What Is FCRA? A Plain-Language Guide for Donors

FCRA full form and purpose

FCRA stands for the Foreign Contribution (Regulation) Act, 2010. It is administered by the Ministry of Home Affairs through the FCRA Online portal. In the portal's own words, the purpose is to regulate foreign contribution and foreign hospitality so that associations function in a manner consistent with the values of a sovereign, democratic Republic, and so that such money is not used for activities detrimental to the national interest.

The 2010 Act replaced an earlier 1976 law and has since been amended, most notably by the Foreign Contribution (Regulation) Amendment Act, 2020, published in the Gazette of India on 28 September 2020. Several of the rules below come from that amendment.

What counts as foreign contribution?

Section 2 of the Act defines foreign contribution as the donation, delivery or transfer, by a foreign source, of currency (Indian or foreign), securities, or articles other than small personal gifts. Interest earned on foreign contribution is also treated as foreign contribution. Money received from a foreign source as a fee or as the price of goods or services in the ordinary course of business is excluded.

The Act's list of foreign sources includes:

• the government of a foreign country and its agencies, and most international agencies (the United Nations and its specialised agencies, the World Bank and the IMF are excluded);
• foreign companies and corporations incorporated abroad, multinational corporations, and Indian companies more than half owned by foreign governments, citizens or bodies;
• foreign trusts and foundations, foreign trade unions, and societies, clubs or associations formed outside India;
• a citizen of a foreign country.

Who needs FCRA registration?

Under section 11, a person having a definite cultural, economic, educational, religious or social programme may accept foreign contribution only after obtaining a certificate of registration from the Central Government. An organisation that is not registered may accept a specific foreign contribution only with prior permission. On the portal, these are separate applications: FC-3A for registration, FC-3B for prior permission and FC-3C for renewal. Registered associations also file an annual return in FC-4.

The FCRA portal lists the basic eligibility for registration for associations, NGOs, trusts, societies and Section 8 companies:

• existence for at least three years;
• a definite cultural, economic, educational, religious or social programme;
• spending of 15 lakh rupees in its chosen field;
• a Darpan ID from NITI Aayog;
• a designated FCRA account in the State Bank of India, New Delhi Main Branch;
• other statutory and documentary compliances under the Act and Rules.

Under section 12(6) of the Act, a certificate of registration is valid for five years, and section 16 provides for renewal. Prior permission is valid only for the specific purpose or amount for which it was given.

Key rules after the 2020 amendment

• One entry point for foreign money. Section 17, as substituted in 2020, says a registered person must receive foreign contribution only in an account designated as the "FCRA Account", opened in the branch of the State Bank of India at New Delhi notified by the government. Other accounts may be opened for keeping or using the money, but no funds other than foreign contribution may be deposited in any of these accounts.
• No passing it on. The new section 7 says a person registered or holding prior permission who receives foreign contribution shall not transfer it to any other person.
• A cap on administration. Section 8 limits the share of foreign contribution received in a financial year that can be used for administrative expenses. The 2020 amendment reduced this limit from fifty per cent to twenty per cent.
• Identity of key people. New section 12A allows the government to require the Aadhaar number of office-bearers and key functionaries (or a passport or OCI card copy for foreigners) with applications.

What this means for NRI and foreign donors

The list of foreign sources in the Act names "a citizen of a foreign country". A person of Indian origin who has taken the citizenship of another country is therefore a foreign source, even if he or she holds an Overseas Citizen of India card. A gift from such a person to an Indian NGO is foreign contribution, and the NGO can accept it only if it holds FCRA registration or prior permission.

An Indian citizen living abroad (an NRI) is not named in that list. Even so, the receiving organisation may ask for proof of citizenship, such as passport details, and may ask that the money come from your own savings through normal banking channels. Rules in this area are applied strictly, so before you give from abroad:

1. Tell the organisation your citizenship and the country you are paying from.
2. If you are a foreign citizen, ask whether the organisation holds FCRA registration, and check it with the "Validate FCRA Certificate" option on the FCRA portal.
3. If it is registered, pay only into its FCRA account details as given by the organisation, never into its ordinary Indian account.
4. Keep the receipt and the bank record.

Separately, if you pay tax in India and want an 80G deduction, the usual 80G rules apply; see our 80G guide.

FCRA, 12A and 80G are different things

These three are often mixed up. FCRA registration is granted by the Ministry of Home Affairs and controls whether an organisation may receive money from foreign sources. 12A registration is granted by the Income Tax Department and concerns whether the trust's own income is exempt. 80G approval, also from the Income Tax Department, decides whether donors can claim a deduction. An organisation can have any one of these without the others.

The Income Tax Department also requires a trust that receives any foreign contribution to file its audit report in Form 10B, even if it is not registered under section 12A.

Supporting Millat Charitable Trust from abroad

This page is general information and does not state that Millat Charitable Trust holds FCRA registration. If you live outside India or hold a foreign passport and would like to support our work in Kota, please write to us through the contact page before sending any money, so that we can tell you whether we are able to accept it. You can read more about the trust and its hospital plans.