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Foreign Contribution (Regulations) in India

Foreign Contribution Regulations in India

What is FCRA?
Foreign Contribution Regulation Act (FCRA) was first enacted in 1976 and later amended in 2010. The FCRA is applicable to every association, groups and NGOs which expect to receive foreign donations. It attempts to ensure that such contributions do not adversly impact internal security. All NGOs seeking foreign funding have to register themselves under the FCRA with MHA. Registered NGOs can receive foreign contribution for social, educational, religious, economic and cultural program. Initial registration is valid for 5 years and it can be renewed subsequently if NGOs comply with all norms. All registered NGOs must file annual returns, on the lines of Income tax. Since 2015, NGOs have been required to certify that accepting foreign financing will not adversely affect India’s sovereignty, integrity, or friendly relations with other nations.

Who can receive Foreign Contribution?
A person having a definite cultural, economic, educational, religious or social program can receive foreign after getting registered with the central government or by obtaining a prior permission.

Who cannot receive Foreign Contribution as per FCRA?
 The following persons are not eligible for foreign contribution:

  • Candidate of election,
  • Any media house or media person,
  • Judge or Government servant,
  • Member of legislature,
  • Political parties or any organization of political nature.

[Note- In 2017, the MHA through the finance bill route, amended the 1976 repealed FCRA law paying the way for political parties to receive funds from the Indian subsidiaries of a foreign company or a foreign company in which an Indian person holds 50% or more shares.]

How to get Foreign Contribution?
As discussed above, there are 2 ways one can get registered. One can be registered for a particular amount from a particular source by getting Prior Permission under FCRA from Central Government and the second method is regular registration i.e. getting registered with Central Government.

Prior permission from Central Government:
There are three criteria’s:

  • It is given in exchange for receiving a specified sum of money from a specific donor in order to carry out a specific activity or project.
  • The association should be registered under statutes like the Societies Registration Act, 1860 or Sec 8 of the Companies Act, 2013 etc.
  • A Commitment letter from the overseas donor is also necessary, outlining the precise sum and the donation’s goal.

Registration with Central Government:
There are also three criteria’s:

  • The association should be registered under statutes like the Societies Registration Act, 1860 or sec. 8 of Companies Act, 2013 etc.
  • It should be in existence for at least three years and shall have spent at least 15 lakhs during the last three years for the purpose of definite cultural, economic, religious program.
  • It cannot have been convicted of or subject to legal action for any offence.

Application Procedure
In order to apply:

  • Form FC-3A for registration and form FC-3B for prior permission has to be submitted online;
  • A cost of Rs. 10,000 must be paid for registration and Rs. 5,000 for prior permission;
  • It is mandatory to have a FCRA Bank Account with SBI, AADHAR No. and DARPAN ID.

This registration will be valid for a period of five years, and it may be renewed in form FC-3C before the end of the initial period of validity.

When is a registration suspended or cancelled?

  • If MHA receives any adverse input against the functioning of associations, it inspects and can suspend the FCRA registration initially for 180 days.
  • The association is prohibited from accepting any new donations up until the final decision and from spending more than 25% of the available funds in the designated bank account without the MHA’s approval.
  • MHA has the right to revoke an organisation or association’s registration, which will prevent them from registering or receiving a “prior permission” for three years after the date of the cancellation.

As specified above, in order to assure that foreign contribution don’t affect the internal security of the country negatively and to increase transparency and accountability in the receipt and use of foreign contributions, the regulations were brought in existence.

However, a country’s NGOs may not operate effectively if there are too many laws. The foreign contribution regulations should not affect the sharing of resources across the borders which is necessary for the functioning of community at global level.

Written by – Jatin Gupta 

At AJSH, we assist our clients in strategic planning, succession planning, organizational development, organizational change management, facilitation and much more. If you have any questions or wish to know more about Foreign Contribution (Regulations) in India, kindly contact us.


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