A plain-English guide to the Foreign Contribution (Regulation) Act, 2010, the law that decides whether your organisation can receive foreign money at all.
Not legal advice. This guide is an educational explainer for practitioners. FCRA compliance has serious consequences, and tens of thousands of registrations have been cancelled or have lapsed. Always confirm specifics with a lawyer or CA who handles FCRA matters, and check the latest MHA notifications at fcraonline.nic.in.
Registration
or Prior Permission, required before you receive any foreign contribution
5 years
validity of an FCRA registration; apply for renewal within the 6 months before expiry
20%
cap on administrative expenses, as a share of the foreign contribution received in the year (was 50% before 2020)
SBI Delhi
all foreign contribution must first land in a designated account at SBI New Delhi Main Branch
Section 01
Why this law decides your funding strategy
The Foreign Contribution (Regulation) Act, 2010 (FCRA) regulates who in India may receive "foreign contribution" (money, securities, or articles from a foreign source) and how it must be received, used, and reported. It is administered by the Ministry of Home Affairs (MHA), not by the tax department. The Act's long title says it exists to prohibit acceptance and utilisation of foreign contribution or foreign hospitality "for any activities detrimental to the national interest", and that purpose shapes how strictly the Act is enforced.
For the social sector the stakes are high. A PIB factsheet of 22 July 2026 says nearly 20,000 registrations stand cancelled and about 15,000 more were deemed ceased over the last decade. An organisation that loses its registration cannot legally accept foreign grants, and since the 2020 amendment it cannot receive them indirectly through another registered NGO either.
Section 02
The Act in six points
Two doors in: registration or prior permission. Regular FCRA registration lets you receive foreign contribution on an ongoing basis. Under rule 9(f), inserted in 2020, an applicant must have been in existence for three years and have spent at least ₹15 lakh on its core activities for the benefit of society in the last three financial years, though the Central Government may waive this in exceptional cases or where the applicant is controlled by the Central or a State Government. Prior Permission (PP) is a one-off approval to receive a specific amount from a specific donor for a specific project. It is the usual route for younger organisations.
"Foreign contribution" is broader than you think. It covers money (in any currency, Indian or foreign), articles and securities from any "foreign source". That includes foreign governments, foreign companies, foreign citizens, international agencies other than the United Nations, its specialised agencies, the World Bank, the International Monetary Fund and any other agency the Central Government notifies, and Indian companies that are more than half foreign-owned unless their shareholding is within the limits set for foreign investment. What counts is who the donor is, wherever the donor is. A US citizen donating in rupees from Mumbai is still a foreign source.
One gateway account. Since the 2020 amendment, every rupee of foreign contribution must first be received in an "FCRA Account" at the State Bank of India, New Delhi Main Branch (Sansad Marg). You can then move it to another FCRA account or utilisation accounts, but the first landing point is fixed by law.
No sub-granting. Section 7, as substituted in 2020, bars a registered organisation from transferring foreign contribution to any other person, including another FCRA-registered NGO. The older model, in which one large NGO received foreign funds and re-granted them to smaller grassroots partners, is no longer legal. The Supreme Court upheld the bar in Noel Harper v. Union of India (8 April 2022).
Spending is policed. Under section 8(1)(b), administrative expenses may not exceed 20% of the foreign contribution received in a financial year, unless the Central Government approves a higher share beforehand. Rule 5 lists what counts as administrative expenses. Under section 8(1)(a) the money must be used for the purposes for which it was received, and the first proviso bars using it, or income from it, for speculative business. Since the Foreign Contribution (Regulation) Amendment Rules, 2026 came into force on 22 June 2026, a registration names its purposes, chosen from a prescribed Schedule, and the States or Union territories where the organisation works.
Some people can never receive it. Section 3 bars the following from accepting foreign contribution: election candidates, journalists and media companies, judges, public servants and government employees, members of a legislature, and political parties and their office-bearers.
Trusts, societies, and Section 8 companies taking money from foreign foundations, bilateral agencies, diaspora donors, or international NGOs need valid registration or prior permission before the first rupee arrives.
Grassroots partner of a funded NGO · the sub-granting ban bites here
If your budget used to come as sub-grants of foreign money from a larger Indian NGO, that pipeline is closed. Your options: obtain your own FCRA registration/prior permission, restructure the relationship (see grey areas), or shift to domestic funding.
Domestically funded organisation · FCRA does not apply, mostly
CSR money from Indian companies, Indian philanthropy, and government grants are not foreign contribution. But check the source's ownership, because money routed from an entity that qualifies as a "foreign source" can still trigger the Act.
Consultant or service provider · fees are not contribution
Money received as fees for services actually rendered (consultancy, research contracts, training delivered at market rates) is generally not foreign contribution. The line between a "fee" and a disguised grant is scrutinised, so put the contract, the deliverables and the invoices on paper.
Section 04
Your compliance checklist
Nine steps that cover the recurring obligations of an FCRA-registered organisation. Tick them off: progress is saved in your browser.
0 of 9 steps done
Saved locally in your browser only: nothing is uploaded.
Section 05
What can go wrong
MHA can suspend a registration for 180 days, and for a further period of up to 180 days, while it decides whether to cancel it (section 13). During suspension you cannot receive foreign contribution unless MHA allows it, and you may spend only up to 25 per cent of the unutilised amount, with MHA's prior approval (rule 14). It can cancel registration on the grounds in section 14(1): a false statement in the application, breach of the Act, the rules or the certificate's conditions, "public interest", or two consecutive years without reasonable activity in its chosen field (or becoming defunct). It must first give the organisation a hearing (section 14(2)), and a cancelled organisation cannot be registered or given prior permission for three years (section 14(3)). Since 22 June 2026 the Rules also require an organisation seeking renewal to show that it utilised at least ₹10 lakh of foreign contribution over the previous two financial years. Offences under the Act are punishable and some can be compounded. Banks must report every foreign contribution transaction to MHA within 48 hours (rule 16), so discrepancies surface quickly.
Ordinary compliance lapses can end a registration. Late or missing annual returns, funds received in the wrong account, unreported changes of office bearers and administrative spending above the cap are all breaches of the Act or the Rules, and breach is a ground for cancellation under section 14(1)(d). The Foreign Contribution (Regulation) Amendment Bill, 2026 (Bill No. 97 of 2026) was introduced in the Lok Sabha on 25 March 2026 and referred to a Joint Parliamentary Committee on 12 August 2026. As introduced, it would vest the foreign contribution and the assets created from it provisionally in a Designated authority when a registration is cancelled, is surrendered or ceases, including by not being renewed. It is not law at the time of writing.
Section 06
Grey areas practitioners argue about
Which Indian companies count as a "foreign source"?
A company that is more than half foreign-owned is a foreign source under section 2(1)(j)(vi). The proviso to that clause says it is not one if its share capital is within the limits set for foreign investment under the Foreign Exchange Management Act, 1999. So CSR money from a foreign-owned Indian subsidiary within those limits is not foreign contribution. The answer depends on the particular company, so get its ownership structure in writing before you classify the money.
Collaboration after the sub-granting ban
Larger NGOs now engage grassroots partners as vendors or implementing contractors (paying for defined services) rather than sub-grantees. Whether a given arrangement is a real service contract or a disguised transfer of foreign contribution is a judgment call that MHA has not fully clarified, so document deliverables, invoices and market-rate pricing.
Crowdfunding and diaspora donations
Small online donations from foreign citizens, including NRIs holding foreign passports and OCI cardholders, are foreign contribution. Donations from NRIs who remain Indian citizens are not. Most crowdfunding platforms cannot reliably screen this for you; you remain responsible.
In-kind support, volunteers, and fellowships
Foreign-funded fellowships, sponsored travel, donated equipment, and seconded staff can amount to foreign contribution or foreign hospitality, depending on how they are structured. The Act covers "articles" and "foreign hospitality" (an offer, not purely casual, of paid travel abroad or free boarding, lodging, transport or medical treatment), and the Rules set value limits for personal gifts, so take advice before accepting.
Section 07
Frequently asked questions
We have no foreign donors. Do we need FCRA registration?
No, and do not apply "just in case." Registration brings a permanent compliance burden (annual returns, account restrictions, inspection exposure) that is pointless without foreign funding. Apply for Prior Permission when a specific foreign grant is actually on the table.
Can we accept CSR funds from the Indian subsidiary of a multinational?
Usually yes, without FCRA registration, if the subsidiary is not a "foreign source" under section 2(1)(j)(vi). That is the case if it is not more than half foreign-owned, or if its share capital is within the limits set under the Foreign Exchange Management Act, 1999. Ask the company for a written confirmation of its FCRA-source status; well-run CSR teams have this ready.
Our registration lapsed. Can we spend the foreign funds already in our account?
No. If registration lapses because renewal was not applied for in time, rule 12(5) says you may neither receive nor utilise foreign contribution until the certificate is renewed, and under rule 12(6A) the unutilised balance and any assets created from it vest in the prescribed authority until renewal or fresh registration. If registration is cancelled, the foreign contribution and assets vest in the authority prescribed under section 15, which is the Additional Chief Secretary or Principal Secretary (Home) of the State or Union territory where the assets are (S.O. 5650(E), 5 November 2018). Missing a renewal deadline therefore stops you spending the grant money.
Is money from a UN agency foreign contribution?
Usually not. Section 2(1)(j)(ii) treats an international agency as a foreign source but leaves out the United Nations and its specialised agencies, the World Bank, the International Monetary Fund and any other agency the Central Government notifies. Money from any other international agency comes from a foreign source, so check before you rely on the exclusion.
Can foreign contribution pay salaries?
Yes. Salaries of staff who deliver the programme are a normal use of the funds. Under rule 5, expenses of hiring personnel to manage the organisation's activities, and their pay, count towards the 20% administrative cap. The salaries of doctors, teachers and similar staff of a welfare organisation, and of training and field-data staff of a body mainly engaged in research or training, are excluded. Classify roles carefully and keep your reasoning on file.
The judgments below are the ones that changed what this law requires in practice. Summaries are editorial orientation, not legal advice; the linked judgment is what is authoritative.
Noel Harper v. Union of India
Supreme Court of India · 8 April, 2022 · still good law
Held. The Court held Sections 7, 12(1A), 12A and 17 of the Foreign Contribution (Regulation) Act 2010, as amended in 2020, to be within the Constitution. Amended Section 7 bars a registered person from transferring foreign contribution to any other person, and Sections 12(1A) and 17 require foreign contribution to be received in an FCRA account at the SBI New Delhi Main Branch. The Court read down Section 12A so that Indian office bearers may produce an Indian passport for identification, which counts as compliance.
What changed. Section 7 as amended bars transfer of foreign contribution to any other person, including a person holding a registration certificate, so a registered organisation must use the amount itself. Foreign contribution must be received in the FCRA account at the SBI New Delhi Main Branch under Sections 12(1A) and 17.
Indian Social Action Forum (INSAF) v. Union of India
Supreme Court of India · 6 March, 2020 · still good law
Held. The Court read down Rules 3(v) and 3(vi) of the Foreign Contribution (Regulation) Rules 2011, which list grounds for declaring an organisation to be of a political nature. It held that 'political interests' in Rule 3(v), and habitual use of bandh, hartal and similar methods in Rule 3(vi), apply only to organisations connected with active politics or party politics. It left the Central Government free to act against organisations used to channel foreign funds for political parties where it has concrete material and follows the procedure in the Act and Rules.
What changed. Supporting a public cause by lawful protest, or working for social and economic welfare, does not make an organisation one of a political nature under Rule 3(v) or 3(vi). The Court tied both rules to a connection with active or party politics. An organisation facing a declaration under Section 5 can rely on this reading.
