/importer from complying with the FCRA provisions for approval and other compliances,” Suresh Surana, founder of tax consulting firm RSM India said. 

The said notification may at best be beneficial only for State-approved entities with FCRA approvals and a stated objective of providing healthcare services, said Mr. Gupta. 

“This is not just about getting a GST exemption on imported goods as many foreign donors had already footed the bill for that last month. The government should have issued a clarification that FCRA rules won’t apply for COVID-19 relief imports, to avoid this ambiguous situation,” said another senior tax lawyer. 

As per the FCRA law, a donation, delivery or transfer of any article, currency or foreign security, by any person who has received it from any foreign source, either directly or through one or more persons, shall also be deemed to be foreign contribution, Mr Surana pointed out, adding that imports mentioned in the May 3 notification may well be covered within the ambit of this definition of Foreign Contribution. 

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Printable version | Jun 24, 2021 12:55:41 PM |

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