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Any organization can receive ‘Foreign Contributions’ provided it is registered under the Foreign Contribution (Regulation) Act, 2010 (FCRA 2010) in India. The FCRA 2010, which came into effect from May 1, 2011, vide Gazette Notification G.S.R. 349 (E) dated the 29th April, 2011, is governed by the Ministry of Home Affairs, Government of India, and replaces the Foreign Contribution (Regulation) Act 1976, which has therefore now been repealed. The Foreign Contribution (Regulation) Rules, 2011 (FCRR 2011) made under section 48 of FCRA, 2010 have also come into force effective from 1st May, 2011. The Foreign Contribution (Regulation) Rules, 2015 (FCRR 2015) made under section 48 of FCRA, 2010 have also come into force effective from 14 Dec, 2015

Organizations seeking foreign contributions for definite cultural, social, economic, educational or religious programmes may either obtain registration or prior permission to receive foreign contribution from Ministry of Home Affairs by making application in the prescribed format and furnishing details of the activities and audited accounts.

To receive foreign contribution, the organization should be registered under FCRA 2010 and should receive such contribution through bank only. For this purpose, a separate bank account has to be maintained exclusively for foreign contributions. It can be received in rupees or foreign currency. The interest or any other income earned out of such received foreign contribution should be shown as second /subsequent foreign contribution receipt in the annual return during the year in which it is earned.

"Foreign Contribution" defined in section 2(1)(h) of FCRA, 2010, means the donation, delivery or transfer made by any foreign source,

  • of any article, not being an article given to a person (individual/ Hindu undivided family/an association/company registered under section 25 of the Companies Act, 1956) 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 (currently Rs. 25,000/- through insertion of Rule 6A in the FCRR 2011 vide the Foreign Contribution (Regulation) Amendment Rules, 2012 G.S.R. 292 (E) dated 12th April, 2012) as may be specified from time to time by the Central Government by rules made by it in this behalf;

  • of any currency, whether Indian or foreign;
  • 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.

Foreign Contribution also includes the following:

  • A donation, delivery or transfer or any article, currency or foreign security referred to in this clause by any person who has received it form any foreign source, either directly or through one or more persons, shall also be deemed to be foreign contribution.
  • The interest accrued on the foreign contribution deposited in any specified bank or any other income derived from the foreign contribution or interest thereon shall also be deemed to be foreign contribution.

However, the following shall not be treated as Foreign contributions:

  • Any amount received, by a 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
  • Any contribution received from an agent or a foreign source towards such fee or cost shall be excluded from the definition of foreign contribution.

FCRA 2010 is meant to ensure that foreign contribution is received from legitimate sources and utilized only for legitimate purposes by person receiving the foreign contribution.
Any individual, HUF, association or a company registered under Section 25 of Companies Act 1956 (Now Section 8 of Companies Act, 2013) can receive foreign contribution subject to following conditions:-

  • It must have a definite cultural, economic, educational, religious or social programme.
  • It must obtain the FCRA registration/prior permission from the Central Government
  • It must not be prohibited under Section 3 of FCRA, 2010.

Section 3 of FCRA 2010 prohibits acceptance of foreign contribution in certain cases. Accordingly, no foreign contribution can be accepted by the following:

  • candidate for election
  • correspondent, columnist, cartoonist, editor, owner, printer or publisher of a registered newspaper;
  • Judge, government servant or employee of any Corporation or any other body controlled or owned by the Government;
  • member of any legislature;
  • political party or office bearer thereof;
  • organization of a political nature as may be specified by the Central Government by an Order published in the Official Gazette, having regard to the activities of the organisation or the ideology propagated by the organisation or the programme of the organisation or the association of the organization with the activities of any political party
  • 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 the Information Technology Act, 2000 or any other mode of mass communication; and any correspondent or columnist, cartoonist, editor, owner of the association or company
  • certain individuals or associations who have been prohibited from receiving foreign contribution.

Foreign contribution can, however, be accepted by the above-mentioned persons in the following specific cases:

  • by way of salary, wages or other remuneration due to him or to any group of persons working under him, from any foreign source or by way of payment in the ordinary course of business transacted in India by such foreign source; or
  • by way of payment, in the course of international trade or commerce, or in the ordinary course of business transacted by him outside India; or
  • as an agent of a foreign source in relation to any transaction made by such foreign source with the Central Government or State Government; or
  • by way of a gift or presentation made to him as a member of any Indian delegation, provided that such gift or present was accepted in accordance with the rules made by the Central Government with regard to the acceptance or retention of such gift or presentation; or
  • from his relative; or
  • by way of remittance received, in the ordinary course of business through any official channel, post office, or any authorised person in foreign exchange under the Foreign Exchange Management Act, 1999; or
  • by way of any scholarship, stipend or any payment of like nature.

Associations which were granted certificates of registration or prior permission under Section 6 of the Foreign Contribution (Regulation) Act, 1976, will continue to be eligible to receive foreign contribution under the Act and such registration shall be valid for a period of five years from the date on which the Act came into force.