top of page

The Foreign Contribution (Regulation) Amendment Act, 2020 - A Journey from Regulation to Control

Contributed by: P&A Law Offices


The Foreign Contribution (Regulation) Act, 2010 (‘FCRA/Act’) along with the Foreign Contribution (Regulation) Rules, 2011 (‘FCRR/Rules’) were enacted with the primary purpose of regulating the inflow of foreign contributions and ensuring that foreign contributions are not utilized for any purpose other than those specified under the legislation. Section 3 of FCRA provides for the categories of persons, organizations, corporations and companies who are prohibited from accepting foreign contribution, with exceptions provided for under Section 4 of the FCRA.

The FCRA applies to “Foreign Contributions” received from “Foreign Sources”. The definition of “Foreign Source” [Section 2(j) FCRA] states that the entity that is the ‘source’ of the funds is established in a foreign territory. Additionally, “Foreign Contribution” [Section 2(h) FCRA] is defined by the FCRA as a donation, delivery or transfer made by a foreign source of: -

  1. Any article (unless given to an individual for personal use), the value of which is not more than such sum as may be specified from time to time, by the Central Government.

  2. Currency, Indian or foreign, or

  3. Foreign securities including all foreign debentures, bonds, shares, stocks and similar instruments of credit. Any income or interest generated from such contributions is also treated as a foreign contribution under the FCRA.

On 6 March 2020, the Supreme Court of India, in Indian Social Action Forum (INSAF) v. Union of India, Civil Appeal No.1510 of 2020 categorically held that:

“18. The object sought to be achieved by the Act is to ensure that Parliamentary institutions, political associations and academic and other voluntary organizations as well as individuals working in the important areas of national life should function in a manner consistent with the values of a sovereign democratic republic without being influenced by foreign contributions or foreign hospitality. The long title of the Act makes it clear that the regulation of acceptance and utilisation of foreign contribution is for the purpose of protecting national interest. Candidates for election and political parties or office bearers of political parties are barred from accepting any foreign contribution. The legislative intent is also to prohibit organizations of a political nature from receiving foreign contributions. It is clear that preventing foreign contribution into the political arena is the object sought to be achieved by the Act ……….”
“22. Any organisation which habitually engages itself in or employs common methods of political action like 'bandh' or 'hartal', 'rasta roko', 'rail roko' or 'jail bharo' in support of public causes can also be declared as an organisation of political nature, according to the guideline prescribed in Rule 3 (vi). Support to public causes by resorting to legitimate means of dissent like bandh, hartal etc. cannot deprive an organisation of its legitimate right of receiving foreign contribution. It is clear from the provision itself that bandh, hartal, rasta roko etc., are treated as common methods of political action. Any organisation which supports the cause of a group of citizens agitating for their rights without a political goal or objective cannot be penalized by being declared as an organisation of a political nature……………………………………..
We make it clear that organisations used for channeling foreign funds by political parties cannot escape the rigour of the Act provided there is concrete material. In that event, the Central Government shall follow the procedure prescribed in the Act and Rules strictly before depriving such organization the right to receive foreign contributions.”


Under the FCRA, the Central Government has been vested with the powers, inter alia, to govern receipt, payment, and transfer of foreign contributions in the following circumstances: -

Section 9 of FCRA: Power of Central Government to prohibit receipt of foreign contribution, etc., in certain cases —

The Central Government may—

  1. prohibit any person or organisation not specified in section 3, from accepting any foreign contribution;

  2. require any person or class of persons, not specified in section 6, to obtain prior permission of the Central Government before accepting any foreign hospitality;…..

Provided that no such prohibition or requirement shall be made unless the Central Government is satisfied that the acceptance of foreign contribution by such person or class of persons, as the case may be, or the acceptance of foreign hospitality by such person, is likely to affect prejudicially—

  1. the sovereignty and integrity of India; or

  2. public interest; or

  3. freedom or fairness of election to any Legislature; or

  4. friendly relations with any foreign State; or

  5. harmony between religious, racial, social, linguistic or regional groups, castes or communities.

Section 10 of FCRA: Power to prohibit payment of currency received in contravention of the Act—

Where the Central Government is satisfied, after making such inquiry as it may deem fit, that any person has in his custody or control any article or currency or security, whether Indian or foreign, which has been accepted by such person in contravention of any of the provisions of this Act, it may, by order in writing, prohibit such person from paying, delivering, transferring or otherwise dealing with, in any manner whatsoever, such article or currency or security save in accordance with the written orders of the Central Government and a copy of such order shall be served upon the person so prohibited in the prescribed manner, and thereupon the provisions of sub-sections (2), (3), (4) and (5) of section 7 of the Unlawful Activities (Prevention) Act, 1967 (37 of 1967) shall, so far as may be, apply to, or in relation to, such article or currency or security and references in the said sub-sections to moneys, securities or credits shall be construed as references to such article or currency or security.”

Foreign Contribution (Regulation) Rules, 2011

Rule 3 of the FCRR are the ‘Guidelines for declaration of an organisation to be of a political nature, not being a political party.’ The Central Government may specify any organisation as an organisation of political nature on one or more of the following grounds : -

  1. organisation having avowed political objectives in its Memorandum of Association or bylaws;

  2. any Trade Union whose objectives include activities for promoting political goals;

  3. any voluntary action group with objectives of a political nature or which participates in political activities;

  4. front or mass organisations like Students Unions, Workers' Unions, Youth Forums and Women's wing of a political party;

  5. organisation of farmers, workers, students, youth based on caste, community, religion, language or otherwise, which is not directly aligned to any political party, but whose objectives, as stated in the Memorandum of Association, or activities gathered through other material evidence, include steps towards advancement of Political interests of such groups;

  6. any organisation, by whatever name called, which habitually engages itself in or employs common methods of political action like 'bandh' or 'hartal', 'rasta roko', 'rail roko' or 'jail bharo' in support of public causes.”


Organizations that have a definite cultural, economic, educational, religious or social programme are entitled to accept foreign contributions under the FCRA. Such contributions may be accepted only with the approval of the Government of India, through the Ministry of Home Affairs.

In order to be eligible to receive foreign contributions, an organization may seek prior approval or obtain a one-time long-term registration which is valid for a period of five years. In the latter case, the permission must be renewed by applying at least six months prior to the date of expiry of the permission. In the interim, organizations often apply for one-time permission, commonly referred to as “Prior Permission”.


Every organization is required to submit their annual returns to the Central Government within nine months from the closure of the financial year. The annual return must include details of the contributions received, the source of contributions, the manner in which contributions were received, the purpose for which contributions were received, and the manner in which contributions were used [Section 19 of FCRA along with Rule 13 and Rule 16 of FCRR].


The FCRA prescribes a robust adjudication mechanism which includes powers and procedures for confiscation, appeal and revision in case of any act committed in violation of the FCRA [Section 29 – 32 of FCRA].

“Section 29 of FCRA: Adjudication of confiscation: —

  1. Any confiscation referred to in section 28 may be adjudged—

    1. without limit, by the Court of Session within the local limits of whose jurisdiction the seizure was made; and

    2. subject to such limits as may be prescribed, by such officer, not below the rank of an Assistant Sessions Judge, as the Central Government may, by notification in the Official Gazette, specify in this behalf…..

Section 31 of FCRA: Appeal: —

  1. Any person aggrieved by any order made under section 29 may prefer an appeal:

    1. where the order has been made by the Court of Session, to the High Court to which such Court is subordinate; or

    2. where the order has been made by any officer specified under clause (b) of sub-section (1) of section 29, to the Court of Session within the local limits of whose jurisdiction such order of adjudication of confiscation was made, within one month from the date of communication to such person of the order: -

Provided that the appellate court may, if it is satisfied that the appellant was prevented by sufficient cause from preferring the appeal within the said period of one month, allow such appeal to be preferred within a further period of one month, but not thereafter.

2. Any organization referred to in clause (f) of sub-section (1) of section 3, or any person or association referred to in section 6 or section 9, aggrieved by an order made in pursuance of section 5 or by an order of the Central Government refusing to give permission under this Act, or by any order made by the Central Government under sub-section (2) or sub-section (4) of section 12, or sub-section (1) of section 14, as the case may be, may, within sixty days from the date of such order, prefer an appeal against such order to the High Court within the local limits of whose jurisdiction the appellant ordinarily resides or carries on business or personally works for gain, or, where the appellant is an organization or association, the principal office of such organization or association is located….

Section 32 of FCRA: Revision of orders by Central Government—

  1. The Central Government may, either of its own motion or on an application for revision by the person registered under this Act, call for and examine the record of any proceeding under this Act in which any such order has been passed by it and may make such inquiry or cause such inquiry to be made and, subject to the provisions of this Act, may pass such order thereon as it thinks fit.

  2. The Central Government shall not of its own motion revise any order under this section if the order has been made more than one year previously.

  3. In the case of an application for revision under this section by the person referred to in sub-section (1), the application must be made within one year from the date on which the order in question was communicated to him or the date on which he otherwise came to know of it, whichever is earlier: - Provided that the Central Government may, if it is satisfied that such person was prevented by sufficient cause from making the application within that period, admit an application made after the expiry of that period.

  4. The Central Government shall not revise any order where an appeal against the order lies but has not been made and the time within which such appeal may be made has not expired or such person has not waived his right of appeal or an appeal has been filed under this Act….”


The penal provisions prescribed under the FCRA in the event of a violation of the Act are as follows: -


The Government of India has, over the past several years, scrutinized the flow of foreign funds to charitable organizations in India. All charitable organizations that receive foreign contributions come under the purview of the FCRA. In April 2015, it was reported that the Ministry of Home Affairs cancelled the licenses of over 8,000 charitable organizations due to non-compliance with the reporting requirements stipulated under the FCRA.

In certain instances, the Government has also suspended registrations granted under FCRA, as was the case with Greenpeace India. In November 2019, the Central Bureau of Investigation raided Amnesty International’s offices in Bengaluru and Delhi based on allegations that the non-governmental organization had violated provisions of the FCRR and the Indian Penal Code. The CBI registered a case against Amnesty International India and three of its associate organizations for alleged violations of laws pertaining to INR. 36 crores of foreign funding. In response to a starred question asked in the Lok Sabha in August 2018, the Union Home Ministry stated,

“Registration of more than 13000 associations/NGOs had been cancelled during last three years for violation of various provisions of FCRA, 2010 and Rules made thereunder. Offences of 86 NGOs have been compounded by imposing penalties amounting to Rs. 3,14,37,649/- since 2016. Also, four cases have been referred to the CBI for investigation during the last three years...”


The Lok Sabha passed The Foreign Contribution (Regulation) Amendment (FCRA) Bill, 2020 on September 21, 2020, amid concerns by voluntary organizations that the new changes will further tighten channels of foreign funding. The Bill was passed by the Rajya Sabha on September 23, 2020 and received the President’s assent on September 28, 2020. The FCRA, 2010 has been amended twice. The first amendment was made by Section 236 of the Finance Act, 2016 and the second was made by Section 220 of the Finance Act, 2018.

The key highlights of the FCRA Amendment Act, 2020 are as follows: -

  • 'Public servants’ (as defined under the Indian Penal Code) have been added to the list of persons prohibited from accepting any foreign contribution under Section 3(c) of the FCRA.

  • Foreign grants received by an entity cannot be transferred to any other person, a partner organisation or an associated person. Organizations now must build their own delivery capacity and cannot rely on implementation partners.

  • Earlier, recipients of foreign grants could use 50% of the contribution for meeting administrative expenses (defined in Rule 5 of FCRR). The limit has been reduced to 20%.

  • The government may restrict usage of unutilized foreign contribution for persons who have been granted prior permission to receive such contribution. This may be done only in cases where the government believes that such person has contravened the provisions of the FCRA.

  • Foreign contribution can now be received only in an account designated by the bank as “FCRA account” in a branch of the State Bank of India (or as may be notified by the central government).

  • Section 12A of the FCRA has been introduced. Section 12A provides that applicants must provide Aadhaar details of all its office-bearers as an identification document for seeking prior permission or registration or renewal of registration under Section 11 of the FCRA, or for making an application for grant of certificate under Section 12 of the FCRA. Foreigners must provide a copy of the passport or the Overseas Citizen of India card for identification.

  • Under the FCRA, the government may suspend the registration of a person for a period not exceeding 180 days. The amendment adds that such suspension may be extended up to an additional 180 days.

  • An option to surrender the FCRA certificate has now been made available (Section 14A, FCRA). The government may permit so if, following an inquiry, it is satisfied that such person has not violated the FCRA

  • The government may conduct an inquiry before renewing the certificate to ensure that the person making the application: -

    1. is not fictitious or benami;

    2. 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;

    3. has not been prosecuted or convicted for creating communal tension or indulging in activities aimed at religious conversion;

    4. has not been found guilty of diversion or misutilization of funds;

    5. is not engaged or likely to engage in propagation of sedition or advocate violent methods to achieve its ends;

    6. is not likely to use the foreign contribution for personal gains or divert it for undesirable purposes;

    7. has not contravened any of the provisions of this Act, and

    8. has not been prohibited from accepting foreign contribution, among other conditions.


The Government of India amended the FCRA with the objective of ensuring that foreign funds received in India by the authorized persons or organisations are spent in the right direction, bringing and maintaining transparency, and curbing the misuse of foreign contributions received in India. In light of the recent actions taken by the Government against various charitable organizations, all organizations that receive foreign contributions must review the FCRA rules and ensure proper due diligence in compliance with the existing FCRA legislation.

Contributed by: P&A Law Offices

The above article has been authored by Mr. Gaurav Mahajan(Associate Partner) and Mr. Saksham Babbar(Associate) from P&A Law Offices, New Delhi.

The views expressed are solely those of the authors and should not be attributed to the author’s firm or its clients, or any other organization.

bottom of page