FCRA

Introduction

The Foreign Contribution (Regulation) Act (FCRA) is a legislative framework that governs the acceptance and utilization of foreign funds by non-profit organizations. Enacted to safeguard national integrity, the FCRA ensures that foreign contributions are received only from bona fide sources and used strictly for the declared cultural, educational, religious, or social purposes. It mandates rigorous compliance protocols, including registration with the Ministry of Home Affairs, maintenance of dedicated bank accounts, and periodic audits by certified professionals. Recent amendments have further refined these controls by tightening reporting requirements and introducing enhanced transparency measures. In essence, the FCRA not only protects India's strategic interests but also reinforces corporate governance and accountability within the non-profit sector. 

Historical Evolution of FCRA 

• The FCRA was enacted in 1976 in order to maintain strict control over voluntary organisations and political associations that received foreign fundings.  

• In 1984, an amendment was made to the act requiring all the Non-Governmental Organisations to register themselves with the Home Ministry.  

• In 2010, the act was repealed and a new act with strict provisions was enacted, it was amended in 2010 when new measures were adopted to regulate foreign contributions with effect from 1st May 2011.  

• The Foreign Contribution (Regulation) Act, 2010 was again amended through the Foreign Contribution (Regulation) Amendment Act, 2020 with effect from 28th September 2020.  

Recent Amendments and Highlights 

Following were the highlights of the Foreign Contribution (Regulation) Amendment Act, 2020: 

• No Foreign contribution can be accepted by a public servant, Judge, Government servant or employee of any corporation or any other body controlled or owned by the Government [section 3(1)(c) of FCRA, 2010] 

• Amendment Act completely prohibits transfer of foreign contribution to any other person [section 7 of FCRA, 2010]. 

• Defraying of foreign contribution towards administrative expenses reduced to 20% from 50% of contribution received – [section 8(1) of FCRA, 2010]. 

• Central Government may restrict or prohibit a person granted “prior permission” from either utilising the unutilized foreign contribution or receive remaining portion of foreign contribution if it has reason to believe that provisions of the Act have been contravened – [proviso to section 11(2) of FCRA, 2010]. 

• Every person who makes an application for “prior permission” or “registration” to open an “FCRA Account” as specified in section 17 – [section 12 (1A) of FCRA, 2010]. 

• Aadhaar number of all functionaries Resident in India and copy of Passport or OCI card in case of foreigner mandatory for application of prior permission or registration under FCRA or renewal thereof – [section 12A of FCRA, 2010]. 

• Suspension of certificate under consideration for cancellation extended for a further period, not exceeding one hundred and eighty days, beyond the initial suspension period of one hundred and eighty days – [section 13 of FCRA, 2010]. 

• Provision made for Surrender of Certificate of Registration under FCRA and the management of foreign contribution and asset to vest with such authority as specified – [section 14A of FCRA, 2010]. 

• All foreign contributions to be received in the designated 'FCRA Account', namely State Bank of India, New Delhi Main Branch (SBI-NDMB). May open another “FCRA account” in any of the scheduled bank for the purpose of keeping or utilising the foreign contribution received in the SBI ‘‘FCRA Account’. May also open one or more accounts in one or more scheduled banks to which funds may be transferred for utilising any foreign contribution, subject to the condition that no local contributions shall be deposited in this account– [section 17 of FCRA, 2010]. 

• Vide Notification G.S.R. 695(E) [F. NO. II/21022/23(12)/2020-FCRA-III], dated 10-11-2020, in exercise of the powers conferred by section 48 of the Foreign Contribution (Regulation) Act, 2010, the Central Government hereby makes the following rules further to amend the Foreign Contribution (Regulation) Rules, 2011, through the enforcement of the Foreign Contribution (Regulation) (Amendment) Rules, 2020 w.r.e.f 29.04.2011. 

Benefits of Registering under FCRA 

Advantages of acquiring FCRA registration 

• Receive Money from Abroad: FCRA registration lets your organization legally accept donations from other countries for your cultural, educational, religious, or social projects.   

• Clear and Open Reporting: It requires you to show exactly how you collect and spend foreign funds, which builds trust with donors and the public.   

• Legal and Tax Perks: Registered organizations often receive tax breaks and government support, which protects them legally and financially.   

• Helps Social Workers: With FCRA status, social workers can easily track where the foreign funds are coming from, helping them support their clients better.   

• Prevents Misuse of Funds: The system ensures that foreign money is spent only for its intended purpose, stopping any misuse. 

Legal and Regulatory Framework 

The Foreign Contribution (Regulation) Act (FCRA) is not only a gateway for legal international funding but also a robust framework that mandates strict compliance and transparency. Below is an overview of the legal and regulatory framework under FCRA: 

Legal Framework 

1. Statutory Basis and Objectives: 

Enacted in 2010 (repealing the earlier 1976 law), the FCRA consolidates and streamlines the regulatory process for foreign contributions. Its primary objectives are to regulate the receipt and utilization of foreign funds, ensure these funds are used solely for their declared, bona fide purposes, and protect national security, public interest, and the integrity of the nation. 

2. Regulatory Oversight: 

The Ministry of Home Affairs is the principal authority responsible for administering the FCRA. This includes: 

1. Registration and Monitoring: NGOs, charitable trusts, societies, and Section 8 companies must register with MHA to become eligible for foreign contributions. 

3. Compliance and Reporting: Registered entities are required to maintain separate bank accounts, file annual returns (Form FC-4), and undergo regular audits to ensure proper utilization of funds. 
4. Enforcement: The MHA has the power to conduct inspections, audit accounts, and, if necessary, suspend or cancel registration if an entity fails to comply with the statutory provisions. 

3. Key Regulatory Provisions 

Registration Requirements: 

Entities must satisfy rigorous eligibility criteria, including a minimum period of existence, clear documentation of objectives, and proof of previous expenditure on programs aligned with their mission. The online application process (via Form FC-3) ensures uniformity and standardization in registration. 

2. Usage Restrictions: 

FCRA mandates that no more than 20% of the foreign contribution can be spent on administrative expenses. This strict allocation ensures that the majority of funds directly support the core activities of the organization. 

3. Reporting and Transparency: 

Every registered organization is obligated to submit detailed annual returns, including financial statements and audited accounts. This level of transparency not only instils donor confidence but also enables the government to track the flow and utilization of funds effectively. 

4. Legal Safeguards and Penalties: 

FCRA incorporates stringent penalties for non-compliance: 

- Fines and Imprisonment: Violations, such as misappropriation of funds or failure to report, can result in significant fines, suspension or cancellation of registration, and in extreme cases, imprisonment. 

- Rectification and Compounding: The Act also allows for the compounding of certain offences, providing a mechanism for entities to rectify errors without facing severe punitive actions immediately. 

4.  Implications for Stakeholders 

• For NGOs and Charitable Entities: 

FCRA registration enhances credibility, opening up avenues for international funding while enforcing a culture of accountability and financial discipline. It serves as a quality control mechanism that reassures donors about the legitimate and transparent use of their contributions. 

• For Regulatory Authorities: 

The framework provides the government with a powerful tool to monitor foreign funding and prevent any potential misuse that could affect national security or public order. This dual objective of facilitation and control is central to the FCRA’s design. 

• For Donors: 

Foreign donors benefit from the assurance that their contributions are being monitored and utilized as intended, which minimizes risks associated with the diversion of funds for unapproved or illicit activities. 

Eligibility Criteria for Grant of Registration 

For grant of registration under FCRA, 2010, the association should: 

1. be registered under an existing statute like the Societies Registration Act, 1860 or the Indian Trusts Act, 1882 or section 25 of the Companies Act, 1956 (Now Section 8 of Companies Act, 2013) etc, 

2. be in existence for at least three years and has undertaken reasonable activity in its chosen field for the benefit of the society for which the foreign contribution is proposed to be utilised.  

The applicant NGO/ association will be free to choose its items of expenditure (excluding the administrative expenditure as defined in Rule 5 of FCRR, 2011) to become eligible for the minimum threshold of Rs. 15.00 lakh spent during the last three years.  

If the association wants inclusion of its capital investment in assets like land, building, other permanent structures, vehicles, equipment etc, then the Chief Functionary shall have to give an undertaking that these assets shall be utilized only for the FCRA activities, and they will not be diverted for any other purpose till FCRA registration of the NGO holds. 

Eligibility Criteria for Grant of Prior Permission 

An organization in formative stage is not eligible for certificate of registration. Such organization may apply for grant of prior permission under FCRA, 2010.  

• Prior permission is granted for receipt of a specific amount from specific donor/donors for carrying out specific activities/projects.  

For this purpose, the association should meet following criteria: 

1. be registered under an existing statute like the Societies Registration Act, 1860 or the Indian Trusts Act, 1882 or section 25 of the Companies Act, 1956 (Now Section 8 of Companies Act, 2013) etc, 

3. submit a specific commitment letter from the donor indicating the amount of foreign contribution and the purpose for which it is proposed to be given; and 
4. For Indian recipient organizations and foreign donor organizations having common members. 

• FCRA Prior Permission shall be granted to the Indian recipient organizations subject to it satisfy the following: 

1. The Chief Functionary of the recipient Indian organization should not be a part of the donor organization. 

2. At least 75% of the office-bearers/ members of the Governing body of the Indian recipient organization should not be members/employees of the foreign donor organization. 

3. In case of foreign donor organization being a single person/individual that person should not be the Chief Functionary or office bearer of the recipient Indian organization. 

4. In case of a single foreign donor, at least 75% office bearers/members of the governing body of the recipient organization should not be the family members and close relatives of the donor. 

Condition for Grant of Registration and Prior Permission 

In terms of Section 12 (4) of FCRA, 2010, the following shall be the conditions for the grant of registration and prior permission: 

1. The ‘person’ making an application for registration or grant of prior permission- 

1. is not fictitious or benami, 

2. has not been prosecuted or convicted for indulging in activities aimed at conversion through inducement or force, either directly or indirectly, from one religious faith to another, 

3. has not been prosecuted or convicted for creating communal tension or disharmony in any specified district or any other part of the country, 

4. has not been found guilty of diversion or mis-utilisation of its funds, 

5. is not engaged or likely to engage in propagation of sedition or advocate violent methods to achieve its ends, 

6. is not likely to use the foreign contribution for personal gains or divert it for undesirable purposes, 

7. has not contravened any of the provisions of this Act, 

8. has not been prohibited from accepting foreign contribution, 

9. the person being an individual, such individual has neither been convicted under any law for the time being in force nor any prosecution for any offence is pending against him, 

10. the person being other than an individual, any of its directors or office bearers has neither been convicted under any law for the time being in force nor any prosecution for any offence is pending against him. 

2. the acceptance of foreign contribution by the association/ person is not likely to affect prejudicially 

1. the sovereignty and integrity of India, 

2. the security, strategic, scientific or economic interest of the State, 

3. the public interest, 

4. freedom or fairness of election to any Legislature, 

5. friendly relation with any foreign State, 

6. harmony between religious, racial, social, linguistic, regional groups, castes or communities. 

3. the acceptance of foreign contribution- 

1. shall not lead to incitement of an offence, 

2. shall not endanger the life or physical safety of any person. 

Document Required for Registration 

• Entity Registration Documents: 

• A self-certified copy of your organization’s registration certificate (e.g., Society Registration under the Societies Registration Act, Trust Deed under the Indian Trusts Act, or Section 8 Company Certificate under the Companies Act, 2013). 

• Constitutional Documents: 

• Self-certified copies of the Memorandum of Association (MoA), if MoA altered then altered MoA along with original MoA and Articles of Association (AoA). 

• Tax Compliance: 

• A copy of the organization’s PAN card. 

• Income Tax Exemption certificates (if available under Sections 12A and 80G). 

• Financial Documentation: 

• Audited financial statements for the past three years (including balance sheets, income & expenditure statements, and cash flow statements) demonstrating expenditure on core activities (typically showing at least Rs.10-15 lakhs spent over three years). 

• Activity Reports: 

• Detailed reports or statements on the organization’s activities and projects over the last three years. 

• Bank Account Proof: 

• Evidence of a designated FCRA bank account, which must be with the specified branch of the State Bank of India in New Delhi (this is critical for receiving all foreign contributions). 

• Board Resolutions & Affidavits: 

• Board resolution(s) or affidavits from key office bearers confirming their appointment and authorizing the FCRA application. 

• Application Form and Fee: 

• A duly completed online application (Form FC-3 or the applicable variant) along with a printout of the fee payment receipt as proof of remittance. 

• Identity Proof for Office Bearers: 

• Copies of Aadhaar cards or Darpan IDs of the office bearers, as mandated under FCRA guidelines. 

Registration Process 

Step 1: Go to FCRA online portal. 

Step 2: Click on ‘FCRA online forms’ to register in FCRA. 

Step 3: In the next screen select application for FCRA registration link. The link will redirect to next page. 

Step 4: Click on 'Click to apply online' button to apply for FC3 (Registration). 

Step 5: You need to sign up into FCRA, select sign-up option. The link will move to next page. 

Step 6: Enter all mandatory details and click on save. 

Step 7: On clicking on save a message will be shown in the screen ‘User ID successfully created, and Your user ID is: _________ 

Step 8: Login into the portal using this User ID and password. 

Step 9: You can see an option ‘I am applying for’ select FCRA registration from drop-down menu. Click on Apply online. 

Step 10: To proceed registration ‘click here to Proceed New Registration’. 

Step 11: Click on FC3 Menu in title bar for proceedings step by step registration. 

Step 12: Select Association Details from the menu. The association detail form will be displayed. Enter all below mentioned mandatory details. 

• Darpan ID 

• Address of Association 

• Registration number 

• Place of registration 

• Date of registration 

• Nature of association 

• Main aim of the association 

Step 13: Click on submit button to save data.  

Executive Committee Form Step 

Step 14: Now go to Executive Committee Form by clicking on Executive Committee option from menu bar. 

Step 15: Enter all details about Executive Committee.  

Step 16: Select ‘Add details of Key Functionary’, you can now edit/delete/add Details of Information of Executive Committee.  

Step 17: To add further foreigner details, select checkbox of the record which one you want and click on Add/View button.  

Step 18: New screen will be displayed, add related foreigner details. You can be able to Edit/Delete Record by clicking on the appropriate option.  

EC detail and others  

Step 19: You need to fill EC details and others. Select this option from the menu list.  

Step 20: Click on save after entering all mandatory details of EC.  

Bank Details  

Step 21: In this section provide your bank details such as Bank Name, IFSC code, Account Number, Address of the bank.  

Other details Section  

Step 22: Click on Other Details option from the menu to provide all other information.  

Upload documents  

Step 23: You need to upload all relevant documents in PDF format.  

Final Submission  

Step 24: Click on final submission from the menu bar. You have to declare the application form, enter place and date and click on final submit.  

Step 25: Once you submitted finally, a pop-up window will appear, click on OK. Note: After final submission, you can’t modify application details.  

Online payment   

Step 26: After clicking on Make Online Payment button from menu bar, the payment screen will be displayed.  

Step 27: Click on Continue for Payment button in this screen, a screen will be pop up on the screen. Select the payment gateway and click on payment. 

 Suspension/Cancellation/Renewal of Certificate under FCRA 

1. Cancellation of Certificate 

Section 14 provides that the Central Government may, if it is satisfied after making such inquiry as it may deem fit, by an order, cancel the certificate if  

1. the holder of the certificate has made a statement in, or in relation to, the application for the grant of registration or renewal thereof, which is incorrect or false; or 

1. the holder of the certificate has violated any of the terms and conditions of the certificate or renewal thereof; or 

2. in the opinion of the Central Government, it is necessary in the public interest to cancel the certificate; or 

3. the holder of certificate has violated any of the provisions of this Act or rules or order made thereunder; or 

4. if the holder of the certificate has not been engaged in any reasonable activity in its chosen field for the benefit of the society for two consecutive years or has become defunct. 

b)  No order of cancellation of certificate under this section shall be made unless the person concerned has been given a reasonable opportunity of being heard. 

c)  Any person whose certificate has been cancelled under this section shall not be eligible for registration or grant of prior permission for a period of three years from the date of cancellation of such certificate. 

2. Suspension of Certificate 

• According to Section 13 of the Act, where the Central Government, for reasons to be recorded in writing, is satisfied that pending consideration of the question of cancelling the certificate on any of the grounds mentioned in section 14(1), it is necessary so to do, it may, by order in writing, suspend the certificate for a period of 180 days, or such further period, not exceeding 180 days, as may be specified in the order. 

• Every person whose certificate has been suspended shall not receive any foreign contribution during the period of suspension of certificate. 

• It may be noted that the Central Government, on an application made by such person, if it considers appropriate, allow receipt of any foreign contribution by such person on such terms and conditions as it may specify. 

• Every person whose certificate has been suspended shall utilise, in the prescribed manner, the foreign contribution in his custody with the prior approval of the Central Government. 

3. Surrender of Certificate 

Section 14A states that on a request being made in this behalf, the Central Government may permit any person to surrender the certificate granted under this Act, if, after making such inquiry as it deems fit, it is satisfied that such person has not contravened any of the provisions of this Act, and the management of foreign contribution and asset, if any, created out of such contribution has been vested in the authority as provided in section 15(1). 

4. Renewal of Certificate 

• Section 16 of the Act provides that every person who has been granted a certificate under section 12 shall have such certificate renewed within six months before the expiry of the period of the certificate. 

• It may be noted that the Central Government may, before renewing the certificate, make such inquiry, as it deems fit, to satisfy itself that such person has fulfilled all conditions specified in section 12(4). 

• The application for renewal of the certificate shall be made to the Central Government in such form and manner and accompanied by such fee as may be prescribed. 

• The Central Government shall renew the certificate, ordinarily within 90days from the date of receipt of application for renewal of certificate subject to such terms and conditions as it may deem fit and grant a certificate of renewal for a period of five years. 

• In case, the Central Government does not renew the certificate within the said period of 90 days, it shall communicate the reasons therefor to the applicant. 

• The Central Government may refuse to renew the certificate in case where a person has violated any of the provisions of this Act or rules made thereunder. 

Offence and Penalty under FCRA 

1. Unauthorized Acceptance of Foreign Contributions  

• Offence: Receiving foreign contributions without proper FCRA registration or prior permission.   

• Penalty: Fine up to Rs. 1,00,000 or 10% of the contribution received (whichever is higher); in serious cases, imprisonment may also be imposed. 

2. Misutilization of Funds 

• Offence: Using the funds for purposes other than those declared in the FCRA application. 

• Penalty: Fine up to Rs. 1,00,000 or a percentage of the misappropriated amount; may also result in cancellation of the FCRA registration. 

3. Exceeding the Administrative Expense Limit 

• Offence: Spending more than the prescribed limit (currently 20% of foreign contributions) on administrative expenses without obtaining prior approval. 

• Penalty: Fine up to Rs. 1,00,000 or 5% of the excess expenditure, whichever is higher. 

4. Improper Transfer of Foreign Contributions 

• Offence: Transferring foreign contributions to any person or entity not registered under FCRA or transferring more than the permitted amount (generally not exceeding 10% of total contributions) without prior approval. 

• Penalty: Fine up to Rs. 1,00,000 or 10% of the transferred amount, whichever is higher. 

5. Failure to Maintain a Designated FCRA Account 

• Offence: Mixing foreign funds with local receipts or not maintaining the mandatory designated bank account (which must be with the specified SBI branch in New Delhi). 

• Penalty: Fine up to Rs. 1,00,000 or a percentage (commonly 5%) of the funds involved. 

6. Non-Filing or Late Filing of Annual Returns 

• Offence: Not filing annual returns (Form FC-4) or filing them late. 

• Penalty: Fine up to Rs. 1,00,000 or 5% of the foreign contributions received during the period of non-compliance. 

7. Failure to Report Required Information 

• Offence: Not disclosing details of each foreign contribution (source, amount, and mode of receipt) as mandated by the Act. 

• Penalty: Fine up to Rs. 1,00,000 or 5% of the total amount of such contributions, whichever is higher. 

8. Unauthorized Acceptance of Foreign Hospitality 

• Offence: Accepting foreign hospitality (covering travel, lodging, etc.) without the necessary prior permission from the Ministry of Home Affairs (applicable to categories like public servants, judges, etc.). 

• Penalty: Generally, attracts a fine (commonly around Rs. 10,000), with the exact amount determined on a case-by-case basis. 

9. Failure to Update Changes in Organizational Details 

• Offence: Not reporting changes (such as changes in key office bearers, objectives, or bank account details) using the prescribed forms (e.g., Form FC-6) within the specified timeframe. 

• Penalty: Fine, typically around Rs. 10,000 per instance of non-reporting. 

10. Non-Compliance with Other Procedural Requirements 

• Offence: Any other deviation from the provisions of FCRA—for example, not maintaining proper records or failing to submit required supporting documents. 

• Penalty: Fines may be imposed (up to Rs. 1,00,000 or a specified percentage of the foreign contribution involved) and can lead to suspension or cancellation of FCRA registration. 

Note: 

- The penalty amounts specified are subject to change as per updated notifications and may vary depending on the severity of the violation and the total value of the foreign contributions involved.   

- In severe cases, repeated or intentional violations can also lead to criminal prosecution and imprisonment. 

13. Frequently Asked Questions (FAQs) 

Q.1 What is the purpose of FCRA, 2010?  

Ans. FCRA, 2010 has been enacted by the Parliament to consolidate the law to regulate the acceptance and utilization of foreign contribution or foreign hospitality by certain individuals or associations or companies and to prohibit acceptance and utilization of foreign contribution or foreign hospitality for any activities detrimental to national interest and for matters connected therewith or incidental thereto. 

Q.2 What is foreign contribution?  

Ans. As defined in Section 2(1)(h) of FCRA, 2010, "foreign contribution" means the donation, delivery or transfer made by any foreign source ─  

(i) of any article, not being an article given to a person* as a gift for his personal use, if the market value, in India, of such article, on the date of such gift is not more than such sum as may be specified from time to time by the Central Government by the rules made by it in this behalf.  

(ii) of any currency, whether Indian or foreign, 

(iii) of any security as defined in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956 and includes any foreign security as defined in clause (o) of Section 2 of the Foreign Exchange Management Act,1999. 

Explanation1– A donation, delivery or transfer of any article, currency or foreign security referred to in this clause 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 within the meaning of this clause.  

Explanation 2 ‒ The interest accrued on the foreign contribution deposited in any bank referred to in sub-section (1) of Section 17 or any other income derived from the foreign contribution or interest thereon shall also be deemed to be foreign contribution within the meaning of this clause. 

Explanation3‒ Any amount received, by any person from any foreign source in India, by way of fee (including fees charged by an educational institution in India from foreign student) or towards cost in lieu of goods or services rendered by such person in the ordinary course of his business, trade or commerce whether within India or outside India or any contribution received from an agent or a foreign source towards such fee or cost shall be excluded from the definition of foreign contribution within the meaning of this clause. 

* In terms of FCRA, 2010 "person" includes ‒  

(i) an individual 

(ii) a Hindu undivided family 

(iii) an association 

(iv) a company registered under section 25 of the Companies Act,1956 (now Section 8 of Companies Act, 2013). 

Q.3 Who can receive foreign contribution?  

Ans. Any “Person” can receive foreign contribution subject to the following conditions: - 

a) It must have a definite cultural, economic, educational, religious or social programme. 

b) It must obtain the FCRA registration/prior permission from the Central Government 

c) It must not be prohibited under Section 3 of FCRA, 2010. 

Q.4 Who cannot receive foreign contribution?  

Ans. As defined in Section 3(1) of FCRA, 2010, the following are prohibited to receive foreign contribution: 

(a) candidate for election, 

(b) Correspondent, columnist, cartoonist, editor, owner, printer or publisher of a registered newspaper, 

(c) Public Servant, Judge, Government servant or employee of any corporation or any other body controlled or owned by the Government, 

(d) Member of any legislature, 

(e) Political party or office bearer thereof, 

(f) organization of a political nature as may be specified under sub-section (1) of Section 5 by the Central Government, 

(g) association or company engaged in the production or broadcast of audio news or audio-visual news or current affairs programmes through any electronic mode, or any other electronic form as defined in clause (r) of sub-section (1) of Section 2 of the Information Technology Act, 2000 or any other mode of mass communication; 

(h) Correspondent or columnist, cartoonist, editor, owner of the association or company referred to in point (g), 

(i) Individuals or associations who have been prohibited from receiving foreign contribution. 

Q.5 Whether interest or any other income earned out of foreign contribution be shown as fresh foreign contribution receipt during that year or not?  

Ans. No. The interest or any other income earned out of foreign contribution should be shown against Column 2(i)(b) in the annual return (Form FC-4) during the year in which it is earned. Such interest or income would be considered as F.C. 

Q.6 Whether earnings from foreign client(s) by a person in lieu of goods sold, or a service rendered by it is treated as foreign contribution?  

Ans. No. As clarified at Explanation 3 under section 2(1)(h), foreign contribution excludes earnings from foreign client(s) by a person in lieu of goods sold, or services rendered by it as this is a transaction of commercial nature/quid pro quo in the normal course of business trade etc within or outside India. 

Q.7 whether donation given by Non-Resident Indians (NRIs) is treated as ‘foreign contribution’?  

Ans. Contributions made by a citizen of India living in another country (i.e., Non-Resident Indian), from his personal savings, through the normal banking channels, is not treated as foreign contribution. However, while accepting any donations from such NRI, it is advisable to obtain his/her passport details to ascertain that he/she is actually an Indian citizen. 

Q.8 Whether donation given by an individual of Indian origin and having foreign nationality is treated as ‘foreign contribution’?  

Ans. Yes. Donation from an Indian origin person who has acquired foreign citizenship is treated as foreign contribution. This will also apply to PIO / OCI cardholders. They are foreigners. However, this will not apply to 'Non-resident Indians', who still hold Indian citizenship as they are not foreigners. 

Q.9 Whether foreign remittances received from a relative are to be treated as foreign contribution as per FCRA, 2010?  

Ans. No. As per section 4(e) of FCRA,2010 and Rule 6 of FCRR ,2011, even the persons prohibited under section 3, i.e., persons not permitted to accept foreign contribution, are allowed to accept foreign contribution from their relatives. However, in terms of Rule 6 of FCRR, 2011, any person receiving foreign contribution in excess of ten lakh rupees or equivalent thereto in a financial year from any of his relatives shall inform the Central Government in electronic Form FC-1 within three months from the date of receipt of such contribution. This form may be filled online on the website: https://fcraonline.nic.in 

Q.10 What is a foreign source?  

Ans. Foreign source, as defined in Section 2(1) (j) of FCRA, 2010 includes, 

(i) the Government of any foreign country or territory and any agency of such Government, 

(ii) any international agency, not being the United Nations or any of its specialized agencies, the World Bank, International Monetary Fund or such other agency as the Central Government may, by notification, specify in this behalf, 

(iii) a foreign company, 

(iv) a corporation, not being a foreign company, incorporated in a foreign country or territory, 

(v) a multi-national corporation referred to in sub-clause (iv) of clause (g) of section 2 of FCRA,2010, 

(vi) a company within the meaning of the Companies Act, 1956, and more than one-half of the nominal value of its share capital is held, either singly or in the aggregate, by one or more of the following, namely: -  

a. the Government of a foreign country or territory, 

b. the citizens of a foreign country or territory, 

c. corporations incorporated in a foreign country or territory, 

d. trusts, societies or other associations of individuals (whether incorporated or not), formed or registered in a foreign country or territory, 

e. foreign company, 

provided that where the nominal value of share capital is within the limits specified for foreign investment under the Foreign Exchange Management Act, 1999, or the rules or regulations made thereunder, then, notwithstanding the nominal value of share capital of a company being more than one-half of such value at the time of making the contribution, such company shall not be a foreign source. 

(vii) a trade union in any foreign country or territory, whether or not registered in such foreign country or territory, 

(viii) a foreign trust or a foreign foundation, by whatever name called, or such trust or foundation mainly financed by a foreign country or territory, 

(ix) a society, club or other association or individuals formed or registered outside India, 

(x) a citizen of a foreign country;”  

NOTE – A few bodies/ organizations of the United Nations, World Bank and some other international agencies/multi-lateral organisations are exempted from this definition and are not treated as foreign source. Hence, the funds received from them are not considered as foreign contribution. List of such bodies / organizations, which are not treated as ‘foreign source’, are available on the website https://fcraonline.nic.in. 

Q.11 What is a foreign company?  

Ans. Please see section 2(1)(g) of FCRA, 2010. Foreign company means any company or association, or body of individuals incorporated outside India and includes- 

a) a foreign company within the meaning of Section 379 of the Companies Act,2013, 

b) a company which is a subsidiary of a foreign company, 

c) the registered office or principal place of business of a foreign company referred to in sub-clause (i) or company referred to in sub-clause(ii), 

d) a multi-national corporation 

Q.12 what is a political party?  

Ans. Please see section 2(1)(4) of FCRA, 2010.  

“Political party” means – 

(i) an association or body of individual citizens of India – 

A) to be registered with the Election Commission of India as a political party under section 29A of the Representation of the People Act, 1951, 

B) which has setup candidates for election to any Legislature, but is not so registered or deemed to be registered under the Election Symbols (Reservation and Allotment) Order, 1968 

(ii) a political party mentioned in column 2 of Table 1 and Table 2 to the notification of the Election Commission of India No. 56/J&K/02, dated the 8th of August 2002, as in force for the time being; 

Q.13 Can a private limited company or a partnership firm get registration or prior permission under FCRA, 2010?  

Ans. Yes, a private limited company too may seek prior permission/registration for receiving foreign funds in case they wish to do some work useful/beneficial to society. 

Q.14 What is the fee for making an application for revision of an order passed by the competent authority under FCRA, 2010?  

Ans. A fee of Rs.3000/- (Three Thousand only) must be paid through the payment gateway specified by the Central Government. 

Q.15 What is the time limit for making an application for revision of an order passed by the competent authority under FCRA, 2010?  

Ans. The application must be made within one year from the date on which the order in question was communicated or the date on which it otherwise came to know of it, whichever is earlier. 

Q.16 What is foreign hospitality?  

Ans. Foreign Hospitality means any offer, not being a purely casual one, made in cash or kind by a foreign source for providing a person with the costs of travel to any foreign country or territory or with free board, lodging, transport or medical treatment. 

Q.17 Who requires prior approval from Ministry of Home Affairs before accepting Foreign Hospitality?  

Ans. The following categories of persons require prior approval from Ministry of Home Affairs before accepting Foreign Hospitality: - 

a) Members of a Legislature  

b) office bearers of political parties 

c) Judges 

d) Government servants, Public Servants  

e) Employees of any corporation or any other body owned or controlled by the Government.  

Provided that it shall not be necessary to obtain any such permission for an emergent medical aid needed on account of sudden illness contracted during a visit outside India. But, where such foreign hospitality has been received, the person receiving such hospitality shall give an intimation to the Central Government as to the receipt of such hospitality within one month from the date of receipt of such hospitality, and the source from which, and the manner in which, such hospitality was received. 

Q.18 In which cases application need not be submitted to MHA for grant of permission to accept foreign hospitality?  

Ans. (i) Where the entire expenditure on the proposed foreign visit is being met by the Central/State Government or any Central/State PSU Etc. 

(ii) Where the proposed foreign visit is being undertaken by a person in his/her personal capacity and the entire expenditure thereon is being met by the person concerned.  

(iii) Where the foreign hospitality is being provided by an Indian national living in a foreign country or territory.  

(iv) Cases involving acceptance of an assignment on salary, fee or remuneration etc.  

(v) Cases involving funding offered by an agency/organisation mentioned in list of agencies of the United Nations and other International Organisations, which are not treated as “foreign source” (available on website https://fcraonline.nic.in  

(vi) Cases involving visits undertaken by the Members of an Indian Parliamentary delegation under bilateral exchange.  

(vii) Cases involving visits undertaken in pursuance of a bilateral agreement between the Government of India and the Government of the country concerned, approved by the Ministry of Finance (Department of Economic Affairs)  

(viii) Cases involving long term/short term foreign training courses approved by the Ministry of Personnel, Training and Public Grievances.