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CS Executive · Economic, Commercial and Intellectual Property Laws · Law relating to Foreign Contribution Regulation

A registered association receives foreign contribution for rural education and invests part of it, along with the income from it, in speculative business. Which statement is correct under Section 8?

Using the contribution or its income for speculative business is prohibited. Section 8(1)(a) requires use for the stated purpose, and its proviso bars both the contribution and any income arising from it from speculative business, with activities defined by rules.

  1. AIt is allowed if the income is reinvested in education
  2. BIt is allowed if the speculative activity is profitable
  3. CIt is prohibited, as the contribution or income arising from it must not be used for speculative businessCorrect
  4. DIt is allowed up to twenty per cent of the contribution

Explanation

The first proviso to Section 8(1)(a) says foreign contribution or any income arising out of it shall not be used for speculative business. No percentage exemption or profitability test exists. The Central Government specifies by rules what counts as speculative business.

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