The Foreign Contribution Regulation Act was enacted in 1976 and replaced in 2010 to regulate foreign donations and contributions to Indian organizations. The Act aims to prevent foreign influence in electoral politics and activities detrimental to public interest. It is administered by the Home Ministry and requires any NGO receiving foreign funds to register under the FCRA and comply with strict reporting and accounting standards. The 2010 version introduced provisions like 5-year validity for registration, cancellation of NGO registrations for political activities, and separate bank accounts for foreign contributions. It prohibits certain individuals and organizations like government employees, politicians, and political parties from receiving foreign funds.

1. Foreign Contribution Regulation Act
(FCRA)1976, 2010
विदेशी अंशदान विननयमन अधिननयम (एफसीआरए) 1976, 2010

2. FCRA 1976
On 31st March 1976, FCRA was enacted with an aim to regulate the utilization of foreign
contributions/hospitality by individuals, associations to keep it consistent with the values of a
sovereign, democratic republic. The FCRA was enacted in 1976 in order to maintain strict
control over voluntary organizations and political associations that received foreign funding. In
1984, an amendment was made to the act requiring all the Non Governmental Organizations to
register themselves with the Home Ministry. In 2010, the act was repealed and a new act with
strict provisions was enacted.

3. FCRA 2010
The Foreign Contribution (Regulation) Act, 2010 and the Foreign Contribution (Regulation) Rules,
2011 are applicable from 1st May, 2011. It replaces Foreign Contribution (Regulation) Act, 1976.
It seeks to regulate foreign contributions or donations and hospitality (air travel, hotel
accommodation etc.) to Indian organizations and individuals and to stop such contributions which
might damage the national interest.
It is an act passed for regulating and prohibiting the acceptance and utilization of foreign
contribution or foreign hospitality by companies, associations or individuals for such activities that
could prove to be detrimental to the national interest and for matters connected therewith or
incidental thereto.
Since the Act is internal security legislation, despite being a law related to financial legislation, it
falls into the purview of the Home Ministry and not the Reserve Bank of India (RBI).

4. Applicability
 It extends to whole of India, and also applies to
a. Citizens of India who are outside India.
b. Associate branches or subsidiaries, outside India, of companies or bodies
corporate, registered or incorporated in India.

5. Need for FCRA
 The act aims at keeping a check on foreigners influencing the Indian electoral
politics, journalists, public servants etc. for wrong purposes or activities detrimental
to the public interest. Those violating the provisions of FCRA can be jailed up to a
term of 5 years.

6. Salient features of FCRA 2010
Here is a brief introduction to the provisions of the FCRA 2010:
 A provision was made for the cancellation of registrations of NGOs if the Home Ministry believes that
the organization is political and not neutral.
 The registration certificate granted to the NGOs under the 2010 act came with five-year validity.
 A provision was inserted stating that the assets of the person who has become defunct needs to be
disposed of in a manner stated by the government.
 A separate account needs to be maintained by the organizations to deposit the Foreign Contributions
received and no other funds except for Foreign Contributions shall be deposited in that account.
 Every bank would be obligated to report to the prescribed authority, the amount of foreign remittances
received and other related details such as the source, manner of receipt etc.

7. Foreign Source
As defined in Section 2(1)(h) of FCRA, 2010, "foreign contribution" means the donation, delivery or transfer
made by any foreign source, ─
a. Government of any foreign country or any agency of such government;
b. Any international agency except United Nations or any of its specialized agencies, World Bank,
International Monetary Fund or such other agency as the Central Government may, by notification in
the Official Gazette, specify;
c. Foreign company;
d. Corporation, other than foreign company, incorporated outside India;
e. A multinational corporation;
f. A company where more than 50% of its share capital is held by a foreign government or citizens of a
foreign country or foreign entity (includes company, corporations, trusts, societies or other associations
of individuals registered in foreign country);
g. A foreign trust or foreign foundation and includes trust or foundation mainly financed by a foreign
country and;
h. Citizen of a foreign country.
i. Foreign Trade Union, Society, Club or Other Association.

8. Who can accept Foreign Contribution?
 Organizations working for definite cultural, social, economic, educational or
religious programs, if and only if they are
 Registered with the Home Ministry
 Maintaining a separate account listing the donations received from foreigners,
getting it audited by a Chartered Accountant and submitting it to the Home
Ministry, every year.

9. Who are debarred from receiving Foreign
Contribution?
 Candidate for election;
 Correspondent, columnist, cartoonist, editor, owner, printer or publisher of a registered
newspaper;
 Government servant, judge or employee of any Government corporation;
 Member of any Legislature;
 Political party or office-bearer thereof
 Organization of political nature;
 Association or company engaged in production or broadcast of audio news or audio visual news
or current affairs programs through any electronic mode or form;
 Correspondent or columnist, cartoonist, editor, owner of the above association or company.

10. Ban does not apply to FC received by way of:
a. Salary, wages or other remuneration, or
b. Payment in ordinary course of international trade or commerce, or
c. Payment received by an agent of a foreign source in relation to any transaction made by
such foreign source with the State or Central Government, or
d. Gift or presentation made to a member of any Indian Delegation, provided the same is in
conformity with the rules framed by the Central Government in this regard, or
e. Gift from relative. Gifts exceeding ₹ 1,00,000 per annum requires intimation to the Central
Government in Form FC-1 within 30 days from date of receipt of such gift, or
f. Any scholarship, stipend or any payment of like nature, or
g. Remittance received in ordinary course of business through official channels.

11. Foreign Contribution (Regulation) Amendment Act, 2020
 Prohibition to accept foreign contribution: The Act bars public servants from receiving foreign
contributions. Public servant includes any person who is in service or pay of the government, or
remunerated by the government for the performance of any public duty.
 Transfer of foreign contribution: The Act prohibits the transfer of foreign contribution to any other
person not registered to accept foreign contributions.
 Aadhaar for registration: The Act makes Aadhaar number mandatory for all office bearers, directors
or key functionaries of a person receiving foreign contribution, as an identification document.
 FCRA account: The Act states that foreign contribution must be received only in an account
designated by the bank as FCRA account in such branches of the State Bank of India, New Delhi.
 Reduction in use of foreign contribution for administrative purposes: The Act proposes that not
more than 20% of the total foreign funds received could be defrayed for administrative expenses. In
FCRA 2010 the limit was 50%.
 Surrender of certificate: The Act allows the central government to permit a person to surrender their
registration certificate.

12. Who is required to obtain permissions under the FCRA?
 Whenever any NGO either in the form of Trust, Society or Section 8 company is willing to receive any kind of foreign
contribution or donation, they are required to obtain FCRA Registration under Section 6 (1) of Foreign Contribution
(Regulation) Act, 2010.
To which organization is the FCRA applicable to
 The FCRA is applicable to all associations, groups and NGOs which intend to receive foreign donations. It is
mandatory for all such NGOs to register themselves under the FCRA. The registration is initially valid for five years
and it can be renewed subsequently if they comply with all norms.