Question: 1 What is the purpose of the Foreign Contribution (Regulation) Act, 2010 (FCRA)?
Answer: FCRA 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.
Question: 2 What are the various acts/rules/guidelines which regulate the flow of foreign contributions to India?
Answer: The flow of foreign contributions to India is regulated under Foreign Contribution (Regulation)Act, 2010 and Foreign Contribution (Regulation) Rules, 2011 read with other notifications/orders etc., as issued there from time to time. These are available at the website fcraonline.nic.in.
Question: 3 What is the status of the FCRA, 1976 after coming into force in FCRA, 2010?
Answer: It has been repealed.
Question: 4 To whom FCRA, 2010 is applicable?
Answer: As per Section 1(2) of FCRA, 2010, the provisions of the act shall apply to:
i. Whole of India
ii. Citizens of India outside India; and
iii. Associate Branches or subsidiaries, outside India, of companies or bodies corporate, registered or incorporated in India
Question: 5 What is foreign contribution?
Answer: 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).
Question: 6 Who can receive foreign contributions?
Answer: 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.
Question: 7 Who cannot receive foreign contributions?
Answer: As defined in Section 3(1) of FCRA, 2010, the following are prohibited to receive foreign contributions:
(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 contributions.
Question: 8 Can foreign contributions be received in rupees?
Answer: Yes. Any donation, delivery or transfer received from a ‘foreign source’ whether in rupees or in foreign currency is construed as ‘foreign contribution’ under FCRA, 2010.
Such transactions include interest on foreign contribution on income derived from foreign contribution even in rupees term are considered as foreign contribution.
Question: 9 Will interest or any other income earned from foreign contribution (FC) be considered foreign contribution?
Answer: Yes. It will become part of F.C. please see Explanation 2 under Question 1.
Question: 10 Whether interest or any other income earned out of foreign contribution be shown as fresh foreign contribution receipt during that year or not?
Answer: 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.
Question: 11 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?
Answer: 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.
Question: 12 Whether donation given by Non-Resident Indians (NRIs) is treated as ‘foreign contribution’?
Answer: 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, cannot be treated as foreign contributions. However, while accepting any donations from such NRI, it is advisable to obtain his passport details to ascertain that he/she is actually an Indian citizen.
Question: 13 Whether donation given by an individual of Indian origin and having foreign nationality is treated as ‘foreign contribution’?
Answer: 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.
Question: 14 Whether foreign remittances received from a relative are to be treated as foreign contribution as per FCRA, 2010?
Answer: 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 one lakh rupees or equivalent thereto in a financial year from any of his relatives shall inform the Central Government in Form FC-1 within thirty days from the date of receipt of such contribution. This form is available on the website: fcraonline.nic.in
Question: 14 Whether individuals not covered under Section 3 or a HUF can accept foreign contribution freely for the purposes listed in section 4 of FCRA,2010?
Answer: Yes. Since subject to the provisions of Section10, even the persons specified under section 3, i.e., persons not permitted to accept foreign contribution, are allowed to receive foreign contribution for the purposes listed in section 4, it is obvious that Individuals in general and a HUF are permitted to accept foreign contribution without
permission for the purposes listed in section 4. However, it should be borne in mind that the monetary limit for acceptance of foreign contribution in the form of any article given as gift to a person for his personal use has been specified as Rs. one lakh vide FCR Amendment Rules, 2019.
Question: 15 Can the fee paid by the foreign delegates/participants attending/participating in a conference/seminar etc. be termed as foreign contribution and thus require permission from FCRA?
Answer: No, “Delegate/participation Fees” paid by foreign delegates/participants for participation in a conference/ seminar and which is utilized for the purpose of meeting the expenditure of hosting the conference/seminar is not treated as foreign contribution and as such no permission under FCRA is required by the recipient.
Question: 16 Section 2(c)(i) of repealed FCRA, 1976 inter alia defined foreign contribution as the donation, delivery or transfer made by any foreign source of any article, not given to a person as a gift for personal use, if the market value, in India, of such article exceeds one thousand rupees. What limit has been prescribed in FCRA, 2010 in respect of such articles?
Answer: The limit has been specified as Rs. One lakh through the insertion of the Rule 6A in FCRR, 2011 vide the Foreign Contribution (Regulation) (Second Amendment) Rules, 2019 [G.S.R. 659 (E) dated 16th September, 2019]:
“6A. When articles gifted for personal use do not amount to foreign contribution. – Any article gifted to a person for his personal use whose market value in India on the date of such gift does not exceed rupees one lakh shall not be a foreign contribution within the meaning of sub-clause (i) of clause (h) of sub-section (1) of section (2).”
Question: 17 What is a foreign source?
Answer: 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 the mare not considered as foreign contribution. List of such bodies / organizations, which are not
treated as ‘foreign source’, are available on the website fcraonline.nic.in
Question: 18 Whether an Individual of Indian Origin who has acquired foreign nationality is treated as a foreign-source?
Answer: Yes. The contribution received from all the non-Indian Passport Holders is treated as “Foreign Source.”
Question: 19 What is a foreign company?
Answer: 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.
Question: 20 What is a Multinational Corporation?
Answer: As per the explanation given under clause (g) of sub-section 1 of Section 2 of FCRA, 2010 a corporation incorporated in a foreign country or territory shall be deemed to be a multi-national corporation if such corporation,-
(a) has a subsidiary or a branch or a place of business in two or more countries or territories; or
(b) carries on business, or otherwise operates, in two or more countries or territories;
Question: 21 Whether a Company incorporated in India under the Companies Act, 2013 having its operations in 2 or more countries is to be treated as an MNC under FCRA, 2010?
Answer: No
Question: 22 What is a candidate for election?
Answer: A candidate for election means a person who has been duly nominated as a candidate for election to any legislature with effect from the date of his such nomination.
Question: 23 What is a registered newspaper?
Answer: “registered newspaper” means a newspaper registered under the Press and Registration of Books Act, 1867.
Question: 24 What is a political party?
Answer: As per 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; or
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 August 2002, as in force for the time being;
Question: 25 How does a person obtain permission to accept Foreign contributions?
Answer: There are two modes of obtaining permission to accept foreign contributions according to FCRA,2010:
i. Registration
ii. Prior Permission
Question: 26 What are the eligibility criteria for the grant of registration?
Answer: For grant of registration under FCRA, 2010, the association should:
(i) 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;
(ii) Normally 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 lac spent during the last three years. The association wants the 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.
Question: 27 What are the eligibility criteria for the grant of prior permission?
Answer: An organization in the formative stage is not eligible for a 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:
(i) be registered under an existing statute like the Societies Registration Act, 1860 or the Indian Trusts Act, 1882 or section 8 of the Companies Act, 2013 etc;
(ii)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
(iii)For Indian recipient organizations and foreign donor organizations having common members, FCRA Prior Permission shall be granted to the Indian recipient organizations subject to its satisfying the following:
i)The Chief Functionary of the recipient Indian organization should not be a part of the donor organization.
ii) 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.
iii) 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.
iv) 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.
Question: 28 What are the conditions to be met for the grant of registration and prior permission?
Answer: In terms of Sec.12 (4) of FCRA, 2010, the following shall be the conditions for the grant of registration and prior permission:
(a) The ‘person’ making an application for registration or grant of prior permission-
i. is not fictitious or benami;
ii. 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;
iii. has not been prosecuted or convicted for creating communal tension or disharmony in any specified district or any other part of the country;
iv. has not been found guilty of diversion or mis-utilisation of its funds;
v. is not engaged or likely to engage in propagation of sedition or advocate violent methods to achieve its ends;
vi. is not likely to use the foreign contribution for personal gains or divert it for undesirable purposes;
vii. has not contravened any of the provisions of this Act;
viii. has not been prohibited from accepting foreign contribution;
ix. 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.
x. 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.
(b) the acceptance of foreign contribution by the association/ person is not likely to affect prejudicially–
i. the sovereignty and integrity of India;
ii. the security, strategic, scientific or economic interest of the State;
iii. the public interest;
iv. freedom or fairness of election to any Legislature;
v. friendly relation with any foreign State;
vi. harmony between religious, racial, social, linguistic, regional groups, castes or communities.
(c) the acceptance of foreign contribution-
i. shall not lead to incitement of an offence;
ii. shall not endanger the life or physical safety of any person.
Question: 29 Can a private limited company or a partnership firm get registration or prior permission under FCRA, 2010?
Answer: 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.
Question: 30 Whether an individual or a Hindu Undivided Family (HUF) can be given registration or prior permission to accept foreign contribution in terms of section 11 of FCRA, 2010?
Answer: Yes. The definition of the ‘person’ under section 2(1)(m) in the Foreign Contribution (Regulation) Act, 2010 includes any individual and a ‘Hindu Undivided Family’ among others. As such an Individual or a HUF is also eligible to apply for a certificate of registration or prior permission to accept foreign contributions.
Question: 31 Whether organisations under Central/State Governments are required to obtain registration or prior permission under FCRA, 2010 for accepting foreign contribution?
Answer: Yes, however all organizations (not being a political party), constituted or established by or under a Central Act or a State Act or by any administrative or executive order of the Central Government or any State Government and wholly-owned by the respective Government and required to have their accounts compulsorily audited by the Comptroller and Auditor General of India (CAG) or any of the agencies of the CAG, are exempted from the operation of all the provisions of FCRA, 2010.
