Section 1 of FCRA, 2010 – Short Title, Extent, Application and Commencement

Introduction

Section 1 of the Foreign Contribution (Regulation) Act, 2010 (FCRA) deals with the basic introductory aspects of the Act. It explains:

The official name of the Act (Short Title)
The geographical area where the Act applies (Extent)
Persons and entities covered by the Act (Application)
The date from which the Act becomes operational (Commencement)

Section 1 provides the foundation for understanding the scope and applicability of the FCRA, 2010.

Section 1(1) – Short Title

Provision:

This Act may be called the Foreign Contribution (Regulation) Act, 2010.

Explanation:

Section 1(1) gives the official name of the legislation.

The Act is known as:

Foreign Contribution (Regulation) Act, 2010

Commonly referred to as:

FCRA, 2010

Purpose of Short Title

The short title helps in:

Identifying the legislation.
Referring to the Act in legal documents and court proceedings.
Distinguishing it from other laws.

Example:

A legal notice may refer to:

“Violation of provisions under the Foreign Contribution (Regulation) Act, 2010.”

Section 1(2) – Extent and Application of the Act

Provision:

The Act extends to the whole of India.

It also applies to:

(a) Citizens of India outside India

(b) Associate branches or subsidiaries outside India of companies or bodies corporate registered or incorporated in India.

Meaning of “Extent”

The term extent refers to the geographical area where a law operates.

Under Section 1(2):

FCRA applies throughout India.
Every state and union territory comes within its jurisdiction.

Example:

An NGO registered in Delhi, Maharashtra, Kerala, or any other state must comply with FCRA if it receives foreign contribution.

Application of FCRA Outside India

Although FCRA is an Indian law, Section 1(2) extends its application in certain situations beyond Indian territory.

Section 1(2)(a) – Indian Citizens Outside India

Meaning:

FCRA applies to Indian citizens even when they are living outside India.

This means Indian citizens cannot avoid FCRA obligations merely because they are located abroad.

Example:

An Indian citizen residing in the United States receives foreign contribution for an activity connected with India. The provisions of FCRA may apply depending on the circumstances.

Section 1(2)(b) – Foreign Branches or Subsidiaries of Indian Companies

Meaning:

The Act also applies to:

Associate branches outside India, or
Subsidiaries outside India

of companies or bodies corporate that are:

Registered in India, or
Incorporated in India.

Purpose:

This provision prevents Indian companies from avoiding FCRA regulations by operating through foreign branches or subsidiaries.

Example:

An Indian company registered in India establishes a subsidiary in another country. The activities of that foreign subsidiary may come under FCRA where the conditions of the Act are satisfied.

Section 1(3) – Commencement of the Act

Provision:

The Act comes into force on a date notified by the Central Government in the Official Gazette.

Meaning of Commencement

Commencement means the date from which the provisions of the Act become legally effective.

A law passed by Parliament does not always become operational immediately. The government may notify a specific date for enforcement.

Role of Central Government

The Central Government has the authority to:

Decide the date on which the Act will start operating.
Publish the commencement date through an Official Gazette notification.

Different Dates for Different Provisions

The proviso to Section 1(3) states that:

Different dates may be appointed for different provisions of the Act.

Meaning:

All sections of an Act do not necessarily have to come into force on the same day.

The government may bring different provisions into operation at different times.

Example:

Section A may become effective from one date.
Section B may become effective later.

Reference to Commencement Date

When any provision mentions:

“the commencement of this Act”

it means:

The date on which that particular provision became operational.

Section 2 – Definitions under FCRA, 2010

1. “Association” – Section 2(1)(a)

Meaning:

An association means:

An association of individuals or a body of individuals, whether incorporated or not.

It includes organisations formed for a common purpose, such as:

NGOs
Societies
Trusts
Charitable organisations
Educational institutions
Research organisations
Welfare organisations

Important Points:

Registration as a legal entity is not compulsory to fall within the meaning of association.
Even an unregistered group of individuals may be covered under FCRA if it receives foreign contribution.

Example:

A group of individuals running a charitable education programme without being registered as a society may still be considered an association under FCRA.

2. “Candidate for Election” – Section 2(1)(c)

Meaning:

A candidate for election means:

A person who has been duly nominated as a candidate for election to any legislature.

It includes candidates contesting elections for:

Lok Sabha
Rajya Sabha
State Legislative Assemblies
State Legislative Councils

Importance under FCRA:

FCRA restricts certain categories of persons from accepting foreign contributions, including candidates for elections.

3. “Foreign Contribution” – Section 2(1)(h)

Meaning:

Foreign contribution means:

Donation, delivery or transfer made by a foreign source of any article (subject to certain conditions), currency or foreign security.

Foreign contribution includes:

(A) Donation

Any voluntary financial assistance received from a foreign source.

Example:

A foreign charitable foundation donating money to an Indian NGO.

(B) Delivery or Transfer of Article

Foreign contribution may also include receiving articles from foreign sources.

However, articles given for personal use are generally excluded if their market value does not exceed the prescribed limit.

(C) Currency

Foreign currency received from foreign sources.

Example:

US Dollars, Euros, Pounds received as donations.

(D) Foreign Security

Includes:

Shares
Bonds
Debentures
Other financial instruments issued by foreign entities.

What is NOT Considered Foreign Contribution?

The following are generally excluded:

1. Personal Gifts

A gift received for personal use from a foreign source within the prescribed limit is not treated as foreign contribution.

2. Business Transactions

Payments received in ordinary commercial transactions are generally not treated as foreign contribution.

Example:

Payment received by an Indian company for exported goods.

4. “Foreign Hospitality” – Section 2(1)(i)

Meaning:

Foreign hospitality means:

Any offer, not being purely casual, made by a foreign source for providing foreign travel, boarding, lodging, transportation or medical treatment facilities.

It includes:

Foreign-sponsored travel
Accommodation abroad
Food expenses
Medical expenses

Example:

A foreign organisation sponsoring travel and accommodation of an Indian public servant.

5. “Foreign Source” – Section 2(1)(j)

Meaning:

A foreign source means any foreign entity or person from whom foreign contribution originates.

It includes:

(a) Government of a Foreign Country

Example:

Donation provided by a foreign government.

(b) Foreign Company

A company incorporated outside India.

Example:

A US-based corporation funding an Indian NGO.

(c) Multinational Corporation

A multinational company operating internationally.

(d) Foreign Trust or Foundation

Example:

International charitable foundations.

(e) International Agency

Examples:

United Nations bodies
International organisations

(Some organisations may be exempted by government notification.)

(f) Foreign Citizen

A person who is not an Indian citizen.

(g) Foreign Association or Organisation

Any organisation established outside India.

6. “Legislature” – Section 2(1)(k)

Meaning:

Legislature includes:

Parliament of India
State Legislatures

It covers:

Lok Sabha
Rajya Sabha
Legislative Assemblies
Legislative Councils

7. “Occupational Category” – Section 2(1)(l)

The Act refers to occupational categories for classification purposes.

It relates to the profession or occupation of individuals as prescribed under the law.

8. “Person” – Section 2(1)(m)

Meaning:

Person includes:

Individual
Hindu Undivided Family (HUF)
Association
Company registered under Companies Act
Other legal entities

Importance:

FCRA applies not only to NGOs but also to different categories of persons covered under this definition.

9. “Political Party” – Section 2(1)(n)

Meaning:

Political party means:

A political party registered under the Representation of the People Act, 1951.

It includes recognised and registered political organisations.

Importance:

Political parties are restricted from accepting foreign contributions under FCRA.

10. “Prescribed” – Section 2(1)(o)

Meaning:

Prescribed means:

Prescribed by rules made under the FCRA Act.

The Central Government makes detailed rules through the:

Foreign Contribution (Regulation) Rules, 2011

11. “Prohibited Organisation”

The term refers to organisations that are restricted from receiving foreign contributions under FCRA.

Examples:

Organisations involved in unlawful activities.
Organisations declared prohibited under law.

12. “Security”

Meaning:

Security includes:

Shares
Stocks
Bonds
Debentures
Government securities

under applicable financial laws.

13. “Transfer”

Meaning:

Transfer means passing foreign contribution from one person or organisation to another.

Importance:

After the FCRA Amendment Act, 2020, transfer of foreign contribution to another person or organisation is prohibited.

14. “Value”

The Act uses value for determining the monetary worth of:

Articles received from foreign sources.
Foreign contribution in non-cash form.

CHAPTER II : REGULATION OF FOREIGN CONTRIBUTION FOREIGN HOSPITALITY

Section 3 of FCRA, 2010 – Prohibition to Accept Foreign Contribution | Complete Explanation

Introduction

Section 3 of the Foreign Contribution (Regulation) Act, 2010 (FCRA) deals with the prohibition on acceptance of foreign contribution by certain individuals, organisations, and entities.

The objective of this provision is to ensure that foreign funds do not influence:

Elections and political processes.
Government functioning.
Public administration.
Media and public opinion.
Legislative activities.
National interest-related matters.

Section 3 identifies categories of persons and organisations that are not permitted to accept foreign contributions either directly or indirectly.

Section 3(1) – Persons and Organisations Prohibited from Accepting Foreign Contribution

According to Section 3(1), no foreign contribution shall be accepted by the following persons or entities:

1. Candidate for Election – Section 3(1)(a)

Meaning:

A person who has been officially nominated as a candidate for election to any legislature cannot accept foreign contribution.

It includes candidates contesting elections for:

Lok Sabha
Rajya Sabha
State Legislative Assemblies
State Legislative Councils

Reason for Restriction:

Foreign funding may influence electoral processes and democratic decision-making.

2. Newspaper Professionals – Section 3(1)(b)

Foreign contribution cannot be accepted by:

Correspondent
Columnist
Cartoonist
Editor
Owner
Printer
Publisher

of a registered newspaper.

Reason:

Media plays an important role in shaping public opinion. Foreign funding of media professionals may affect journalistic independence.

3. Public Servants and Government Employees – Section 3(1)(c)

(Inserted through FCRA Amendment Act, 2020)

Foreign contribution cannot be accepted by:

Public servants.
Judges.
Government servants.
Employees of government corporations.
Employees of bodies owned or controlled by the Government.

Explanation of Public Servant

Section 3 provides that:

Public servant has the same meaning as defined under Section 21 of the Indian Penal Code, 1860.

A public servant generally includes persons holding public office or performing duties connected with the government.

Meaning of Corporation under Section 3

The term corporation includes:

Government-owned corporations.
Government-controlled corporations.
Government companies as defined under Section 2(45) of the Companies Act, 2013.

4. Members of Legislature – Section 3(1)(d)

Foreign contribution cannot be accepted by:

Members of Parliament.
Members of State Legislatures.

Reason:

To prevent foreign influence on law-making and legislative functioning.

5. Political Parties and Office Bearers – Section 3(1)(e)

Foreign contribution cannot be accepted by:

Political parties.
Office bearers of political parties.

Example:

A political party cannot receive donations from foreign sources.

6. Organisations of Political Nature – Section 3(1)(f)

The Central Government may specify certain organisations as:

“Organisations of a political nature”

under Section 5(1) of FCRA.

Such organisations cannot accept foreign contribution.

Factors Considered Under Section 5

While deciding whether an organisation is of political nature, the government may consider:

Objectives of the organisation.
Activities carried out by it.
Nature of its work.
Relationship with political activities.

7. News and Current Affairs Organisations – Section 3(1)(g)

Foreign contribution cannot be accepted by:

Associations or companies engaged in production or broadcast of:
- Audio news
- Audio-visual news
- Current affairs programmes

through:

Electronic mode.
Digital platforms.
Other forms of mass communication.

Example:

Entities involved in:

Online news platforms.
Digital news broadcasting.
Audio news services.

may fall under this restriction if covered by the provision.

8. Persons Connected with News Organisations – Section 3(1)(h)

Foreign contribution cannot be accepted by:

Correspondent.
Columnist.
Cartoonist.
Editor.
Owner

of organisations mentioned under Section 3(1)(g).

Section 3(2) – Indirect Acceptance of Foreign Contribution Prohibited

Section 3 not only prohibits direct acceptance but also prevents indirect methods of receiving foreign contributions.

Section 3(2)(a)

Provision:

No person:

Resident in India, or
Indian citizen residing outside India

shall accept foreign contribution or foreign currency from a foreign source:

on behalf of:

Political party.
Persons prohibited under Section 3(1).

Example:

A person cannot accept foreign donation in his own name and later transfer it to a political party.

Section 3(2)(b)

Provision:

A person resident in India cannot transfer foreign currency received from a foreign source to another person if he knows or has reason to believe that such person will:

Transfer it to a political party, or
Transfer it to any prohibited person under Section 3(1).

Example:

Person A receives foreign funds and gives them to Person B knowing that B will donate them to a political party.

This is prohibited.

Section 3(2)(c)

Applicable to Indian Citizens Living Outside India

An Indian citizen residing outside India cannot deliver foreign currency received from a foreign source to:

(i) A political party or prohibited person.

OR

(ii) Any other person if he knows or believes that such person may transfer it to:

Political party.
Prohibited person.

Section 3(3) – Restriction on Delivery of Foreign Currency Received on Behalf of Others

This provision applies where a person receives foreign currency from a foreign source on behalf of persons mentioned under Section 9.

Such person cannot deliver the currency:

(a)To any person other than the person for whom it was received.

(b) To another person if he knows or believes that such person will transfer it to someone other than the intended recipient.

Purpose of Section 3

Section 3 aims to:

Prevent foreign influence in elections.
Protect independence of media.
Maintain neutrality of government officials.
Prevent foreign funding of political activities.
Ensure democratic institutions remain free from external influence.
Stop indirect routing of prohibited foreign contributions.

Important Case Law

Association for Democratic Reforms v. Union of India (2024)

The Supreme Court examined issues relating to political funding and transparency, including concerns regarding foreign influence and electoral finance.

The judgment highlighted the importance of transparency in political funding.

Penalty for Violation of Section 3

Violation of FCRA provisions may attract penalties and legal action under:

Section 35 – Punishment for acceptance of foreign contribution in contravention of the Act
Section 37 – Penalties for offences
Other applicable provisions of FCRA.

Possible consequences include:

Imprisonment.
Fine.
Cancellation of FCRA registration.
Other legal action.

Section 4 of FCRA, 2010 – Persons to Whom Section 3 Prohibition Shall Not Apply |

Introduction

Section 4 of the Foreign Contribution (Regulation) Act, 2010 (FCRA) provides exceptions to the prohibition mentioned under Section 3.

Section 3 prohibits certain persons and organisations, such as:

Candidates for elections
Political parties
Members of Legislature
Government employees
Judges
Public servants
Certain media organisations

from accepting foreign contributions.

However, Section 4 clarifies that these prohibited persons may accept certain types of foreign contributions if such acceptance falls within the specific categories mentioned in this section and complies with Section 10 of the FCRA and applicable rules.

In simple words:

Section 3 creates restrictions, while Section 4 provides limited exceptions to those restrictions.

Legal Provision: Section 4 of FCRA, 2010

Section 4 states that:

Nothing contained in Section 3 shall apply where a person mentioned under Section 3 accepts foreign contribution in the circumstances permitted under Section 4.

However, if such a person receives foreign contribution for any purpose other than those specifically allowed under Section 4, it will be considered a violation of Section 3.

Objective of Section 4

The purpose of Section 4 is to ensure that genuine personal, professional, commercial, and lawful transactions are not unnecessarily restricted.

The law recognises that certain foreign payments may be legitimate, such as:

Salary from a foreign employer.
Business payments.
Scholarships.
Gifts from relatives.
Official remittances.
International trade payments.

Therefore, these transactions are excluded from the prohibition under Section 3.

Section 4 Exceptions Explained

1. Salary, Wages or Remuneration – Section 4(a)

Provision:

A person prohibited under Section 3 may accept foreign contribution if it is received:

As salary,
Wages,
Other remuneration,

from a foreign source.

It also includes payments made in the ordinary course of business in India by a foreign source.

Explanation:

A person does not violate FCRA merely because they receive salary or professional payment from a foreign entity.

Examples:

An Indian citizen working for a foreign company receives monthly salary.
An Indian employee receives remuneration from a foreign organisation operating in India.

Such payments are considered normal employment or business transactions.

2. Payment in International Trade or Commerce – Section 4(b)

Provision:

Foreign contribution restrictions do not apply to payments received:

During international trade or commerce.
In the ordinary course of business conducted outside India.

Explanation:

Commercial transactions are not treated as foreign contributions.

Examples:

Payment received by an Indian exporter from a foreign buyer.
Business income received from foreign customers.

The purpose is to ensure that FCRA does not interfere with normal economic activities.

3. Acting as an Agent of Foreign Source – Section 4(c)

Provision:

A person may receive foreign funds as an agent of a foreign source when the transaction is with:

Central Government, or
State Government.

Explanation:

Where a foreign entity conducts an official transaction with the Indian government and appoints an agent, the agent receiving payment is not prohibited.

Example:

A foreign company appoints an Indian agent to facilitate a government contract.

The payment received by the agent is covered under this exception.

4. Gifts or Presentations Received as a Member of Indian Delegation – Section 4(d)

Provision:

A person may accept gifts or presentations received as a member of an Indian delegation.

However:

The gift must be accepted according to government rules.
The acceptance or retention must comply with prescribed regulations.

Examples:

An Indian official receives a ceremonial gift during an international delegation visit.
A government representative receives a souvenir from a foreign government.

Such gifts are allowed if accepted according to applicable rules.

5. Contribution Received from Relative – Section 4(e)

Provision:

A person may receive foreign contribution from their relative.

Meaning:

A genuine family transfer from a relative living abroad is not prohibited.

Examples:

Money sent by a family member living in the United States.
Financial assistance from a sibling residing abroad.

Important:

The transaction must satisfy applicable FCRA rules regarding reporting and disclosure.

Under the Foreign Contribution (Regulation) Rules, 2011, if foreign contribution received from relatives exceeds the prescribed threshold, reporting requirements may apply.

6. Remittance Through Official Channels – Section 4(f)

Provision:

Foreign exchange received through:

Official channels,
Post office,
Authorised persons,

under the Foreign Exchange Management Act, 1999 (FEMA) is allowed.

Explanation:

Legitimate foreign exchange transactions through authorised banking channels are not prohibited.

Examples:

Money received through authorised banking systems.
Foreign exchange received through permitted remittance services.

Importance:

This provision ensures that normal international financial transactions are not restricted by FCRA.

7. Scholarship, Stipend or Similar Payments – Section 4(g)

Provision:

A person may accept:

Scholarship,
Stipend,
Similar educational or research payments.

Examples:

Indian student receiving scholarship from a foreign university.
Research scholar receiving foreign fellowship.
Internship stipend from a foreign institution.

Such payments are not treated as prohibited foreign contributions.

Proviso to Section 4 – Important Restriction

The proviso states:

If a person mentioned under Section 3 receives foreign contribution for any purpose other than those permitted under Section 4, it will be considered acceptance in violation of Section 3.

Meaning:

The exception is limited only to the purposes mentioned in Section 4.

A prohibited person cannot use Section 4 as a general permission to accept foreign funds.

Example:

Allowed:

A Member of Parliament receives a scholarship from a foreign university.

Covered under Section 4(g).

Not Allowed:

The same Member of Parliament receives foreign donation for political activities.

This violates Section 3.

Relationship Between Section 3 and Section 4

Section	Purpose
Section 3	Prohibits certain persons from accepting foreign contribution
Section 4	Provides limited exceptions to Section 3
Section 10	Allows Central Government to prohibit receipt of foreign contribution in certain cases

Section 4 and FCRA Amendment Updates

FCRA Amendment Act, 2020

The major 2020 amendment introduced stricter regulation under FCRA, including:

Increased monitoring of foreign contributions.
Addition of public servants in prohibited categories under Section 3.
Greater transparency requirements.

However, the basic exceptions provided under Section 4 continue to remain available for legitimate transactions.

Section 6 of FCRA, 2010 – Restriction on Acceptance of Foreign Hospitality |

Introduction

Section 6 of the Foreign Contribution (Regulation) Act, 2010 (FCRA) deals with restrictions on the acceptance of foreign hospitality by certain categories of persons holding important public positions.

The purpose of this provision is to prevent undue foreign influence on:

Members of Parliament and State Legislatures.
Political parties.
Judges.
Government officials.
Employees of government-controlled bodies.

Section 6 ensures that persons involved in public administration, law-making, and governance cannot accept foreign-sponsored benefits without proper government approval.

Meaning of Foreign Hospitality

According to Section 2(1)(i) of FCRA, 2010:

Foreign hospitality means:

Any offer, not being a purely casual one, made by a foreign source for providing a person with the costs of travel, boarding, lodging, transportation, or medical treatment facilities in a foreign country or territory.

Components of Foreign Hospitality

Foreign hospitality may include:

1. Travel Expenses

Example:

Foreign organisation paying airfare or travel expenses for an Indian government official.

2. Boarding and Lodging

Example:

A foreign entity providing hotel accommodation and food expenses during an official visit.

3. Transportation Facilities

Example:

Foreign government providing local transport facilities during a visit.

4. Medical Treatment

Example:

A foreign organisation paying medical expenses abroad.

Objective of Section 6

The main objectives are:

To prevent foreign influence on public officials.
To maintain independence of government functioning.
To ensure transparency in foreign-sponsored visits.
To prevent conflicts of interest.
To regulate benefits received from foreign sources.

Persons Covered Under Section 6

Section 6 applies to the following persons:

1. Members of Legislature

This includes:

Members of Parliament (MPs).
Members of State Legislative Assemblies (MLAs).
Members of State Legislative Councils (MLCs).

Reason:

Legislators participate in law-making and policy decisions. Foreign hospitality may influence their independent decision-making.

2. Office-Bearers of Political Parties

It applies to office holders of political parties, including:

Party presidents.
General secretaries.
Other important office bearers.

Reason:

Political parties influence governance and public policy, therefore foreign benefits require regulation.

3. Judges

Section 6 applies to:

Judges of courts.

Reason:

Judicial independence is an essential part of the rule of law. Foreign hospitality may create concerns regarding impartiality.

4. Government Servants

It includes:

Central Government employees.
State Government employees.
Public officials covered under government service.

5. Employees of Government-Controlled Bodies

It applies to employees of:

Government corporations.
Government-controlled bodies.
Organisations owned or controlled by the Government.

Main Rule Under Section 6

The persons mentioned above cannot accept foreign hospitality while visiting any foreign country or territory outside India without prior permission of the Central Government.

Requirement of Prior Permission

Before accepting foreign hospitality, the person must obtain:

Prior permission from the Central Government.

This means:

Permission must be obtained before accepting the benefit.
A person cannot first accept foreign hospitality and later seek approval.

Example

Situation:

A Member of Parliament is invited to visit another country by a foreign organisation.

The foreign organisation offers:

Flight tickets.
Hotel accommodation.
Local transportation.

Requirement:

The MP must obtain prior permission from the Central Government before accepting these benefits.

Exception: Emergency Medical Aid

Proviso to Section 6

Section 6 provides an exception for:

Emergency medical aid required due to sudden illness during a foreign visit.

Meaning

If a person covered under Section 6 suddenly becomes ill while travelling abroad and requires urgent medical assistance, prior permission is not required.

Example:

A government servant visits a foreign country officially and suddenly suffers a medical emergency.

A foreign hospital provides emergency treatment.

Such medical assistance can be accepted without prior approval.

Obligation After Receiving Emergency Medical Aid

Although prior permission is not required, the person must inform the Central Government.

The information must be provided:

Within One Month

The person must give an intimation within:

One month from the date of receiving such foreign hospitality.

Information Required in Intimation

The person must provide details regarding:

1. Receipt of Foreign Hospitality

Information about:

Nature of hospitality received.
Date of receipt.
Circumstances in which it was received.

2. Source of Hospitality

Details of:

Foreign person.
Foreign organisation.
Foreign institution.

that provided the hospitality.

3. Manner of Receiving Hospitality

Details about:

How assistance was provided.
Whether it was through payment, facility, arrangement, or any other method.

Difference Between Foreign Contribution and Foreign Hospitality

Basis	Foreign Contribution	Foreign Hospitality
Meaning	Donation, currency, security or article received from foreign source	Travel, accommodation, transport or medical facilities provided by foreign source
Main Provision	Section 2(1)(h)	Section 2(1)(i)
Regulation	Sections 3, 11 etc.	Section 6
Example	Foreign NGO donating money	Foreign organisation sponsoring travel expenses

Relationship Between Section 6 and Section 3

Both provisions regulate foreign influence but operate differently.

Section 3	Section 6
Restricts acceptance of foreign contribution	Restricts acceptance of foreign hospitality
Applies to specified persons and organisations	Applies mainly to public office holders
Deals with donations/funds	Deals with foreign-sponsored benefits

Consequences of Violation of Section 6

Failure to comply with Section 6 may lead to:

Legal action under FCRA.
Penalties prescribed under the Act.
Departmental action in case of government employees.
Questions regarding ethical conduct and conflict of interest.

Importance of Section 6

Section 6 plays an important role in:

1. Protecting Public Interest

It ensures that decision-makers do not become influenced by foreign benefits.

2. Maintaining Transparency

Foreign-sponsored visits and benefits remain subject to government oversight.

3. Protecting Institutional Independence

It safeguards:

Legislature.
Judiciary.
Government administration.

from external influence.

Key Points to Remember

Section 6 deals with foreign hospitality, not foreign contribution.
It applies to:
- Members of Legislature.
- Political party office bearers.
- Judges.
- Government servants.
- Employees of government-controlled bodies.
Prior permission of the Central Government is required before accepting foreign hospitality.
Emergency medical aid during a foreign visit is exempted from prior permission.
Such medical hospitality must be reported within one month.
The person must disclose the source and manner of receiving the hospitality.

Section 7 of FCRA, 2010 – Prohibition to Transfer Foreign Contribution to Other Person |

Introduction

Section 7 of the Foreign Contribution (Regulation) Act, 2010 (FCRA) deals with the prohibition on transferring foreign contribution from one person or organisation to another person.

The main objective of this provision is to ensure that foreign contributions are utilised only by the organisation that has received approval under the FCRA and that foreign funds are not diverted through intermediaries.

Before the FCRA Amendment Act, 2020, transfer of foreign contribution was permitted in certain circumstances. However, the 2020 Amendment introduced a complete prohibition on such transfers.

Legal Provision: Section 7 of FCRA, 2010

Section 7 states:

No person who:

Is registered under the FCRA and has been granted a certificate of registration; or
Has obtained prior permission under the FCRA; and
Receives any foreign contribution,

shall transfer such foreign contribution to any other person.

Meaning of Section 7

In simple words:

An NGO, association, or person who receives foreign contribution under FCRA registration or prior permission cannot give that foreign contribution to another person or organisation.

The organisation receiving foreign funds must itself utilise those funds for the approved objectives.

Who is Covered Under Section 7?

Section 7 applies to:

1. Registered FCRA Organisations

These are organisations that have obtained:

FCRA registration certificate from the Central Government.

Examples:

Registered NGOs.
Trusts.
Societies.
Section 8 companies.

2. Organisations Having Prior Permission

Organisations that have not obtained regular registration but have received permission for a specific foreign contribution under FCRA are also covered.

Example:

A newly established NGO receives prior permission to accept a foreign donation for a particular education project.

Such NGO cannot transfer that donation to another organisation.

What is Prohibited Under Section 7?

Section 7 prohibits:

Transfer of foreign contribution.
Donation of foreign funds to another NGO.
Passing foreign contribution through intermediaries.
Sub-granting foreign funds to another person.

Example

Situation Before 2020 Amendment:

An international foundation gives ₹50 lakh to NGO “A”.

NGO “A” transfers ₹10 lakh to NGO “B” for implementing a health project.

This was allowed under the earlier law if both organisations complied with FCRA requirements.

Situation After 2020 Amendment:

International foundation gives ₹50 lakh to NGO “A”.

NGO “A” cannot transfer any part of this amount to NGO “B”.

NGO “A” must directly implement the project.

FCRA Amendment Act, 2020 – Major Change in Section 7

Position Before Amendment

Before the Foreign Contribution (Regulation) Amendment Act, 2020, Section 7 allowed transfer of foreign contribution to another organisation/person who was also authorised to receive foreign contribution.

Therefore:

One FCRA-registered NGO could transfer funds to another FCRA-registered NGO.
Foreign-funded projects were often implemented through partner organisations.

Position After Amendment (2020)

The words allowing transfer to another FCRA-approved person were removed.

After the amendment:

Transfer of foreign contribution to any other person is completely prohibited.

This means:

Registered NGOs cannot transfer foreign funds.
NGOs cannot give foreign funds to implementing partners.
Foreign contributions cannot be routed through another organisation.

Reason Behind the 2020 Amendment

The Government introduced this change to:

1. Increase Accountability

The organisation receiving foreign funds becomes directly responsible for:

Utilisation.
Monitoring.
Reporting.

2. Prevent Diversion of Funds

The amendment aims to prevent:

Layering of funds.
Misuse of foreign donations.
Lack of transparency in fund flow.

3. Improve Monitoring

Direct utilisation makes it easier for authorities to track:

Source of funds.
End-use of funds.
Financial records.

Impact of Section 7 After 2020 Amendment

1. NGOs Cannot Act as Intermediaries

Earlier, large NGOs often received foreign contributions and distributed them to smaller partner organisations.

Now, this practice is prohibited.

2. Direct Implementation Required

The organisation receiving foreign contribution must:

Conduct activities itself.
Maintain accounts.
Ensure compliance.

3. Increased Compliance Burden

Organisations must now have:

Proper infrastructure.
Financial management systems.
Capacity to implement projects independently.

Relationship Between Section 7 and FCRA Registration

Section 7 applies only when:

A person has FCRA registration; or
Has prior permission; and
Receives foreign contribution.

Without FCRA approval, receiving foreign contribution itself may violate the Act.

Exceptions to Section 7

After the 2020 Amendment, there is no general exception allowing transfer of foreign contribution to another person.

However, normal utilisation of funds for the organisation’s own approved activities remains permitted.

Example:

An NGO paying salaries, purchasing materials, or paying project expenses from foreign contribution is not considered a transfer.

Difference Between Utilisation and Transfer

Utilisation	Transfer
Spending funds for own approved objectives	Giving funds to another person/entity
Allowed under FCRA	Prohibited under Section 7
Example: Paying school expenses	Example: Giving foreign funds to another NGO

Penalty for Violation of Section 7

Violation of Section 7 may attract action under FCRA, including:

Suspension of FCRA registration under Section 13.
Cancellation of registration under Section 14.
Penalties under the Act.
Prosecution for serious violations.

Important Case Law

Noel Harper & Others v. Union of India (2022)

The Supreme Court examined challenges against the FCRA Amendment Act, 2020.

The Court upheld the validity of restrictions introduced by the amendment, including restrictions on transfer of foreign contributions, holding that Parliament can regulate foreign contributions in the interest of transparency and national interest.

Section 8 of FCRA, 2010 – Restriction on Utilisation of Foreign Contribution for Administrative Purposes | Complete Explanation

Introduction

Section 8 of the Foreign Contribution (Regulation) Act, 2010 (FCRA) deals with the manner in which foreign contributions received by an organisation must be utilised.

The provision ensures that foreign funds are used only for the objectives for which they were received and are not diverted towards excessive administrative expenditure or speculative business activities.

Section 8 mainly focuses on two important restrictions:

Purpose-based utilisation of foreign contribution
Limitation on administrative expenses

Legal Provision: Section 8 of FCRA, 2010

Section 8 applies to every person who:

Is registered under FCRA and has obtained a registration certificate; or
Has obtained prior permission under FCRA; and
Receives foreign contribution.

Such person must comply with the conditions prescribed under this section.

Section 8(1)(a) – Utilisation of Foreign Contribution Only for Approved Purpose

Provision:

Every person receiving foreign contribution shall utilise such contribution only for the purposes for which it has been received.

Meaning

Foreign contribution cannot be used for activities different from the purpose mentioned at the time of:

FCRA registration; or
Prior permission application.

The recipient organisation must ensure that the funds are utilised according to its stated objectives.

Example:

Allowed:

An NGO receives foreign contribution for:

Running a healthcare programme.

The NGO uses the money for:

Medicines.
Medical camps.
Healthcare equipment.

This is permitted.

Not Allowed:

The same NGO uses the foreign contribution for:

Buying property unrelated to the project.
Personal expenses of office bearers.
Activities outside its approved objectives.

This may amount to violation of Section 8.

Prohibition on Speculative Business

Section 8(1)(a) contains a restriction that:

Foreign contribution or income generated from such contribution shall not be used for speculative business.

Meaning of Speculative Business

A speculative business generally refers to activities involving:

High financial risk.
Profit based mainly on market fluctuations.
Trading without genuine commercial activity.

Examples may include:

Speculative trading in shares.
Betting-related activities.
Gambling-type financial activities.

Government Power to Define Speculative Business

The Central Government has the power to specify through rules:

Which activities will be considered speculative business.
The criteria for determining speculative activities.

These rules are provided under the Foreign Contribution (Regulation) Rules, 2011.

Section 8(1)(b) – Restriction on Administrative Expenses

Section 8 places a limit on the amount of foreign contribution that can be spent on administrative expenses.

Present Limit: 20%

After the FCRA Amendment Act, 2020:

An organisation cannot use more than:

20% of foreign contribution received during a financial year

for administrative expenses.

Meaning of Administrative Expenses

Administrative expenses are expenses related to the general management and functioning of an organisation rather than direct project activities.

Examples:

Office administration.
Salaries of administrative staff.
Office rent.
Electricity and communication expenses.
Accounting expenses.
Legal and professional charges.
General management costs.

Example of 20% Administrative Expense Limit

Suppose an NGO receives:

$100,000 as foreign contribution in a financial year.

Maximum administrative expenses allowed:

20% of $100,000 = $20,000

The remaining amount should generally be used for the objectives and activities for which the contribution was received.

Prior Approval for Higher Administrative Expenses

Section 8 provides an exception.

If an organisation wants to spend more than 20% of foreign contribution on administrative expenses, it must obtain:

Prior approval of the Central Government.

Example:

An NGO receives foreign contribution for a large humanitarian project.

Due to the nature of the project, administrative expenses exceed 20%.

The NGO must apply to the Central Government and obtain approval before exceeding the limit.

Section 8(2) – Power of Central Government to Prescribe Administrative Expenses

Section 8(2) authorises the Central Government to prescribe:

What expenses will be included as administrative expenses.
How administrative expenses will be calculated.

These details are provided through the Foreign Contribution (Regulation) Rules, 2011.

Administrative Expenses Under FCRA Rules

The administrative expenses generally include costs relating to:

1. Salaries and Wages

Salary of administrative employees.
Staff engaged in management functions.

2. Office Expenses

Includes:

Rent.
Electricity.
Water charges.
Office maintenance.
Communication expenses.

3. Professional Expenses

Includes:

Legal fees.
Accounting charges.
Audit expenses.
Consultancy fees.

4. Management and Administration Costs

Includes:

Management meetings.
General organisational expenses.
Internal administration.

Expenses Generally Not Considered Administrative Expenses

Expenses directly related to programme implementation are generally treated as project expenses.

Examples:

Medical equipment purchased for healthcare projects.
Educational materials distributed to students.
Food supplies provided during relief work.
Training costs directly connected with beneficiaries.

FCRA Amendment Act, 2020 and Section 8

The Foreign Contribution (Regulation) Amendment Act, 2020 made an important change to Section 8.

Before 2020 Amendment:

Administrative expenses limit:

50% of foreign contribution

After 2020 Amendment:

Administrative expenses limit reduced to:

20% of foreign contribution

Reason Behind Reducing the Limit

The reduction was introduced to:

Ensure maximum utilisation of foreign funds for actual objectives.
Reduce diversion of funds towards organisational overheads.
Increase transparency and accountability.
Ensure foreign contributions benefit intended beneficiaries.

Difference Between Utilisation and Administrative Expenses

Basis	Utilisation for Purpose	Administrative Expenses
Meaning	Spending funds for approved activities	Spending for management and operation
Example	Running schools, hospitals, relief programmes	Office rent, administration salaries
Restriction	Must match approved objectives	Maximum 20% limit
Approval	Normal utilisation allowed	Above 20% requires government approval

Relationship of Section 8 with Other FCRA Provisions

Section 7 – Prohibition on Transfer of Foreign Contribution

Section 7 and Section 8 are closely connected.

Section 7 prohibits a person or organisation receiving foreign contribution from transferring it to any other person.
Section 8 requires the recipient organisation to use the foreign contribution only for the purpose for which it was received.

Example:

An NGO receives foreign contribution for an education project.

Giving that money to another NGO → Violation of Section 7
Using that money for unrelated business activities → Violation of Section 8

Therefore, Section 7 controls the transfer of funds, whereas Section 8 controls the utilisation of funds.

Section 11 – Registration and Prior Permission

Section 11 is connected with Section 8 because only those persons who are:

Registered under FCRA, or
Have obtained prior permission from the Central Government,

are legally allowed to receive foreign contributions.

Once foreign contribution is received under FCRA approval, Section 8 requires that such funds must be utilised according to the conditions of the Act.

Section 13 and Section 14 – Suspension and Cancellation

Violation of Section 8 may lead to regulatory action under FCRA.

If an organisation:

Misuses foreign contribution.
Uses funds for purposes other than approved objectives.
Spends beyond the permitted administrative expense limit without approval.

The Central Government may take action, including:

Suspension of FCRA registration under Section 13.
Cancellation of FCRA registration under Section 14.
Other proceedings under the Act.

Consequences of Violation of Section 8

Non-compliance with Section 8 may result in:

1. Misutilisation of Foreign Contribution

Using foreign funds for purposes other than those for which they were received can attract action under FCRA.

2. Use in Speculative Business

Foreign contribution or income generated from it cannot be used for speculative business activities.

3. Excess Administrative Expenses

Spending more than 20% of foreign contribution on administrative expenses without prior approval of the Central Government may amount to violation.

Importance of Section 8

1. Proper Utilisation of Foreign Funds

Section 8 ensures that foreign contributions are used only for the objectives for which they were received.

2. Financial Discipline

The provision prevents organisations from using excessive amounts of foreign funds for administrative overheads.

3. Transparency and Accountability

Proper utilisation requirements allow:

Government authorities.
Donors.
Auditors.

to verify whether foreign funds are being used lawfully.

4. Protection of Public Interest

Section 8 ensures that foreign contributions are directed towards:

Social welfare.
Education.
Healthcare.
Development activities.

rather than unrelated or unauthorised purposes.

Section 9 of FCRA, 2010 – Power of Central Government to Prohibit Receipt of Foreign Contribution, etc., in Certain Cases |

Introduction

Section 9 of the Foreign Contribution (Regulation) Act, 2010 (FCRA) gives special powers to the Central Government to regulate or restrict the acceptance of:

Foreign contribution, and
Foreign hospitality

by certain persons or organisations in specific circumstances.

Unlike Section 3, which permanently prohibits certain categories of persons from accepting foreign contribution, Section 9 gives discretionary powers to the Central Government to impose restrictions on persons who are not otherwise prohibited under the Act.

The main objective of Section 9 is to protect:

National sovereignty.
Public interest.
Electoral fairness.
Friendly relations with foreign countries.
Social harmony.

Purpose of Section 9

Section 9 acts as a preventive mechanism.

Even if a person or organisation is not covered under the prohibited categories of Section 3, the government may restrict their acceptance of foreign contribution if it believes that such foreign funding may adversely affect national interests.

Powers of Central Government under Section 9

Section 9 provides five major powers:

Section 9(a) – Power to Prohibit Acceptance of Foreign Contribution

Provision:

The Central Government may prohibit any person or organisation not specified in Section 3 from accepting foreign contribution.

Meaning:

Section 3 already prohibits certain persons, such as:

Political parties.
Candidates for elections.
Legislators.
Government servants.
Certain media organisations.

However, Section 9 allows the government to prohibit other persons or organisations also if circumstances require.

Example:

An organisation is not covered under Section 3 and is normally allowed to receive foreign contribution.

However, if the government believes that foreign funding received by that organisation may harm national interest, it may prohibit such acceptance under Section 9(a).

Section 9(b) – Power Regarding Foreign Hospitality

Provision:

The Central Government may require any person or class of persons not covered under Section 6 to obtain prior permission before accepting foreign hospitality.

Meaning:

Section 6 already requires prior permission for:

Members of Legislature.
Political party office bearers.
Judges.
Government servants.
Employees of government-controlled bodies.

Section 9(b) allows the government to extend this requirement to other persons also.

Example:

A private individual or professional who is not covered under Section 6 may be required to obtain prior approval before accepting foreign-sponsored travel or accommodation.

Section 9(c) – Requirement to Provide Information Regarding Foreign Contribution

Provision:

The Central Government may require any person or class of persons not specified in Section 11 to provide information regarding:

Amount of foreign contribution received.
Source of contribution.
Manner in which it was received.
Purpose for which it was received.
Manner in which it was utilised.

Meaning:

This provision allows the government to demand transparency from persons who are otherwise not required to register under FCRA.

Example:

A person receives foreign contribution but is not an FCRA-registered association.

The government may require that person to disclose:

Who provided the funds?
How much amount was received?
How the money was used?

Section 9(d) – Prior Permission Requirement for Persons Covered Under Section 11

Provision:

The Central Government may require any person or class of persons mentioned under Section 11(1) to obtain prior permission before accepting foreign contribution.

Relationship with Section 11:

Section 11 generally provides that:

Persons having registration certificate, or
Prior permission

can accept foreign contribution.

Section 9(d) gives power to the government to impose additional restrictions on persons covered under Section 11.

Example:

An organisation normally eligible to receive foreign contribution may be directed to obtain prior permission before accepting any foreign donation.

Section 9(e) – Intimation Regarding Foreign Hospitality

Provision:

The Central Government may require persons not specified in Section 6 to provide information regarding acceptance of foreign hospitality.

The information may include:

Receipt of hospitality.
Source of hospitality.
Manner in which hospitality was received.

Example:

A private researcher receives foreign-sponsored travel.

The government may require details regarding:

Who sponsored the visit?
What facilities were provided?
Purpose of the visit?

Proviso to Section 9 – Grounds for Exercising Power

The Central Government cannot impose restrictions arbitrarily.

The government must be satisfied that acceptance of foreign contribution or foreign hospitality is likely to adversely affect certain interests.

These grounds are:

1. Sovereignty and Integrity of India

Meaning:

Foreign funding should not threaten:

India’s independence.
Territorial integrity.
National unity.

Example:

Funding intended to support activities threatening India’s territorial integrity may attract restrictions.

2. Public Interest

Meaning:

Foreign contribution should not harm the welfare and interest of the public.

It includes concerns relating to:

Public order.
Security.
Social welfare.

3. Freedom and Fairness of Elections

Meaning:

Foreign funding should not influence electoral processes.

The purpose is to protect:

Free elections.
Fair political competition.
Democratic functioning.

4. Friendly Relations with Foreign States

Meaning:

Foreign contribution should not damage India’s diplomatic relations with other countries.

5. Harmony Between Different Groups

The government may restrict foreign funding if it may disturb harmony between:

Religious groups.
Racial groups.
Social groups.
Linguistic groups.
Regional communities.
Castes.

Difference Between Section 3 and Section 9

Section 3	Section 9
Provides fixed prohibition	Provides discretionary government power
Applies to specified persons	Can apply to other persons also
No foreign contribution allowed	Government may prohibit/restrict after assessment
Permanent statutory restriction	Case-specific restriction

Difference Between Section 9 and Section 11

Section 9	Section 11
Power of government to restrict acceptance	Registration/prior permission requirement
Preventive control mechanism	General regulatory framework
Can impose additional restrictions	Allows eligible persons to receive foreign contribution

FCRA Amendment and Section 9 – Latest Update

FCRA Amendment Act, 2020

The Foreign Contribution (Regulation) Amendment Act, 2020 made several important changes to FCRA, including:

Reduction of administrative expenses limit from 50% to 20% under Section 8.
Prohibition on transfer of foreign contribution under Section 7.
Mandatory Aadhaar identification requirements.
Greater monitoring and compliance requirements.

However:

Section 9 itself was not substantially amended by the FCRA Amendment Act, 2020.

The basic powers of the Central Government under Section 9 remain the same.

Importance of Section 9

1. Protects National Security

It allows preventive action against potentially harmful foreign influence.

2. Maintains Transparency

The government can demand information regarding foreign funding.

3. Protects Democratic Institutions

It helps safeguard elections and public institutions from external influence.

4. Prevents Social Disruption

Restrictions can be imposed where foreign funding may disturb social harmony.

Consequences of Non-Compliance with Section 9 Orders

If a person violates restrictions imposed under Section 9, consequences may include:

Action under FCRA.
Penalties under the Act.
Suspension or cancellation of registration where applicable.
Legal proceedings.

Key Points for Exams and Legal Notes

Section 9 gives discretionary powers to the Central Government.
It allows prohibition or regulation of foreign contribution and foreign hospitality.
It applies to persons not already covered under Sections 3 and 6.
Government action must be based on protection of:
- Sovereignty and integrity of India.
- Public interest.
- Electoral fairness.
- Friendly foreign relations.
- Social harmony.
Section 9 was not substantially changed by the FCRA Amendment Act, 2020.

Section 10 of FCRA, 2010 – Power to Prohibit Payment of Currency Received in Contravention of the Act |

Introduction

Section 10 of the Foreign Contribution (Regulation) Act, 2010 (FCRA) provides powers to the Central Government to restrict the use, transfer, or disposal of foreign contribution, currency, articles, or securities that have been received in violation of FCRA provisions.

The purpose of this provision is to prevent persons from using or transferring funds that were obtained illegally or in contravention of the Act.

In simple words:

If the government finds that a person is holding foreign contribution, currency, articles, or securities received illegally under FCRA, it can stop that person from dealing with those assets without government permission.

Legal Provision: Section 10 of FCRA, 2010

According to Section 10:

If the Central Government is satisfied, after conducting an inquiry, that any person has possession or control over:

Any article,
Currency (Indian or foreign), or
Security (Indian or foreign),

which has been accepted in violation of FCRA provisions, the government may issue a written order prohibiting that person from:

Paying,
Delivering,
Transferring, or
Otherwise dealing with such article, currency, or security.

The person can deal with such assets only according to the written instructions of the Central Government.

Objective of Section 10

The main objectives are:

1. Prevent Misuse of Illegal Foreign Funds

It prevents a person from using foreign contributions received unlawfully.

2. Protect Public Interest

It ensures that funds received in violation of law do not enter unauthorised activities.

3. Enable Government Control

It gives the government authority to freeze or restrict dealings with unlawful foreign contributions.

4. Ensure Compliance with FCRA

It strengthens enforcement of FCRA provisions.

Important Elements of Section 10

1. Satisfaction of Central Government

The power under Section 10 can be exercised only when:

The Central Government is satisfied.
The government has conducted an inquiry.

The government cannot arbitrarily restrict assets without forming a reasonable opinion.

2. Inquiry by Central Government

Before passing an order, the government may conduct:

Investigation.
Verification of records.
Examination of documents.
Any other inquiry considered necessary.

The purpose is to determine whether the foreign contribution was received in violation of FCRA.

3. Assets Covered Under Section 10

Section 10 applies to:

(A) Article

An article means any item received from a foreign source.

Examples:

Equipment.
Goods.
Materials.
Other physical items.

(B) Currency

Currency includes:

Indian Currency

Example:

Indian Rupees received through unlawful foreign contribution channels.

Foreign Currency

Example:

US Dollars.
Euros.
Other foreign currencies.

(C) Security

Security includes financial instruments such as:

Shares.
Bonds.
Debentures.
Other recognised securities.

4. Acceptance Must Be in Contravention of FCRA

Section 10 applies only when the article, currency, or security has been received:

In violation of the provisions of FCRA.

Examples:

Example 1:

A person prohibited under Section 3 receives foreign donation.

The government may restrict the use of such funds under Section 10.

Example 2:

An NGO receives foreign contribution without FCRA registration or prior permission.

The government may prohibit dealing with such contribution.

Powers of Central Government Under Section 10

After satisfaction of violation, the Central Government may issue a written order prohibiting the person from:

1. Paying

The person cannot make payments using such funds.

Example:

An organisation cannot pay expenses from illegally received foreign contribution.

2. Delivering

The person cannot hand over the article or money to another person.

Example:

Illegal foreign funds cannot be transferred to another entity.

3. Transferring

The person cannot transfer such assets.

Example:

A person cannot move unlawfully received foreign currency to another account.

4. Otherwise Dealing With

This is a broad expression covering any activity involving such assets.

It may include:

Withdrawal.
Disposal.
Investment.
Conversion.
Use for any purpose.

Requirement of Written Order

The government order must be:

In writing.
Served upon the concerned person.
Issued according to prescribed procedure.

The affected person must receive a copy of the order.

Effect of Government Order

Once the order is served:

The person cannot deal with the prohibited assets except according to written directions of the Central Government.

Application of Unlawful Activities (Prevention) Act, 1967 (UAPA)

Section 10 provides that certain provisions of:

Section 7(2), 7(3), 7(4), and 7(5) of the Unlawful Activities (Prevention) Act, 1967

shall apply, as far as possible, to such assets.

Meaning of Applying UAPA Provisions

The reference to UAPA gives additional legal mechanisms regarding:

Control over assets.
Restrictions on dealing with property.
Government authority over prohibited funds.

The terms used in UAPA such as:

Money,
Securities,
Credits,

are interpreted in relation to:

Article,
Currency,
Security

under FCRA.

Relationship Between Section 10 and Other FCRA Provisions

Section 7 – Transfer of Foreign Contribution

Section 7 prohibits transfer of foreign contribution.
Section 10 prevents dealing with foreign contribution already received illegally.

Connection:

Section 7 prevents improper transfer, while Section 10 gives government power to restrict illegal assets.

Section 8 – Utilisation of Foreign Contribution

Section 8 regulates proper utilisation.
Section 10 can restrict funds that were received unlawfully.

Section 9 – Government Power to Prohibit Receipt

Section 9 allows government to prohibit acceptance in certain situations.
Section 10 deals with action after prohibited acceptance has already occurred.

Section 11 – Registration and Prior Permission

Foreign contribution generally requires:

FCRA registration, or
Prior permission.

Receiving funds without compliance may lead to action under Section 10.

Difference Between Section 10 and Suspension/Cancellation

Section 10	Section 13/14
Restricts dealing with illegal assets	Deals with registration status
Applies to article, currency, security	Applies to FCRA registration
Prevents use or transfer of funds	Suspends or cancels permission

Consequences of Violation of Section 10

If a person violates an order issued under Section 10, consequences may include:

Legal action under FCRA.
Penalties under the Act.
Criminal proceedings where applicable.
Further investigation by authorities.

Importance of Section 10

1. Prevents Illegal Use of Foreign Funds

It ensures that unlawfully received foreign contributions cannot be utilised.

2. Strengthens Enforcement Mechanism

It gives the government practical power to control illegal funds.

3. Protects National Interest

It prevents foreign funds received in violation of law from being used for harmful purposes.

4. Ensures Accountability

Persons receiving foreign contributions remain responsible for compliance with FCRA requirements.

Key Points for Exams and Legal Notes

Section 10 empowers the Central Government to prohibit dealing with illegally received foreign contribution.
It applies to:
- Articles.
- Indian or foreign currency.
- Indian or foreign securities.
Government must conduct an inquiry before passing an order.
Restriction is imposed through a written order.
The order must be served on the concerned person.
UAPA provisions relating to control of assets apply as far as possible.
Section 10 is an enforcement mechanism to prevent misuse of unlawful foreign contributions.

CHAPTER III : REGISTRATION

Section 11 of FCRA, 2010 – Registration of Certain Persons with Central Government |

Introduction

Section 11 of the Foreign Contribution (Regulation) Act, 2010 (FCRA) is the primary provision that regulates the eligibility of persons or organisations to receive foreign contribution in India.

It establishes two legal methods through which an organisation can receive foreign contribution:

FCRA Registration Certificate (for regular receipt of foreign contribution); or
Prior Permission (for receiving a specific foreign contribution from a specific source for a specific purpose).

The purpose of Section 11 is to ensure that foreign funds are received only by genuine organisations and are utilised for lawful objectives.

Section 11(1) – Requirement of FCRA Registration

Provision

A person having a definite:

Cultural programme,
Economic programme,
Educational programme,
Religious programme, or
Social programme

cannot accept foreign contribution unless such person obtains a certificate of registration from the Central Government.

Meaning of Section 11(1)

Section 11 creates a general rule:

Any organisation or person involved in specified programmes must obtain FCRA registration before accepting foreign contribution.

A normal registration under other laws is not sufficient.

For example:

Registration under the Societies Registration Act.
Registration of a Trust.
Incorporation as a Section 8 Company.

does not automatically allow an organisation to receive foreign donations.

It must separately obtain approval under FCRA.

Who Can Apply for FCRA Registration?

Persons or organisations having activities relating to:

1. Cultural Programme

Includes activities related to:

Art and culture promotion.
Preservation of heritage.
Traditional practices.
Cultural research.

2. Economic Programme

Includes activities related to:

Livelihood development.
Poverty reduction.
Economic empowerment.
Skill development.

3. Educational Programme

Includes:

Schools.
Educational institutions.
Vocational training.
Educational research.
Scholarship programmes.

4. Religious Programme

Includes:

Religious education.
Religious welfare activities.
Charitable activities connected with religion.

5. Social Programme

Includes:

Healthcare.
Women empowerment.
Child welfare.
Rural development.
Disability support.
Environmental welfare activities.

Deemed Registration Under Previous FCRA, 1976

The proviso to Section 11(1) deals with organisations registered under the earlier:

Foreign Contribution (Regulation) Act, 1976

Meaning

Associations that:

Were registered under Section 6 of FCRA, 1976; or
Had obtained prior permission under FCRA, 1976,

were considered as registered or approved under FCRA, 2010.

Validity

Such registration remained valid for:

Five years from the commencement of Section 11.

This provision ensured a smooth transition from the old FCRA, 1976 to the new FCRA, 2010.

Section 11(2) – Prior Permission for Receiving Foreign Contribution

Provision

If a person is not registered under Section 11(1), such person can accept foreign contribution only after obtaining:

Prior permission from the Central Government.

Meaning of Prior Permission

Prior permission is an approval given by the Central Government for receiving a particular foreign contribution.

It is different from regular FCRA registration.

Prior permission is:

Limited in scope.
Given for a specific purpose.
Related to a specific foreign source.

Conditions of Prior Permission

Prior permission is valid only for:

1. Specific Purpose

The foreign contribution must be used only for the purpose mentioned in the application.

Example:

An NGO receives permission for a healthcare project.

It cannot use that amount for unrelated educational activities.

2. Specific Foreign Source

The permission is linked with a particular donor.

Example:

An NGO receives approval to accept funds from a foreign foundation.

It cannot use the same approval to receive funds from another foreign organisation.

Example: Registration vs Prior Permission

FCRA Registration

An NGO regularly receives foreign donations from different donors for multiple social welfare activities.

It requires FCRA registration.

Prior Permission

A newly established NGO receives a one-time donation from a foreign organisation for a particular project.

It may apply for prior permission.

First Proviso to Section 11(2) – Restriction During Inquiry

This provision gives additional powers to the Central Government.

If the government:

Receives information or a report;
Conducts a summary inquiry; and
Has reason to believe that a person with prior permission has violated FCRA,

it may restrict such person from:

1. Using Unutilised Foreign Contribution

The organisation cannot use the remaining unused foreign funds.

2. Receiving Remaining Foreign Contribution

If some amount approved under prior permission is still pending, it cannot be received.

3. Receiving Additional Foreign Contribution

The organisation cannot receive any additional foreign contribution without prior approval.

Second Proviso to Section 11(2) – Restriction After Violation

If a person is found guilty of violating:

FCRA, 2010; or
FCRA, 1976,

then:

Unutilised foreign contribution cannot be used.
Unreceived foreign contribution cannot be accepted.

without prior approval of the Central Government.

Section 11(3) – Power of Central Government to Specify Additional Restrictions

Section 11(3) gives power to the Central Government to issue notifications in the Official Gazette.

The government may specify:

(i) Persons Requiring Prior Permission

The government may specify any person or category of persons who must obtain prior permission before accepting foreign contribution.

Example:

A particular category of organisations may be placed under additional scrutiny.

(ii) Areas Where Prior Permission is Required

The government may specify geographical areas where foreign contribution can be accepted or utilised only after approval.

Purpose:

This may apply to sensitive areas requiring additional monitoring.

(iii) Purposes Requiring Prior Permission

The government may specify activities for which foreign contribution requires prior permission.

Example:

Certain sensitive activities may require additional government oversight.

(iv) Sources Requiring Prior Permission

The government may specify foreign sources from which contribution can only be accepted after approval.

Example:

Certain categories of foreign donors may require additional verification.

FCRA Amendment Act, 2020 and Section 11

The Foreign Contribution (Regulation) Amendment Act, 2020 introduced several major compliance changes in FCRA.

However:

Section 11 was not substantially amended by the 2020 Amendment Act.

The major changes of the 2020 Amendment related to:

1. Section 7

Complete prohibition on transfer of foreign contribution.

2. Section 8

Reduction of administrative expenses limit from 50% to 20%.

3. Section 12

Additional identification requirements for applicants.

4. Section 16

Changes relating to renewal of FCRA registration.

Therefore, the basic framework of Section 11 regarding registration and prior permission remains unchanged.

Relationship of Section 11 with Other FCRA Provisions

Section 7 – Transfer of Foreign Contribution

Section 11 allows eligible persons to receive foreign contribution.

Section 7 restricts them from transferring such contribution to another person.

Section 8 – Utilisation of Foreign Contribution

After receiving foreign contribution under Section 11:

Funds must be used only for approved objectives.
Administrative expenses must remain within the permitted limit.

Section 12 – Grant of Registration and Prior Permission

Section 12 deals with:

Conditions for approval.
Procedure for granting registration.
Grant of prior permission.

Section 13 and Section 14 – Suspension and Cancellation

If an organisation violates FCRA conditions after receiving approval:

Registration may be suspended under Section 13.
Registration may be cancelled under Section 14.

Consequences of Receiving Foreign Contribution Without Section 11 Compliance

Receiving foreign contribution without:

FCRA registration; or
Prior permission,

may result in:

Violation proceedings under FCRA.
Penalties.
Seizure or restriction of funds.
Legal action against responsible persons.

Importance of Section 11

1. Regulatory Control Over Foreign Funding

It ensures that only approved persons receive foreign contributions.

2. Transparency

The government can monitor:

Source of funds.
Amount received.
Purpose of funding.
Utilisation of funds.

3. Prevention of Misuse

It prevents unauthorised organisations from receiving foreign donations.

4. Protection of National Interest

It ensures foreign contributions are used for lawful social, educational, cultural, religious, or economic purposes.

Key Points for Revision

Section 11 deals with FCRA registration and prior permission.
Registration is required for regular acceptance of foreign contribution.
Prior permission is required for a specific donation from a specific source for a specific purpose.
Central Government has power under Section 11(3) to impose additional restrictions.
FCRA Amendment Act, 2020 did not make major changes to Section 11.
Section 11 is one of the most important compliance provisions for NGOs receiving foreign funds.

Section 12 of the Foreign Contribution (Regulation) Act, 2010 (FCRA) – Grant of Certificate of Registration | with Latest Amendments

Introduction

Section 12 of the Foreign Contribution (Regulation) Act, 2010 (FCRA) lays down the procedure, conditions, and eligibility criteria for obtaining:

FCRA Registration Certificate, or
Prior Permission from the Central Government to receive foreign contribution.

While Section 11 establishes that certain persons or organisations must obtain registration or prior permission before accepting foreign contribution, Section 12 explains how such approval is granted, the conditions that must be satisfied, the grounds for refusal, and the validity of registration or prior permission.

It is one of the most important provisions under FCRA because it ensures that only genuine and law-abiding persons or organisations are permitted to receive foreign contributions.

Objective of Section 12

The primary objectives of Section 12 are to:

Establish a transparent procedure for granting FCRA registration and prior permission.
Prescribe eligibility conditions for applicants.
Prevent misuse of foreign contributions.
Ensure that foreign funding does not adversely affect India’s sovereignty, security, or public interest.
Promote accountability and lawful utilisation of foreign contributions.

Section 12(1) – Application for Registration or Prior Permission

Legal Provision

A person referred to in Section 11 who wishes to receive foreign contribution must submit an application to the Central Government for:

Grant of an FCRA Registration Certificate; or
Grant of Prior Permission.

The application must be submitted:

In the prescribed form.
In the prescribed manner.
Along with the prescribed fee.

Meaning

Receiving foreign contribution is not automatic. Every eligible person or organisation must first submit an application and comply with the procedure prescribed under the Act and the Foreign Contribution (Regulation) Rules, 2011.

The Central Government examines the application before deciding whether registration or prior permission should be granted.

Section 12(1A) – Mandatory FCRA Account (Latest Amendment)

Legal Provision

Every applicant must open an “FCRA Account” as specified under Section 17 and provide the account details in the application.

Meaning

This provision was introduced through the:

Foreign Contribution (Regulation) Amendment Act, 2020

Under the amendment:

Every applicant must open an exclusive FCRA Account before applying for registration or prior permission.
The account details must be mentioned in the application.

Purpose of the Amendment

The amendment was introduced to:

Improve transparency.
Enable better monitoring of foreign contributions.
Ensure that foreign funds are received only through a designated banking channel.
Reduce misuse and diversion of foreign contributions.

Current Position

Under Section 17, the designated FCRA Account must be opened at the specified branch of the State Bank of India, New Delhi Main Branch (NDMB), although organizations may transfer funds to other permitted utilization accounts after receipt, subject to the Act and Rules.

Section 12(2) – Rejection of Defective Applications

Legal Provision

If the application:

Is not submitted in the prescribed form, or
Does not contain the required particulars,

the Central Government shall reject the application.

Meaning

Applicants must ensure that:

All mandatory information is provided.
Required documents are attached.
Prescribed procedures are followed.

Incomplete or defective applications are liable to rejection.

Section 12(3) – Grant of Registration or Prior Permission

Legal Provision

After receiving the application and conducting such inquiry as it considers appropriate, the Central Government may grant:

Registration Certificate; or
Prior Permission,

if it is satisfied that the conditions under Section 12(4) have been fulfilled.

The decision should ordinarily be made within 90 days from receipt of the application.

Inquiry by the Government

Before granting approval, the Government may examine:

Background of the applicant.
Activities carried out by the organisation.
Financial records.
Office bearers.
Compliance history.
Any other relevant information.

Ninety-Day Time Limit

The Act states that the Government should ordinarily decide the application within 90 days.

If no decision is taken within this period, the Government must communicate the reasons for the delay to the applicant.

Restriction on Suspended Applicants

A person whose FCRA registration has been suspended and continues to remain under suspension cannot apply for fresh registration or prior permission during the suspension period.

Section 12(4) – Conditions for Grant of Registration or Prior Permission

This subsection lays down the conditions that every applicant must satisfy.

(a) General Eligibility Conditions

The applicant:

(i) Must Not Be Fictitious or Benami

The applicant must be a genuine legal person or organisation.

Shell entities or benami organisations are not eligible.

(ii) Must Not Have Been Prosecuted or Convicted for Forced Religious Conversion

The applicant must not have been prosecuted or convicted for activities involving religious conversion through:

Force.
Fraud.
Inducement.

(iii) Must Not Have Been Prosecuted or Convicted for Creating Communal Disharmony

The applicant should not have been prosecuted or convicted for promoting communal tension or disturbing public harmony.

(iv) Must Not Have Diverted or Misused Funds

Applicants having a history of:

Diversion of funds.
Financial mismanagement.
Misutilisation of funds.

may be denied registration.

(v) Must Not Promote Sedition or Violence

The applicant must not:

Promote sedition.
Advocate violent methods.
Encourage unlawful activities.

(vi) Foreign Contribution Must Not Be Used for Personal Gain

Foreign contribution should be utilised only for approved objectives and not for:

Personal enrichment.
Private benefit.
Unauthorised purposes.

(vii) Must Not Have Violated FCRA

Applicants with previous violations of FCRA may not satisfy this condition.

(viii) Must Not Be Prohibited from Receiving Foreign Contribution

A person already prohibited under FCRA cannot obtain registration.

(b) Reasonable Activities for Registration

Applicants seeking FCRA Registration must demonstrate that they have undertaken reasonable activities in their chosen field for the benefit of society.

Meaning

Registration is generally intended for organisations that have an established record of genuine work.

Examples:

Educational activities.
Healthcare programmes.
Rural development.
Social welfare.

(c) Reasonable Project for Prior Permission

Applicants seeking Prior Permission must prepare a reasonable project explaining:

Purpose of foreign contribution.
Expected benefits.
Proposed utilisation of funds.

Unlike registration, prior permission focuses on a specific project.

(d) Additional Condition for Individual Applicants

Where the applicant is an individual:

The person should not have been convicted under any law.
No criminal prosecution should be pending against the individual.

(e) Additional Condition for Organisations

Where the applicant is an organisation:

Its directors, trustees, or office-bearers:

Should not have been convicted under any law.
Should not have pending criminal prosecutions.

(f) Acceptance Must Not Harm National Interest

The Government must be satisfied that receiving foreign contribution is not likely to adversely affect:

1. Sovereignty and Integrity of India

2. Security, Strategic, Scientific, or Economic Interests of the State

3. Public Interest

4. Freedom and Fairness of Elections

5. Friendly Relations with Foreign States

6. Harmony Between Religious, Racial, Social, Linguistic, Regional Groups, Castes, or Communities

(g) Foreign Contribution Must Not Promote Offences

Acceptance of foreign contribution should not:

(i) Lead to Incitement of an Offence

(ii) Endanger the Life or Physical Safety of Any Person

Section 12(5) – Refusal of Registration or Prior Permission

Legal Provision

If the Central Government refuses:

Registration, or
Prior Permission,

it must record the reasons for refusal and provide a copy of the order to the applicant.

Exception

The Government may withhold reasons where disclosure is not required under the Right to Information Act, 2005, such as cases involving exempt information.

Section 12(6) – Validity of Registration and Prior Permission

Registration Certificate

An FCRA Registration Certificate is valid for:

Five years

after which renewal must be sought in accordance with the Act.

Prior Permission

Prior Permission is valid only:

For the specific purpose approved.
For the specific amount of foreign contribution.
From the approved foreign source.

It cannot be used for unrelated projects or additional foreign donations.

Latest Amendments Affecting Section 12

The Foreign Contribution (Regulation) Amendment Act, 2020 introduced one major amendment to Section 12.

Mandatory FCRA Account

A new Section 12(1A) was inserted requiring every applicant to:

Open an exclusive FCRA Account under Section 17.
Mention the account details in the application.

This amendment strengthened financial monitoring and improved transparency in the receipt of foreign contributions.

No other substantive changes were made to the eligibility conditions under Section 12.

Relationship with Other FCRA Provisions

Section 11 establishes that registration or prior permission is mandatory before receiving foreign contribution.
Section 12 prescribes the procedure and eligibility criteria for obtaining registration or prior permission.
Section 16 governs the renewal of an FCRA registration certificate after its five-year validity period.
Section 17 requires foreign contributions to be received through the designated FCRA Account.
Sections 13 and 14 empower the Government to suspend or cancel registration if the Act is violated after registration has been granted.

Key Points for Revision

Section 12 explains how registration or prior permission is granted.
Applications must be submitted in the prescribed form along with the prescribed fee.
Every applicant must provide details of the designated FCRA Account.
The Government ordinarily decides applications within 90 days.
Registration is granted only if the applicant satisfies all statutory eligibility conditions.
Registration is valid for five years.
Prior Permission is valid only for the approved project, amount, and donor.
The major amendment to Section 12 was the insertion of Section 12(1A) through the FCRA Amendment Act, 2020, making the designated FCRA Account mandatory.

Section 15 of the Foreign Contribution (Regulation) Act, 2010 (FCRA) – Management of Foreign Contribution of a Person Whose Certificate Has Been Cancelled or Surrendered | with Latest Amendments

Introduction

Section 15 of the Foreign Contribution (Regulation) Act, 2010 (FCRA) deals with the management of foreign contributions and assets created from such contributions when an organisation’s FCRA registration certificate has been cancelled or voluntarily surrendered.

This provision ensures that foreign contributions and assets created using foreign funds are not misused, diverted, or left unmanaged after an organisation loses its authority to receive foreign contributions.

Instead, such foreign contribution and assets temporarily vest in a prescribed authority, which manages them according to the directions of the Central Government.

Objective of Section 15

The primary objectives of Section 15 are to:

Protect foreign contributions from misuse after cancellation or surrender of registration.
Ensure continuity of welfare and charitable activities where necessary.
Safeguard assets created from foreign contributions.
Enable the Government to supervise the management and disposal of such assets.
Prevent loss of public resources created through foreign funding.

Section 15(1) – Vesting of Foreign Contribution and Assets

Legal Provision

Where an FCRA registration certificate has been:

Cancelled under Section 14, or
Surrendered under Section 14A,

the foreign contribution and all assets created out of such foreign contribution shall vest in the authority prescribed by the Central Government.

Meaning

When an organisation loses its FCRA registration—either because it has been cancelled for violations or voluntarily surrendered—it does not automatically retain unrestricted control over foreign funds and assets created from those funds.

Instead:

The unutilised foreign contribution, and
Assets purchased or created using foreign contribution,

are transferred to the control of a prescribed authority.

What Does “Vest” Mean?

The word “vest” means that the authority obtains legal control and responsibility over the foreign contribution and related assets for management in accordance with the Act.

It does not necessarily mean permanent ownership. The authority manages the assets according to the provisions of FCRA and the directions of the Central Government.

What Is Covered Under Section 15?

Section 15 covers two categories:

1. Foreign Contribution

This includes:

Unspent foreign donations.
Foreign currency.
Grants.
Financial assistance received from foreign sources.

2. Assets Created from Foreign Contribution

These include any property or assets purchased or developed using foreign contribution.

Examples include:

School buildings.
Hospital buildings.
Office premises.
Medical equipment.
Educational equipment.
Vehicles.
Computers.
Furniture.
Land purchased using foreign contribution.
Other movable or immovable assets financed by foreign contributions.

Section 15(2) – Management of Activities

Legal Provision

The prescribed authority may, if it considers it necessary and in the public interest, continue managing the activities of the organisation for such period and in such manner as directed by the Central Government.

If adequate funds are not available, the authority may:

Utilise the available foreign contribution; or
Dispose of assets created from foreign contribution.

Meaning

Cancellation or surrender of registration should not necessarily stop important public welfare activities immediately.

Where necessary, the prescribed authority may continue operating projects for the benefit of society.

Examples

The authority may continue operating:

Schools.
Hospitals.
Child welfare centres.
Rural development programmes.
Old-age homes.
Disability support centres.

until appropriate arrangements are made.

Disposal of Assets

If sufficient funds are unavailable for continuing activities, the authority may dispose of assets created out of foreign contribution.

Examples include:

Selling unused vehicles.
Selling equipment.
Disposing of other movable or immovable property.

Such disposal must be carried out according to Government directions and applicable legal procedures.

Public Interest Requirement

The authority can exercise these powers only when it considers such action necessary in the public interest.

This means the decision should benefit society and should not be arbitrary.

Section 15(3) – Return of Foreign Contribution and Assets

Legal Provision

The prescribed authority shall return the foreign contribution and the assets vested in it when the conditions specified under the Act and applicable rules are fulfilled.

Meaning

Management by the prescribed authority is not always permanent.

Where legally permissible, and subject to Government directions and compliance with FCRA, the authority may return the foreign contribution or assets to the person or organisation concerned.

The return must be carried out in accordance with the Act and the applicable rules.

Relationship with Sections 14 and 14A

Section 14 – Cancellation of Registration

When the Central Government cancels an FCRA registration certificate due to violations of the Act, Section 15 determines how the remaining foreign contribution and assets are to be managed.

Section 14A – Surrender of Registration

Where an organisation voluntarily surrenders its FCRA registration and the surrender is accepted by the Central Government, Section 15 also governs the management of foreign contribution and assets.

Latest Amendment Affecting Section 15

Foreign Contribution (Regulation) Amendment Act, 2020

The FCRA Amendment Act, 2020 introduced an important change to Section 15.

Before the Amendment

Section 15 applied only where the registration certificate had been cancelled under Section 14.

After the 2020 Amendment

The words:

“or surrendered under Section 14A”

were inserted.

As a result, Section 15 now applies to both:

Cancellation of registration; and
Voluntary surrender of registration.

This amendment became necessary because the 2020 Amendment introduced Section 14A, which allows eligible organisations to voluntarily surrender their FCRA registration certificate.

Practical Example

Suppose an NGO voluntarily decides to stop receiving foreign contributions and applies to surrender its FCRA registration.

After the Central Government accepts the surrender:

The NGO’s unutilised foreign contribution.
Buildings, equipment, vehicles, or other assets created from foreign contribution.

may vest in the prescribed authority under Section 15, which will manage them according to Government directions.

Similarly, if an NGO’s registration is cancelled for violating FCRA, the same procedure applies.

Relationship with Other FCRA Provisions

Section 13 – Suspension

During suspension, the organisation continues to exist, but its registration remains temporarily inactive. Section 15 does not apply merely because registration has been suspended.

Section 14 – Cancellation

Section 15 comes into operation after registration has been cancelled.

Section 14A – Surrender

Where registration is voluntarily surrendered and accepted by the Government, Section 15 governs the management of foreign contribution and assets.

Section 17 – FCRA Bank Account

The foreign contribution held in the designated FCRA Account may also become subject to management under Section 15 after cancellation or surrender, subject to the Act and Government directions.

Importance of Section 15

1. Protects Foreign Contributions

It prevents unutilised foreign contributions from being misused after cancellation or surrender.

2. Protects Public Assets

Assets created for charitable or public welfare purposes remain protected.

3. Ensures Continuity of Welfare Activities

Important public projects may continue under Government supervision when necessary.

4. Promotes Accountability

Organisations cannot freely dispose of foreign-funded assets after losing FCRA registration.

5. Safeguards Public Interest

The provision ensures that foreign-funded charitable resources continue to serve society wherever possible.

Key Points for Revision

Section 15 applies after cancellation (Section 14) or surrender (Section 14A) of an FCRA registration certificate.
Foreign contribution and assets created from such contribution vest in a prescribed authority.
The authority may manage the organisation’s activities if necessary in the public interest.
The authority may utilise foreign contribution or dispose of assets where adequate funds are unavailable.
Assets and foreign contribution may be returned in accordance with the Act and applicable rules when legally permissible.
The FCRA Amendment Act, 2020 expanded Section 15 by including cases where registration is surrendered under Section 14A, in addition to cancellation.

Section 16 of the Foreign Contribution (Regulation) Act, 2010 (FCRA) – Renewal of Certificate | with Latest Amendments

Introduction

Section 16 of the Foreign Contribution (Regulation) Act, 2010 (FCRA) governs the renewal of an FCRA Registration Certificate. Since an FCRA registration is not permanent, every organisation holding a registration certificate must apply for its renewal before the certificate expires.

The section prescribes:

When an application for renewal should be made.
The procedure for renewal.
The powers of the Central Government to conduct inquiries before renewal.
The time limit for deciding the renewal application.
The grounds on which renewal may be refused.

The purpose of Section 16 is to ensure that only organisations that continue to comply with FCRA requirements remain eligible to receive foreign contributions.

Objective of Section 16

The main objectives of Section 16 are to:

Ensure periodic review of organisations receiving foreign contributions.
Verify continued compliance with FCRA.
Prevent non-compliant organisations from continuing to receive foreign funds.
Strengthen transparency and accountability.
Protect national interests while permitting genuine organisations to receive foreign contributions.

Section 16(1) – Mandatory Renewal of FCRA Registration

Legal Provision

Every person or organisation that has been granted an FCRA Registration Certificate under Section 12 must renew that certificate within six months before the date of its expiry.

Meaning

An FCRA Registration Certificate remains valid for five years.

Before the expiry of this five-year period, the certificate holder must submit an application for renewal.

The application should be filed during the six-month period immediately preceding the expiry of the registration certificate.

Example

Suppose an organisation’s FCRA registration expires on 31 December 2030.

The renewal application should ordinarily be submitted between 1 July 2030 and 31 December 2030, in accordance with the prescribed rules and timelines.

Purpose of Renewal

Renewal is not an automatic extension of registration.

The renewal process enables the Central Government to verify whether the organisation continues to satisfy the requirements of the FCRA.

It also allows the Government to assess whether the organisation has complied with the Act during the previous registration period.

Proviso to Section 16(1) – Inquiry Before Renewal (Latest Amendment)

Legal Provision

Before renewing the registration certificate, the Central Government may conduct such inquiry as it considers necessary to satisfy itself that the applicant continues to fulfil the conditions specified in Section 12(4).

Meaning

Renewal is subject to verification.

The Government may examine:

Activities carried out by the organisation.
Compliance with FCRA.
Financial records.
Annual returns.
Utilisation of foreign contribution.
Details of office bearers.
Compliance with other applicable legal requirements.

Conditions Verified During Renewal

The Government may verify whether the organisation continues to satisfy the eligibility conditions contained in Section 12(4), including whether it:

Is a genuine and legally existing organisation.
Has not diverted or misused foreign contribution.
Has not violated FCRA or the Rules.
Is not engaged in activities prejudicial to national interest.
Does not promote violence or unlawful activities.
Continues to utilise foreign contribution for legitimate purposes.

Section 16(2) – Application Procedure

Legal Provision

The application for renewal must be submitted:

To the Central Government.
In the prescribed form.
In the prescribed manner.
Along with the prescribed fee.

Meaning

Applicants must comply with the procedural requirements laid down under the Foreign Contribution (Regulation) Rules, 2011.

The renewal application generally requires updated information regarding:

Registration details.
Office bearers.
Organisational activities.
Financial statements.
Compliance history.
Other prescribed documents.

Section 16(3) – Decision on Renewal Application

Legal Provision

The Central Government should ordinarily decide the renewal application within 90 days from the date of its receipt.

If satisfied, it may renew the registration subject to such terms and conditions as it considers appropriate.

The renewed certificate remains valid for five years.

Meaning

The Government examines the application and supporting documents before deciding whether the organisation continues to be eligible.

If the organisation satisfies the statutory requirements, the Government may issue a renewed registration certificate.

Ninety-Day Time Limit

The Act provides that the Government should ordinarily complete the renewal process within 90 days.

The word “ordinarily” indicates that while the Government should generally adhere to this period, delays may occur in exceptional circumstances.

Delay in Renewal Decision

If the Government does not decide the application within 90 days, it must communicate the reasons for the delay to the applicant.

This promotes transparency in the renewal process.

Validity of Renewed Certificate

Once renewed, the registration certificate remains valid for another five years, unless:

It is suspended under Section 13.
It is cancelled under Section 14.
It is voluntarily surrendered under Section 14A.
Renewal is subsequently refused upon expiry.

Refusal of Renewal

The second proviso to Section 16(3) authorises the Central Government to refuse renewal if the applicant has violated:

Any provision of the FCRA; or
Any rule made under the FCRA.

Grounds for Refusal

Renewal may be refused if the organisation has:

Misutilised foreign contribution.
Failed to submit mandatory annual returns.
Violated conditions of registration.
Failed to maintain proper accounts.
Received foreign contribution in contravention of the Act.
Breached provisions of the FCRA Rules.
Violated any of the eligibility conditions under Section 12.

The decision is based on the facts and compliance record of each case.

Latest Amendment Affecting Section 16

Foreign Contribution (Regulation) Amendment Act, 2020

The Foreign Contribution (Regulation) Amendment Act, 2020 introduced an important amendment to Section 16.

Before the Amendment

Section 16 primarily required renewal before expiry but did not expressly authorise the Government to verify continued compliance with Section 12(4) before renewal.

After the 2020 Amendment

A proviso was inserted to Section 16(1), empowering the Central Government to conduct an inquiry before renewal to ensure that the applicant continues to satisfy all the eligibility conditions specified in Section 12(4).

Significance of the Amendment

The amendment strengthened the renewal process by ensuring that:

Renewal is based on current compliance rather than past registration alone.
Organisations continue to meet statutory eligibility conditions.
Foreign contributions remain subject to effective regulatory oversight.
Only compliant organisations retain FCRA registration.

Difference Between Initial Registration and Renewal

Basis	Initial Registration	Renewal
Governing Provision	Section 12	Section 16
Purpose	First-time registration	Extension of existing registration
Eligibility	Must satisfy Section 12(4)	Must continue to satisfy Section 12(4)
Inquiry	Before initial registration	Before renewal, if considered necessary
Validity	Five years	Five years after each renewal

Relationship with Other FCRA Provisions

Section 11 – Registration Requirement

Section 11 requires eligible persons to obtain FCRA registration before receiving foreign contribution.

Section 16 governs the renewal of that registration after the initial five-year period.

Section 12 – Grant of Registration

Section 12 prescribes the eligibility conditions for obtaining registration.

Section 16 requires the Government to verify that these conditions continue to be fulfilled before renewing the certificate.

Section 13 – Suspension of Registration

If a registration certificate has been suspended, the organisation’s ability to receive and utilise foreign contribution is restricted.

Serious compliance issues identified during or before renewal may also result in suspension under Section 13, where legally justified.

Section 14 – Cancellation of Registration

Persistent violations or serious breaches of the Act may lead to cancellation of registration instead of renewal.

Section 14A – Surrender of Registration

An organisation that voluntarily surrenders its registration under Section 14A does not require renewal unless it seeks registration again under the Act.

Importance of Section 16

1. Ensures Continuous Compliance

Renewal allows the Government to verify whether organisations continue to comply with FCRA.

2. Strengthens Transparency

Periodic review improves monitoring of foreign contributions and their utilisation.

3. Prevents Misuse of Foreign Funds

Organisations with poor compliance records may be denied renewal, reducing the risk of misuse.

4. Protects National Interest

The inquiry process helps ensure that foreign contributions do not adversely affect India’s sovereignty, security, public interest, or social harmony.

5. Promotes Accountability

Organisations must maintain proper records, comply with statutory obligations, and adhere to FCRA throughout the validity period—not only at the time of initial registration.

Key Points for Revision

Section 16 deals with renewal of an FCRA Registration Certificate.
Renewal must be applied for within six months before the certificate expires.
The application must be submitted in the prescribed form along with the prescribed fee.
The Central Government should ordinarily decide the renewal application within 90 days.
A renewed certificate remains valid for five years.
Renewal may be refused if the applicant has violated the FCRA or the Rules.
The FCRA Amendment Act, 2020 inserted a proviso allowing the Central Government to conduct an inquiry before renewal to verify continued compliance with the conditions specified in Section 12(4).

CHAPTER IV : ACCOUNTS , INTIMATION , AUDITS AND DISPOSAL OF ASSETS ,ETC.

Section 17 of the Foreign Contribution (Regulation) Act, 2010 (FCRA) – Foreign Contribution Through Scheduled Bank | with Latest Amendments

Introduction

Section 17 of the Foreign Contribution (Regulation) Act, 2010 (FCRA) governs the banking mechanism for receiving, holding, and utilizing foreign contributions in India. It prescribes the mandatory banking channels through which every registered person or person having prior permission must receive foreign contributions.

The provision was substantially amended by the Foreign Contribution (Regulation) Amendment Act, 2020, introducing the requirement that all foreign contributions must first be received through a designated “FCRA Account” opened at a specified branch of the State Bank of India (SBI), New Delhi.

The purpose of Section 17 is to enhance transparency, accountability, financial monitoring, and regulatory oversight over foreign contributions received in India.

Objective of Section 17

The primary objectives of Section 17 are to:

Establish a uniform banking system for receiving foreign contributions.
Ensure effective monitoring of foreign funds.
Prevent diversion and misuse of foreign contributions.
Improve financial transparency.
Facilitate regulatory supervision by the Central Government.

Section 17(1) – Mandatory Receipt of Foreign Contribution Through FCRA Account

Legal Provision

Every person who has been granted:

an FCRA Registration Certificate, or
Prior Permission under Section 12,

must receive foreign contribution only in an account designated by the bank as the “FCRA Account.”

This account must be opened in the specified branch of the State Bank of India (SBI) at New Delhi, as notified by the Central Government.

Meaning of Section 17(1)

Section 17 creates a mandatory banking requirement.

Every eligible person or organisation receiving foreign contribution must ensure that:

Foreign contribution is first received only in the designated FCRA Account.
The account must be maintained at the notified SBI branch in New Delhi.
No foreign contribution can be directly received in any other bank account.

What is an FCRA Account?

An FCRA Account is a specially designated bank account exclusively meant for receiving foreign contributions under the FCRA.

It serves as the primary entry point for all foreign remittances received by an eligible person or organisation.

Specified Branch of State Bank of India

Following the FCRA Amendment Act, 2020, the Central Government notified the State Bank of India, New Delhi Main Branch (NDMB) as the designated branch where every FCRA recipient must open the mandatory FCRA Account.

Regardless of where an organisation is located in India, foreign contributions must first be credited to this designated account.

Purpose of Centralised Receipt

Requiring all foreign contributions to pass through a single designated banking channel helps:

Improve monitoring of foreign funds.
Enable uniform reporting.
Reduce diversion of funds.
Strengthen financial oversight.
Facilitate regulatory compliance.

First Proviso – Additional FCRA Account in Any Scheduled Bank

Legal Provision

After receiving foreign contribution in the designated SBI FCRA Account, the person may open another FCRA Account in any scheduled bank of their choice.

This account is used for:

Keeping foreign contribution.
Utilizing foreign contribution.

Meaning

The law permits organisations to transfer foreign contribution from the mandatory SBI FCRA Account to another FCRA Account maintained in any scheduled bank.

This provides operational convenience while ensuring that the initial receipt remains centrally monitored.

Example

An NGO located in Bengaluru receives foreign contribution in its designated SBI New Delhi FCRA Account.

After the funds are credited, the NGO may transfer the amount to its FCRA Account maintained with another scheduled bank for day-to-day management and utilization.

Second Proviso – Utilisation Accounts

Legal Provision

The recipient may also open one or more utilisation accounts in one or more scheduled banks.

Foreign contribution may be transferred:

From the designated SBI FCRA Account; or
From another FCRA Account maintained in a scheduled bank,

to these utilisation accounts.

Meaning

The Act allows organisations to maintain multiple utilisation accounts to facilitate project implementation.

For example:

One account for educational projects.
One account for healthcare activities.
One account for disaster relief.
One account for administrative operations (subject to Section 8 limits).

However, all such transfers must originate from the designated FCRA banking channel.

Third Proviso – No Mixing of Funds

Legal Provision

No funds other than foreign contribution shall be received or deposited into any FCRA Account or utilisation account maintained under Section 17.

Meaning

The FCRA banking system requires complete separation between:

Foreign contribution; and
Domestic funds.

Purpose

This restriction ensures:

Accurate accounting.
Financial transparency.
Easy auditing.
Prevention of fund mixing.
Better regulatory oversight.

Example

The following should not be deposited into an FCRA Account:

Domestic donations.
Membership fees collected in India.
Government grants.
Business income.
Personal funds.
Indian charitable donations.

Only foreign contribution and related receipts permitted under the Act should flow through these accounts.

Section 17(2) – Reporting by Banks

Legal Provision

The specified SBI branch, any scheduled bank maintaining an FCRA Account, or an authorised dealer in foreign exchange must report prescribed information to the authority specified by the Central Government.

Purpose of Reporting

Banks play an important role in ensuring compliance with FCRA.

They are required to provide information that enables the Government to monitor foreign contributions received by registered persons.

Information to be Reported

(a) Amount of Foreign Remittance

Banks must report the prescribed amount of foreign contribution received.

This helps authorities monitor the volume of foreign funding.

(b) Source and Manner of Receipt

Banks report:

Identity of the foreign donor.
Source country, where applicable.
Mode through which the contribution was received.

This improves traceability and transparency.

(c) Other Prescribed Particulars

Banks must also furnish any additional information prescribed under the FCRA Rules.

Examples may include:

Date of receipt.
Transaction details.
Account particulars.
Other regulatory information required under the Rules.

Latest Amendments Affecting Section 17

The Foreign Contribution (Regulation) Amendment Act, 2020 introduced one of the most significant reforms to FCRA by substantially replacing Section 17.

Key Changes Introduced

1. Mandatory SBI FCRA Account

Before 2020:

Foreign contribution could generally be received directly in an FCRA-designated account maintained in a scheduled bank.

After 2020:

Every recipient must first receive foreign contribution in the designated State Bank of India, New Delhi Main Branch (NDMB) FCRA Account.

2. Introduction of a Centralised Banking System

The amendment established a uniform entry point for all foreign contributions.

This enables:

Better monitoring.
Improved transparency.
Easier regulatory supervision.

3. Separate Utilisation Accounts Permitted

The amendment clarified that recipients may:

Maintain another FCRA Account in any scheduled bank.
Open multiple utilisation accounts.

This balances regulatory oversight with operational flexibility.

4. Absolute Prohibition on Mixing Funds

The amendment expressly provides that:

No funds other than foreign contribution shall be deposited into FCRA Accounts or utilisation accounts maintained under Section 17.

This strengthens financial discipline and simplifies auditing.

Relationship with Other FCRA Provisions

Section 11 – Registration and Prior Permission

Only persons holding registration or prior permission under Section 11 can receive foreign contribution through the FCRA Account.

Section 12 – Grant of Registration

Section 12(1A), inserted by the 2020 Amendment, requires every applicant to open the designated FCRA Account before applying for registration or prior permission.

Section 8 – Utilisation of Foreign Contribution

After funds are received through the FCRA Account, they must be utilized only for approved purposes and in compliance with Section 8.

Section 7 – Transfer of Foreign Contribution

While Section 17 permits internal transfers between the recipient’s own designated FCRA Account, other FCRA Accounts, and utilisation accounts, Section 7 prohibits transferring foreign contribution to another person or organisation.

Section 19 – Maintenance of Accounts

Section 17 governs where foreign contribution is received, while Section 19 requires proper maintenance of accounts and records relating to those funds.

Importance of Section 17

1. Enhances Transparency

Every foreign contribution enters India through a regulated banking channel.

2. Prevents Diversion of Funds

Centralised receipt reduces the possibility of unauthorised transfers or misuse.

3. Improves Regulatory Monitoring

The reporting obligations imposed on banks enable effective oversight by the Central Government.

4. Ensures Financial Discipline

Separate FCRA Accounts prevent mixing of foreign and domestic funds.

5. Strengthens Accountability

The banking framework creates a clear audit trail from receipt to utilisation of foreign contributions.

Key Points for Revision

Section 17 governs the receipt, holding, and utilisation of foreign contribution through designated bank accounts.
Every registered person or person with prior permission must receive foreign contribution in the designated FCRA Account at the notified State Bank of India, New Delhi Main Branch (NDMB).
Additional FCRA Accounts and multiple utilisation accounts may be opened in scheduled banks for operational convenience.
Only foreign contribution may be deposited into these accounts; domestic funds are prohibited.
Banks must report prescribed details of foreign remittances to the specified authority.
The FCRA Amendment Act, 2020 substantially replaced Section 17 by introducing the mandatory designated SBI FCRA Account and strengthening financial monitoring.

Section 18 of the Foreign Contribution (Regulation) Act, 2010 (FCRA) – Intimation of Foreign Contribution | with Latest Amendments

Introduction

Section 18 of the Foreign Contribution (Regulation) Act, 2010 (FCRA) imposes a statutory reporting obligation on every person or organisation that receives foreign contribution under the Act. It requires recipients to periodically inform the Central Government about the receipt, source, purpose, and utilisation of foreign contributions.

The objective of Section 18 is to ensure transparency, accountability, and proper regulatory oversight over foreign funding received in India. Even after obtaining FCRA registration or prior permission, recipients must continue to comply with reporting requirements throughout the period during which they receive and utilise foreign contributions.

Objective of Section 18

The primary objectives of Section 18 are to:

Ensure transparency in the receipt of foreign contributions.
Enable the Central Government to monitor foreign funding.
Promote accountability in the utilisation of foreign contributions.
Prevent diversion or misuse of foreign funds.
Maintain a complete record of foreign contributions received by registered persons.

Section 18(1) – Mandatory Intimation to the Central Government

Legal Provision

Every person who has been granted:

an FCRA Registration Certificate, or
Prior Permission under the Act,

must submit an intimation to the Central Government and any other authority specified by the Government.

The intimation must be furnished:

Within the prescribed time.
In the prescribed manner.
Containing the prescribed information.

Meaning of Section 18(1)

Receiving foreign contribution is not the final compliance requirement under FCRA.

Every recipient must periodically report details of foreign contribution received and utilised.

This reporting obligation continues for as long as the person remains subject to the Act.

Who Must Submit Intimation?

The requirement applies to every person or organisation that has:

FCRA Registration; or
Prior Permission to receive foreign contribution.

This includes:

Trusts.
Societies.
Section 8 Companies.
Educational institutions.
Religious organisations.
Charitable organisations.
Other eligible persons receiving foreign contributions under FCRA.

Information Required in the Intimation

The recipient must provide complete information regarding the foreign contribution.

1. Amount of Foreign Contribution Received

The recipient must disclose:

Total foreign contribution received.
Individual receipts, where applicable.
Amount received during the reporting period.

2. Source of Foreign Contribution

The report should identify the source of the foreign contribution.

This generally includes:

Name of the foreign donor.
Identity of the foreign source.
Country of origin, where applicable.

This enables authorities to verify the legitimacy of foreign funding.

3. Manner of Receipt

The recipient must disclose how the foreign contribution was received.

Examples include:

Bank remittance.
Wire transfer.
Other lawful banking channels permitted under FCRA.

This information assists in financial monitoring.

4. Purpose of Foreign Contribution

The organisation must explain the purpose for which the foreign contribution was received.

Examples include:

Education.
Healthcare.
Rural development.
Environmental protection.
Religious activities.
Scientific research.
Disaster relief.
Social welfare programmes.

5. Manner of Utilisation

The recipient must explain how the foreign contribution has actually been utilised.

This includes information regarding:

Projects undertaken.
Activities financed.
Expenditure incurred.
Balance remaining, where applicable.

This enables the Government to determine whether the funds have been used for the approved objectives.

Time and Manner of Submission

Section 18 itself does not prescribe the specific timeline or format.

Instead, it provides that the intimation shall be submitted:

Within the prescribed time; and
In the prescribed manner.

The detailed procedure is prescribed under the Foreign Contribution (Regulation) Rules, 2011, including the forms, timelines, and mode of filing (currently through the FCRA online portal).

Section 18(2) – Bank-Certified Statement

Legal Provision

Every person receiving foreign contribution must submit, along with the intimation:

A copy of the statement showing the particulars of foreign contribution received.

The statement must be certified by:

The concerned bank officer; or
An authorised person dealing in foreign exchange.

Meaning of Section 18(2)

The reporting requirement is not based solely on the recipient’s own declaration.

It must also be supported by authenticated banking records.

This independent verification strengthens the reliability of information furnished to the Government.

Purpose of Bank Certification

Bank certification helps:

Verify the amount received.
Confirm the date of receipt.
Confirm the source of funds.
Ensure accuracy of financial reporting.
Reduce false reporting.

Importance of Accurate Reporting

Accurate reporting under Section 18 enables authorities to:

Track foreign funding.
Verify lawful utilisation.
Detect financial irregularities.
Ensure compliance with FCRA.

Failure to provide correct information may attract action under the Act.

Latest Amendments Affecting Section 18

Foreign Contribution (Regulation) Amendment Act, 2020

The FCRA Amendment Act, 2020 did not make any substantive amendment to the text of Section 18.

The core obligation to furnish intimation regarding receipt and utilisation of foreign contribution remains unchanged.

However, the 2020 amendments to other provisions indirectly strengthened compliance under Section 18.

Indirect Impact of the 2020 Amendment

1. Mandatory Designated FCRA Account (Section 17)

Since all foreign contributions must now first be received through the designated FCRA Account at the notified State Bank of India, New Delhi Main Branch, reporting under Section 18 has become more accurate and easier to verify.

2. Enhanced Monitoring

The centralised banking system introduced by the 2020 Amendment enables better verification of the information furnished under Section 18.

3. Greater Transparency

The combination of mandatory banking records, designated FCRA accounts, and reporting obligations improves financial accountability.

Relationship with Other FCRA Provisions

Section 11 – Registration and Prior Permission

Only persons holding registration or prior permission are entitled to receive foreign contribution.

After receipt, they must comply with Section 18 by submitting the required intimation.

Section 12 – Grant of Registration

Registration or prior permission granted under Section 12 carries continuing compliance obligations, including reporting under Section 18.

Section 17 – FCRA Account

Foreign contribution is received through the designated FCRA Account under Section 17.

The transactions recorded in that account form the basis for reporting under Section 18.

Section 19 – Maintenance of Accounts

Section 18 requires reporting of foreign contribution, while Section 19 requires recipients to maintain proper books of account and records supporting that reporting.

Section 20 – Audit of Accounts

The information submitted under Section 18 may be verified through the audit and inspection mechanisms provided elsewhere in the Act.

Consequences of Non-Compliance

Failure to comply with Section 18 may result in action under the FCRA, depending on the nature and seriousness of the violation.

Possible consequences include:

Notice from the competent authority.
Requirement to furnish pending information.
Monetary penalties where applicable under the Act and Rules.
Suspension of FCRA registration under Section 13 in appropriate cases.
Cancellation of registration under Section 14 for serious or persistent violations.
Other legal or regulatory action permitted under the FCRA.

The consequences depend on the facts of each case and the applicable statutory provisions.

Importance of Section 18

1. Promotes Transparency

Every foreign contribution received must be reported to the Government.

2. Ensures Accountability

Recipients remain accountable for the source and utilisation of foreign funds.

3. Strengthens Regulatory Oversight

The Government can effectively monitor foreign contributions received across the country.

4. Prevents Misuse

Mandatory reporting reduces the possibility of diversion or unauthorised use of foreign contributions.

5. Supports Public Confidence

Transparent reporting helps maintain public trust in organisations receiving foreign contributions.

Key Points for Revision

Section 18 requires every registered person or person with prior permission to report foreign contributions received and utilised.
The intimation must include the amount received, source, mode of receipt, purpose, and manner of utilisation.
A bank-certified statement of foreign contributions must accompany the intimation.
The procedure, forms, and timelines are prescribed under the FCRA Rules, 2011.
The FCRA Amendment Act, 2020 did not directly amend Section 18, but the mandatory designated FCRA Account under Section 17 strengthened the accuracy and transparency of reporting.

Section 21 of the Foreign Contribution (Regulation) Act, 2010 (FCRA) – Intimation by Candidate for Election | Complete Explanation with Latest Amendments

Introduction

Section 21 of the Foreign Contribution (Regulation) Act, 2010 (FCRA) requires every candidate for election to disclose any foreign contribution received during a specified period before filing nomination papers. The provision aims to promote transparency in the electoral process by ensuring that the Central Government is informed about foreign contributions received by individuals who contest elections.

Although Section 3 of the FCRA prohibits candidates for election from accepting foreign contribution, Section 21 imposes an additional reporting obligation in situations where a person had received foreign contribution before becoming a candidate for election. It enables the Government to verify whether such contributions were received lawfully and whether they could affect the integrity of the electoral process.

Objective of Section 21

The main objectives of Section 21 are to:

Promote transparency in elections.
Prevent hidden foreign influence in the democratic process.
Ensure disclosure of foreign contributions received before candidature.
Assist the Government in monitoring compliance with the FCRA.
Protect the fairness and integrity of elections.

Section 21 – Legal Provision

Legal Requirement

Every person who becomes a candidate for election and has received any foreign contribution within 180 days immediately preceding the date of his or her valid nomination must furnish an intimation to:

The Central Government;
The prescribed authority; or
Both, as prescribed.

The intimation must be submitted within the prescribed time and in the prescribed manner.

Meaning of Section 21

Section 21 applies only after a person becomes a duly nominated candidate for an election.

If that person had received any foreign contribution during the 180 days immediately before the date of nomination, the law requires disclosure of that contribution.

The provision is intended to ensure transparency during elections and to help authorities examine whether the receipt of foreign contribution has any relevance under the FCRA.

Who Is Covered Under Section 21?

Section 21 applies only to:

Candidates contesting elections after being duly nominated under the applicable election law.

It does not apply to:

Ordinary citizens who are not election candidates.
Political parties (they are governed by other FCRA provisions).
Persons who never become candidates.

What Is the 180-Day Period?

The law refers to:

“One hundred and eighty days immediately preceding the date on which he is duly nominated.”

This means authorities examine the 180 days before the date of valid nomination, not the election date or the date of declaration of results.

Example

Suppose a candidate files a valid nomination on 1 October.

Section 21 requires disclosure of any foreign contribution received between 4 April and 30 September (approximately 180 days immediately preceding the nomination).

Information Required in the Intimation

The candidate must provide complete details regarding the foreign contribution.

1. Amount of Foreign Contribution

The candidate must disclose:

Total amount received.
Individual amounts, where applicable.

2. Source of Foreign Contribution

The report should identify the foreign source from which the contribution was received.

This helps authorities determine the origin of the funds.

3. Manner of Receipt

The candidate must explain how the foreign contribution was received.

Examples include:

Bank transfer.
Wire transfer.
Other lawful banking channels.

4. Purpose of the Foreign Contribution

The candidate must explain the purpose for which the foreign contribution was originally received.

Examples may include:

Educational purposes.
Research.
Social welfare activities.
Charitable work.
Other lawful purposes.

5. Manner of Utilisation

The candidate must disclose how the foreign contribution was utilised.

This enables authorities to verify whether the funds were used for lawful purposes and whether there is any connection with election activities.

Relationship Between Section 21 and Section 3

Section 21 should always be read together with Section 3.

Section 3

Section 3 expressly prohibits a candidate for election from accepting foreign contribution.

Section 21

Section 21 does not permit candidates to receive foreign contribution.

Instead, it requires disclosure where a person had received foreign contribution before becoming a candidate, provided the receipt falls within the statutory 180-day period.

Therefore:

Section 3 creates the prohibition.
Section 21 creates the disclosure requirement.

The two provisions operate together and are not contradictory.

Purpose of the Disclosure Requirement

The disclosure requirement enables the Government to:

Examine the timing of foreign contributions.
Verify compliance with the FCRA.
Ensure transparency during elections.
Prevent foreign influence in democratic institutions.
Protect public confidence in electoral processes.

Time and Manner of Submission

Section 21 itself does not prescribe the exact procedure.

It provides that the intimation must be furnished:

Within the prescribed time.
In the prescribed manner.

The detailed procedural requirements are prescribed under the Foreign Contribution (Regulation) Rules, 2011.

Latest Amendments Affecting Section 21

Foreign Contribution (Regulation) Amendment Act, 2020

The FCRA Amendment Act, 2020 did not amend the text of Section 21.

The disclosure obligation, the 180-day reporting period, and the information required to be furnished remain unchanged.

Indirect Effect of the 2020 Amendments

Although Section 21 itself was not amended, other provisions of the Act were strengthened.

For example:

Mandatory receipt of foreign contribution through the designated FCRA Account under Section 17 improves traceability of foreign funds.
Enhanced compliance and monitoring provisions make verification of disclosures under Section 21 more effective.

These amendments indirectly support enforcement of Section 21.

Relationship with Other FCRA Provisions

Section 3 – Prohibition on Acceptance

Section 3 prohibits candidates for election from accepting foreign contribution.

Section 21 requires disclosure of foreign contribution received during the statutory period before nomination.

Section 18 – Intimation by Registered Persons

Section 18 requires registered persons and persons with prior permission to report foreign contributions.

Section 21 creates a separate reporting obligation specifically for election candidates.

Section 17 – FCRA Bank Account

Where applicable, banking records maintained under Section 17 may assist authorities in verifying information disclosed under Section 21.

Section 9 – Power of Central Government

The Central Government may exercise powers under Section 9 where acceptance of foreign contribution is likely to affect public interest, elections, or national interests.

Consequences of Non-Compliance

Failure to comply with Section 21 may attract action under the FCRA, depending on the facts and applicable provisions.

Possible consequences include:

Inquiry by the competent authority.
Requirement to furnish information or explanations.
Penalties where authorised under the Act.
Other legal action available under the FCRA and applicable election laws, depending on the circumstances.

The nature of any action depends on the specific facts of the case and the relevant statutory provisions.

Importance of Section 21

1. Protects Electoral Integrity

It promotes transparency regarding foreign contributions received before candidature.

2. Prevents Hidden Foreign Influence

The provision enables authorities to identify foreign funding that could potentially influence elections.

3. Strengthens Public Confidence

Mandatory disclosure improves public trust in the electoral process.

4. Supports Regulatory Oversight

Authorities receive information necessary to verify compliance with the FCRA.

5. Complements the Prohibition Under Section 3

Section 21 reinforces the prohibition on foreign contributions to election candidates by ensuring disclosure and scrutiny of recent foreign contributions.

Key Points for Revision

Section 21 applies only to candidates for election.
It requires disclosure of foreign contribution received within 180 days before the date of valid nomination.
The intimation must include the amount received, source, manner of receipt, purpose, and utilisation.
The procedure and timelines are prescribed under the FCRA Rules, 2011.
Section 21 does not permit candidates to receive foreign contribution; it operates alongside the prohibition contained in Section 3.
The FCRA Amendment Act, 2020 did not amend Section 21.

Section 22 of the Foreign Contribution (Regulation) Act, 2010 (FCRA) – Disposal of Assets Created out of Foreign Contribution | Complete Explanation with Latest Amendments

Introduction

Section 22 of the Foreign Contribution (Regulation) Act, 2010 (FCRA) provides the legal framework for the disposal of assets created from foreign contributions when a person or organisation receiving such contributions ceases to exist or becomes defunct.

Foreign contributions are often used to create valuable assets such as buildings, schools, hospitals, vehicles, equipment, and other infrastructure. Section 22 ensures that these assets are not misappropriated, abandoned, or unlawfully transferred when the recipient organisation is no longer in existence.

The provision lays down the legal mechanism for disposing of such assets in accordance with the applicable law or, where no such law exists, under the directions of the Central Government.

Objective of Section 22

The primary objectives of Section 22 are to:

Prevent misuse of assets created from foreign contributions.
Ensure lawful disposal of foreign-funded assets.
Protect public resources created using foreign donations.
Maintain transparency and accountability.
Provide a legal mechanism where an organisation ceases to exist.

Legal Provision Under Section 22

Section 22 applies where a person or organisation that was permitted to receive foreign contribution under the FCRA:

Ceases to exist, or
Becomes defunct.

In such cases, the assets created from foreign contribution must be disposed of according to:

The law under which the person or organisation was registered or incorporated; or
If no such law provides a mechanism, the Central Government may prescribe the authority, manner, and procedure for disposal.

Meaning of “Ceases to Exist”

A person or organisation ceases to exist when it legally comes to an end.

Examples include:

Dissolution of a society.
Winding up of a company.
Dissolution of a trust, where permitted by law.
Merger resulting in termination of the original legal entity.
Any other lawful termination of the organisation.

Meaning of “Defunct”

An organisation becomes defunct when it no longer functions or carries on its activities, even if it has not yet been formally dissolved.

Examples include:

Permanent closure of operations.
No governing body functioning.
No charitable activities being conducted.
Inactive organisation incapable of carrying out its objectives.

Assets Covered Under Section 22

Section 22 applies only to assets created out of foreign contribution.

These may include:

Immovable Assets

Land purchased using foreign contribution.
School buildings.
Hospitals.
Office buildings.
Training centres.
Community halls.

Movable Assets

Vehicles.
Computers.
Furniture.
Medical equipment.
Laboratory instruments.
Agricultural machinery.
Educational equipment.

Other Property

Any other property purchased, developed, or created using foreign contribution.

Primary Rule – Disposal Under Applicable Law

Legal Provision

If the organisation is registered or incorporated under a law that provides a mechanism for disposal of assets, that law will govern the disposal.

Meaning

Section 22 respects the governing law applicable to the organisation.

For example:

Society

If a society registered under the applicable Societies Registration Act is dissolved, its assets will generally be disposed of according to the provisions of that Act.

Trust

If the trust deed or the applicable trust law prescribes how trust property should be dealt with after dissolution, those provisions will ordinarily apply, subject to compliance with the FCRA and other applicable laws.

Section 8 Company

If a Section 8 company is wound up, disposal of its assets is generally governed by the Companies Act, 2013 and the applicable winding-up provisions.

When No Applicable Law Exists

Sometimes an organisation may not be governed by any law containing provisions regarding disposal of assets created from foreign contribution.

In such cases, Section 22 empowers the Central Government to intervene.

Power of the Central Government

Where no applicable law exists, the Central Government may issue a notification specifying:

The authority responsible for disposal.
The manner in which assets are to be disposed of.
The procedure to be followed.

Purpose of Government Intervention

The Government’s power ensures that:

Foreign-funded assets are not abandoned.
Valuable public resources remain protected.
Assets continue to be used in the public interest wherever possible.
Disposal is conducted according to a lawful and transparent process.

Factors Considered by the Government

Before issuing a notification, the Central Government may have regard to the nature of the assets created from foreign contribution.

This means the Government may consider factors such as:

Type of asset.
Public utility of the asset.
Nature of charitable activities.
Value of the asset.
Public interest.
Applicable legal requirements.

Illustrative Examples

Example 1 – Dissolved Society

A society registered under the Societies Registration Act establishes a hospital using foreign contribution.

If the society is dissolved, disposal of the hospital building will ordinarily be governed by the provisions of the applicable Societies Registration Act.

Example 2 – Defunct NGO

An NGO receiving foreign contribution becomes permanently inactive.

If no governing law specifies how foreign-funded assets should be disposed of, the Central Government may notify the appropriate authority and prescribe the procedure for disposing of those assets.

Example 3 – Section 8 Company

A Section 8 company constructs educational infrastructure using foreign contribution.

Upon lawful winding up, disposal of those assets will generally follow the provisions of the Companies Act, 2013 and other applicable legal requirements.

Latest Amendments Affecting Section 22

Foreign Contribution (Regulation) Amendment Act, 2020

The FCRA Amendment Act, 2020 did not amend Section 22.

The text of Section 22 remains substantially unchanged.

However, amendments made to other provisions of the Act indirectly strengthen the management of foreign-funded assets.

For example:

Section 14A introduced voluntary surrender of FCRA registration.
Section 15 now governs the management of foreign contribution and assets where registration has been cancelled or surrendered.
Section 22 continues to apply specifically when the recipient ceases to exist or becomes defunct.

Difference Between Section 15 and Section 22

Many readers confuse these two provisions because both deal with assets created from foreign contribution.

Section 15	Section 22
Applies after cancellation or voluntary surrender of FCRA registration.	Applies when the organisation ceases to exist or becomes defunct.
Assets vest in a prescribed authority for management.	Assets are disposed of according to the applicable law or Government notification.
Focus is on management and protection of assets after cancellation or surrender.	Focus is on the final disposal of assets after the organisation no longer exists or functions.

Therefore, the two provisions operate in different situations and should not be treated as overlapping.

Relationship with Other FCRA Provisions

Section 14 – Cancellation of Registration

Cancellation of registration may eventually lead to issues concerning foreign-funded assets. If the organisation subsequently ceases to exist, Section 22 becomes relevant for disposal of those assets.

Section 14A – Surrender of Registration

An organisation may voluntarily surrender its registration. If it later ceases to exist, Section 22 governs disposal of assets created from foreign contribution.

Section 15 – Management of Assets

Section 15 deals with temporary management of foreign contribution and assets following cancellation or surrender of registration.

Section 22 addresses their disposal when the organisation has ceased to exist or become defunct.

Section 19 – Maintenance of Accounts

Proper accounting under Section 19 assists in identifying assets created from foreign contribution, which may later become subject to disposal under Section 22.

Importance of Section 22

1. Protects Public Assets

Assets created through foreign contributions remain protected even after an organisation ceases to exist.

2. Prevents Misappropriation

The provision prevents individuals from unlawfully taking over or disposing of foreign-funded assets.

3. Ensures Legal Disposal

Assets are disposed of through lawful procedures rather than arbitrary decisions.

4. Promotes Transparency

The statutory process ensures accountability in the handling of valuable assets created from foreign funding.

5. Safeguards Public Interest

Where appropriate, assets created for charitable or public welfare purposes may continue to be dealt with in accordance with law and the public interest.

Key Points for Revision

Section 22 applies when an FCRA recipient ceases to exist or becomes defunct.
It governs the disposal of assets created from foreign contribution.
Disposal is ordinarily carried out under the law under which the organisation is registered or incorporated.
If no such law exists, the Central Government may specify the authority, manner, and procedure for disposal through a notification.
The FCRA Amendment Act, 2020 did not amend Section 22.
Section 22 should be read separately from Section 15, which deals with the management of assets after cancellation or surrender of registration.

CHAPTER V : INSPECTION , SEARCH , SEIZURE

Section 23 of the FCRA, 2010 – Inspection of Accounts or Records

Section 23 of the Foreign Contribution (Regulation) Act, 2010 (FCRA) deals with the inspection of accounts and records of political parties, persons, organisations, and associations where the Central Government has reason to suspect a violation of the Act.

In simple terms, Section 23 gives the Central Government the power to authorise an officer to inspect the accounts and records of an entity when there are recorded grounds for suspecting an FCRA contravention.

Objective of Section 23

The main purpose of Section 23 is to ensure that foreign contribution is:

received legally;
utilised only for permitted purposes;
properly accounted for;
not diverted or misused; and
handled in accordance with the FCRA, 2010.

The provision therefore acts as an inspection and monitoring mechanism for enforcing the FCRA.

When Can Section 23 Be Invoked?

Section 23 can be used when the Central Government has any ground to suspect that a provision of the FCRA:

has been contravened, or
is being contravened.

The suspicion may relate to a past violation or an ongoing violation.

Important requirement: Reasons must be recorded in writing

The Central Government cannot simply order an inspection without a recorded basis.

The section specifically requires that the ground for suspicion must be recorded in writing.

This provides an element of procedural accountability because there should be a documented basis for ordering the inspection.

Who Can Be Inspected?

Section 23 applies to four categories:

(a) Political Party

A political party may be subjected to inspection if there is a recorded ground to suspect violation of the FCRA.

(b) Any Person

The provision is not restricted only to organisations or associations. It also covers any person where the circumstances fall within the section.

(c) Organisation

An organisation receiving or dealing with foreign contribution can be inspected where there is a suspected contravention.

(d) Association

An association can similarly be subjected to inspection.

In short:

Political Party + Person + Organisation + Association

may come within the scope of Section 23.

Power of the Central Government

Once the Central Government has a ground to suspect an FCRA violation and records that ground in writing, it may issue a:

general order, or
special order

authorising an officer or other specified authority to conduct the inspection.

This is an important feature of Section 23.

The inspection is therefore not automatically carried out by every government officer. There must be an authorisation from the Central Government.

Who Can Be an Inspecting Officer?

Section 23 refers to the authorised person as the “inspecting officer.”

The Central Government may authorise:

1. A Gazetted Officer holding a Group A post

The Central Government can authorise a Gazetted Officer holding a Group A post under the Central Government.

2. Such other officer

The Government may also authorise such other officer as it considers appropriate.

3. Authority or organisation

The Central Government can also authorise an authority or organisation as it thinks fit.

Therefore, Section 23 gives the Central Government flexibility regarding who can conduct the inspection.

Meaning of “Inspecting Officer”

Section 23 itself defines the authorised person for the purpose of the provision.

The person authorised by the Central Government is called the:

Inspecting Officer

The inspecting officer exercises the inspection powers granted by Section 23.

What Can Be Inspected?

The inspecting officer has the right to inspect:

accounts, and
records

maintained by the concerned:

political party;
person;
organisation; or
association.

Therefore, the inspection is primarily directed toward the financial and documentary records relevant to compliance with the FCRA.

Right to Enter Premises

Section 23 gives the inspecting officer a significant power.

For the purpose of inspecting the relevant accounts or records, the inspecting officer has the right to:

enter in or upon any premises

where the relevant accounts or records are maintained.

This allows the inspection to be carried out at the place where the relevant records are located.

Timing of Inspection

The power of entry is subject to a specific timing requirement.

The inspecting officer may enter premises at any:

Reasonable hour

However, the inspection must take place:

after sunrise and before sunset.

Therefore, Section 23 does not provide an unrestricted power to enter premises at any time of the day or night.

Simple example

Suppose an organisation maintains its FCRA-related accounts at its office.

If an inspection is properly authorised under Section 23, the inspecting officer may enter the office during a reasonable daytime hour, such as 11:00 AM, for the purpose of inspecting the relevant accounts and records.

“Reasonable Hour” – Meaning

The expression reasonable hour means an appropriate time for carrying out the inspection, considering the circumstances.

The section further limits this by requiring that entry must occur:

after sunrise and before sunset.

Thus, the provision contains both:

a reasonableness requirement, and
a daylight timing requirement.

Scope of the Inspection Power

The inspection power is connected to the purpose for which it is granted.

The inspecting officer enters the premises:

for the purpose of inspecting the said account or record.

Therefore, Section 23 is essentially a regulatory inspection power, rather than an unlimited general search power.

The power is intended to enable the Government to verify compliance with the FCRA.

Why Inspection of Accounts Is Important Under FCRA

Foreign contribution is subject to regulatory requirements under the FCRA.

Inspection of accounts and records can help the Government determine matters such as:

whether foreign contribution was received in accordance with the Act;
whether the recipient was legally permitted to receive it;
whether the funds were properly accounted for;
whether the contribution was used for lawful purposes;
whether records relating to foreign contribution have been properly maintained;
whether the funds have potentially been diverted or misused; and
whether the provisions of the FCRA have been contravened.

Thus, Section 23 supports financial transparency and regulatory compliance.

Important Elements of Section 23

For examination purposes, Section 23 can be broken down into the following elements:

Element	Provision
Authority	Central Government
Basis	Ground to suspect contravention
Recording requirement	Ground must be recorded in writing
Persons/entities covered	Political party, person, organisation, association
Order	General or special order
Authorised person	Inspecting officer
Possible inspecting officer	Gazetted Group A officer or other authorised officer/authority/organisation
Records covered	Accounts and records
Entry power	Right to enter premises
Timing	Reasonable hour
Time limit	After sunrise and before sunset
Purpose	Inspection of accounts/records

General Order and Special Order

Section 23 allows the Central Government to issue either a:

General Order

A general order may authorise inspection in circumstances or categories specified by the Government.

Special Order

A special order may be directed toward a particular person, organisation, association, political party, or specific situation.

The important point is that Section 23 expressly recognises both general and special orders.

Section 23 Is Not a Random Inspection Power

A very important point is that the Central Government must have a ground to suspect that the FCRA has been or is being contravened.

Moreover, that ground must be recorded in writing.

Therefore, the basic sequence is:

Ground to suspect violation → Recording of ground in writing → Government authorisation → Appointment/authorisation of inspecting officer → Inspection of accounts/records

This is the easiest way to remember Section 23.

Simple Example

Suppose an organisation is permitted to receive foreign contribution.

The Central Government receives information suggesting that the organisation may have violated provisions of the FCRA.

The Government considers the information and has a ground to suspect that a provision of the Act has been or is being contravened.

The Government records the ground for suspicion in writing.

It then issues an appropriate order authorising an inspecting officer.

The officer may then, during a reasonable hour after sunrise and before sunset, enter the relevant premises and inspect the organisation’s accounts and records.

The purpose is to determine whether the organisation has complied with the FCRA.

Key Features of Section 23

1. Preventive and enforcement-oriented provision

Section 23 helps the Government detect and investigate possible violations of the FCRA.

2. Written reasons are required

The Government’s ground for suspicion must be recorded in writing.

3. Wide coverage

It applies to:

political parties;
persons;
organisations; and
associations.

4. Government authorisation is required

The inspecting officer acts pursuant to a general or special order of the Central Government.

5. Accounts and records can be inspected

The provision specifically concerns inspection of accounts and records.

6. Entry into premises is permitted

The inspecting officer has a right to enter the relevant premises for inspection.

7. Timing is restricted

Entry must be at a reasonable hour, after sunrise and before sunset.

Section 23 and Financial Transparency

The FCRA regulates the acceptance and utilisation of foreign contribution.

Therefore, maintaining proper accounts and records is extremely important.

Section 23 gives the Government a mechanism to verify whether the records maintained by a person or organisation correspond with the requirements of the Act.

In this way, the provision promotes:

Accountability → Transparency → Proper record-keeping → Compliance → Prevention of misuse

Section 23 vs Section 22

Do not confuse Section 22 and Section 23.

Section 22 – Disposal of Assets

Section 22 deals with the disposal of assets created out of foreign contribution where a person permitted to accept foreign contribution ceases to exist or becomes defunct.

Section 23 – Inspection of Accounts or Records

Section 23 deals with the Government’s power to inspect accounts and records where there is a recorded ground to suspect an FCRA contravention.

Easy distinction:

Section 22 = Disposal of assets

Section 23 = Inspection of accounts/records

One-Line Summary

Section 23 empowers the Central Government to authorise inspection of accounts and records when it has a written ground to suspect an FCRA violation, with the inspecting officer being permitted to enter the relevant premises at a reasonable hour between sunrise and sunset.

Aspect	Detailed Explanation of Section 24 – Seizure of Accounts or Records
Section	Section 24 of the Foreign Contribution (Regulation) Act, 2010 (FCRA)
Subject	Seizure of Accounts or Records
Purpose	Section 24 empowers the inspecting officer to seize accounts or records when, after an inspection under Section 23, there is reasonable cause to believe that the FCRA or another law relating to foreign exchange has been or is being contravened.
When does Section 24 apply?	It applies after an inspection of an account or record under Section 23. Therefore, Section 24 operates after the inspection process contemplated under Section 23.
Who can exercise the power?	The inspecting officer/authorised officer can exercise the power of seizure when the statutory conditions are satisfied.
First condition – Inspection	The account or record must first have been inspected under Section 23.
Second condition – Reasonable cause to believe	After inspection, the inspecting officer must have reasonable cause to believe that a contravention has occurred or is occurring. Mere suspicion is not the standard stated in Section 24; the officer must have a reasonable cause to believe.
What can be contravened?	The suspected contravention may relate to any provision of the FCRA or any other law relating to foreign exchange.
FCRA contravention	The officer may seize records if they provide reasonable cause to believe that a provision of the Foreign Contribution (Regulation) Act, 2010 has been or is being violated.
Foreign-exchange law contravention	Section 24 also covers contraventions of other laws relating to foreign exchange. Thus, its scope is not limited exclusively to the FCRA.
What can be seized?	The inspecting officer may seize the account or record that was inspected and that is relevant to the suspected contravention.
Purpose of seizure	The purpose is to preserve the relevant account or record so that it can be produced in proceedings concerning the alleged contravention.
Where must the seized records be produced?	The seized account or record must be produced before the court, authority or tribunal in which proceedings are brought for the alleged contravention.
Court	If proceedings are brought before a court, the seized records may be produced before that court as relevant material.
Authority	Where proceedings are before an appropriate authority, the seized records may be produced before that authority.
Tribunal	Where proceedings are brought before a tribunal, the seized records may be produced before that tribunal.
Important point	Seizure under Section 24 is connected with proceedings for the contravention disclosed by the account or record.
Return of seized records – Proviso	The proviso provides a safeguard: if no proceeding is brought within six months from the date of seizure for the contravention disclosed by the account or record, the authorised officer must return the account or record to the person from whom it was seized.
Six-month period	The six-month period is calculated from the date of seizure.
When must the record be returned?	If no proceeding is brought within six months for the relevant contravention, the seized account or record must be returned.
Who receives the record back?	It must be returned to the person from whom it was seized.
Nature of the return requirement	The proviso uses “shall return”, making the return a mandatory requirement when the specified condition is fulfilled.
Why is the six-month rule important?	It prevents accounts and records from remaining seized indefinitely where no proceeding is initiated in relation to the contravention disclosed by those records.
Simple sequence	Section 23 inspection → Reasonable cause to believe contravention → Seizure under Section 24 → Production before court/authority/tribunal → If no proceeding within 6 months → Return of records
Section 23 vs Section 24	Section 23 = Inspection of accounts/records. Section 24 = Seizure of accounts/records after such inspection when reasonable cause to believe a contravention exists.
Key words for exams	Inspection → Reasonable cause to believe → Contravention → FCRA/foreign-exchange law → Seizure → Court/Authority/Tribunal → Six months → Return
One-line summary	Section 24 allows the inspecting officer to seize accounts or records after a Section 23 inspection when there is reasonable cause to believe that the FCRA or a foreign-exchange law has been or is being contravened, and requires their return if no relevant proceeding is brought within six months of seizure.

Section 23 vs Section 24 of FCRA, 2010 — Complete Comparison Chart

Basis	Section 23 – Inspection of Accounts or Records	Section 24 – Seizure of Accounts or Records
Subject matter	Deals with inspection of accounts and records.	Deals with seizure of accounts and records.
Main purpose	To allow the Government to inspect and verify accounts and records when there is a ground to suspect an FCRA violation.	To allow the inspecting officer to take possession of accounts or records when inspection gives reasonable cause to believe that a legal contravention has occurred or is occurring.
Nature of power	Inspection power.	Seizure power.
Who exercises the power?	An inspecting officer authorised by the Central Government.	The inspecting officer/authorised officer after the inspection contemplated under Section 23.
Who authorises the action?	The Central Government may authorise the officer by a general or special order.	The officer exercises the seizure power when the conditions prescribed by Section 24 are satisfied.
Initial requirement	The Central Government must have any ground to suspect that a provision of the FCRA has been or is being contravened.	There must first have been an inspection under Section 23.
Standard required	Ground to suspect a contravention.	Reasonable cause to believe that a contravention has occurred or is occurring.
Written record requirement	The Central Government’s ground for suspicion must be recorded in writing.	Section 24 does not separately prescribe the same written-record requirement; it requires the inspecting officer to have reasonable cause to believe a contravention exists.
Persons/entities covered	Political party, person, organisation or association.	Accounts or records inspected under Section 23; therefore, it operates in connection with the entities covered by Section 23.
What can be inspected?	Any account or record maintained by the concerned political party, person, organisation or association.	The account or record referred to in Section 23 may be seized when the statutory conditions are met.
Triggering event	Suspicion of an FCRA contravention.	Findings after inspection that create reasonable cause to believe that a contravention has occurred or is occurring.
Laws covered	Specifically concerned with suspected contravention of the FCRA.	Covers contravention of the FCRA or any other law relating to foreign exchange.
Power to enter premises	Yes. The inspecting officer has the right to enter in or upon premises for inspection.	Section 24 itself primarily concerns seizure after inspection; the entry power is provided by Section 23.
Timing of entry	Entry must be at a reasonable hour, after sunrise and before sunset.	No separate entry-time rule is prescribed in Section 24; the relevant entry power comes from Section 23.
What happens to the records?	The officer inspects the accounts or records.	The officer may seize the relevant account or record.
Meaning in simple language	“Let me check your records.”	“After checking them, I have reasonable cause to believe there is a violation, so I can take the relevant records into custody.”
Purpose of taking action	To examine and verify compliance with the FCRA.	To preserve the relevant evidence/records and produce them before the forum where proceedings for the contravention are brought.
Where are seized records produced?	Not applicable because Section 23 concerns inspection.	Before the court, authority or tribunal in which proceedings are brought for the contravention.
Court involvement	No court production is prescribed merely for the inspection under Section 23.	The seized account or record is to be produced before the court, authority or tribunal where proceedings are brought.
Six-month rule	No six-month return rule is provided in Section 23.	If no proceeding is brought within six months from the date of seizure for the relevant contravention, the record must be returned.
Return of records	Section 23 does not contain the specific six-month return mechanism.	Yes. The authorised officer shall return the account or record if the required proceeding is not brought within six months.
To whom must it be returned?	Not applicable.	To the person from whom it was seized.
Nature of safeguard	Written recording of the Government’s ground for suspicion and limits on time of entry provide procedural safeguards.	The six-month return provision prevents the records from remaining seized indefinitely when no relevant proceeding is brought.
Relationship between the sections	Section 23 comes first.	Section 24 follows Section 23.
Sequence	Suspicion → Written grounds → Authorisation → Inspection	Inspection → Reasonable cause to believe → Seizure → Production in proceedings / Return after six months if no proceeding
Key phrase	“Ground to suspect”	“Reasonable cause to believe”
Core action	Inspect	Seize
Exam keyword	Inspection + Entry	Seizure + Production + Six months

Section 23 → Section 24:

Step	Section 23	Section 24
1	Central Government has a ground to suspect an FCRA contravention.	—
2	Ground for suspicion is recorded in writing.	—
3	Government issues a general or special order.	—
4	An inspecting officer is authorised.	—
5	Officer may enter premises at a reasonable hour, after sunrise and before sunset.	—
6	Officer inspects accounts/records.	Inspection provides the basis for the next step.
7	—	Officer develops reasonable cause to believe that the FCRA or a foreign-exchange law has been or is being contravened.
8	—	Officer may seize the relevant account or record.
9	—	Seized record is produced before the court, authority or tribunal where proceedings are brought.
10	—	If no proceeding is brought within six months from seizure, the record shall be returned to the person from whom it was seized.

Most Important Difference for Exams

Section 23	Section 24
Inspection	Seizure
Ground to suspect	Reasonable cause to believe
Government authorises inspection	Officer may seize after inspection
Accounts/records are examined	Accounts/records are taken into custody
Entry into premises is expressly provided	Seizure follows the Section 23 inspection
FCRA contravention	FCRA or other foreign-exchange law
No six-month return provision	Six-month return rule

One-Line Memory Trick

Section 23 = “Inspect” → Section 24 = “Seize.”

Or remember:

23 → Inspect → 24 → Seize → Proceed → If no proceeding in 6 months → Return.

Section 25 of FCRA, 2010 – Seizure of Article, Currency or Security

Section 25 of the Foreign Contribution (Regulation) Act, 2010 (FCRA) deals with the power to seize certain articles, money and securities when they are suspected to be connected with a violation of the Act.

The provision is intended to prevent foreign contributions received in violation of the FCRA from being retained or dealt with freely by the person possessing them.

Section 25 Explained in Detail

Point	Explanation
Purpose of Section 25	Section 25 provides a legal mechanism for taking possession of an article, currency or security when there is a reasonable basis to believe that it is connected with a violation of the FCRA.
Who can exercise this power?	The power can be exercised by a Gazetted Officer who has been specifically authorised by the Central Government for this purpose.
How is the officer authorised?	The Central Government can grant the authority through either a general order or a special order.
Requirement of “reason to believe”	The officer must have reason to believe that the conditions prescribed by Section 25 exist. The power cannot be exercised arbitrarily without a reasonable basis.
Who can be affected?	The provision applies where any person has the relevant article, currency or security in their possession or control.
What can be seized?	Section 25 covers three broad categories: article, currency and security.
Article	An article connected with foreign contribution can fall within Section 25 where its value exceeds the threshold referred to in Section 2(1)(h)(i).
Currency	Both Indian currency and foreign currency are covered by the provision.
Security	The provision also covers securities, whether Indian or foreign, where the statutory conditions are satisfied.
Possession or control	The relevant property must be in the person’s possession or control. The wording therefore focuses on custody or control rather than merely asking who formally owns the property.
Connection with FCRA violation	The officer must have reason to believe that the article, currency or security is connected with a situation where a provision of the FCRA has already been violated or is currently being violated.
Power of seizure	Once the required conditions are satisfied, the authorised officer may seize the relevant article, currency or security.
Nature of power	This is a seizure power. It allows the authorised officer to take the concerned property into official custody.
Past violation covered	Section 25 can apply where the FCRA has been contravened, meaning the suspected violation has already taken place.
Ongoing violation covered	It can also apply where the FCRA is being contravened, meaning the violation is continuing.
Article-value reference	The value threshold for an article is linked to Section 2(1)(h)(i). Therefore, the definition of “foreign contribution” should be read along with Section 25.
Important limitation	The seizure power is not an unlimited power to take any property. The statutory requirements concerning the nature of the property, possession/control and suspected FCRA contravention must be satisfied.

Section 26 of FCRA, 2010 – Disposal of Seized Article, Currency or Security

Section 26 deals with the procedure for disposal of certain articles, currency or securities seized under the FCRA. It creates a mechanism through which specified seized property can be dealt with promptly while also preserving reliable evidence of what was seized.

Important: Section 26 should be understood together with Sections 25, 27, 28 and 29. Section 25 deals with seizure, Section 26 with disposal and evidentiary procedure, and Sections 28–29 deal with confiscation and adjudication.

Section 26(1) – Government’s Power to Specify Property for Disposal

The Central Government can identify certain seized:

articles;
currency; or
securities

for disposal.

However, the Government must consider relevant factors, including:

1. Value

The value of the seized property may influence whether it is appropriate to keep it in physical custody.

2. Vulnerability to theft

If the property is particularly susceptible to theft, retaining it physically may create unnecessary risk.

3. Other relevant considerations

The Government can also take into account other circumstances relevant to the safe and practical handling of the property.

The Government specifies such property by notification.

Simple understanding:

Government identifies risky/difficult-to-store seized property → notification → disposal according to prescribed procedure.

Section 26(2) – Forwarding Without Unnecessary Delay

Once an article, currency or security has been seized and falls within the procedure contemplated by Section 26, it must be forwarded:

without unnecessary delay

to the officer specified for this purpose.

This requirement is important because it discourages unnecessary retention of seized property at the initial location.

Key phrase:

“Without unnecessary delay”

This means the property should be forwarded promptly rather than being kept unnecessarily with the seizing officer.

Section 26(3) – Preparation of Inventory

After the seized property is forwarded, the officer referred to in Section 26(1) must prepare an inventory.

The inventory may contain:

description of the article;
value;
identifying particulars;
other details necessary to establish its identity.

Why is an inventory important?

Suppose a particular security, currency or article has been seized.

The inventory creates an official record of:

What was seized + what it looked like/consisted of + its value + identifying details

This helps avoid disputes about the identity or condition of the seized property.

Certification by Magistrate

After preparing the inventory, the officer makes an application to a Magistrate.

The purpose of the application is to obtain certification of the correctness of the inventory.

This adds an independent judicial certification to the official record.

Section 26(4) – Magistrate to Allow Application

When the application is made, the Magistrate is required to allow it as soon as may be.

In practical terms, the provision seeks to ensure that certification of the inventory is not unnecessarily delayed.

Important exam point:

Officer prepares inventory → applies to Magistrate → Magistrate allows application.

Section 26(5) – Evidentiary Value of Certified Inventory

This is one of the most important parts of Section 26.

A court trying an offence under the FCRA must treat the inventory certified by the Magistrate as primary evidence in relation to that offence.

This applies notwithstanding provisions contained in:

the Indian Evidence Act, 1872, or
the Code of Criminal Procedure, 1973.

Why is this significant?

Normally, questions may arise about how seized property itself should be produced and proved in court.

Section 26 creates a special statutory mechanism:

Seizure → Inventory → Magistrate certification → Certified inventory treated as primary evidence

Therefore, the certified inventory becomes extremely important in the prosecution of an offence under the FCRA.

Section 26(6) – Report to Court

The officer acting under the inventory provision must forthwith report the seizure to:

the Court of Session, or
the Assistant Sessions Judge

having jurisdiction.

The purpose is connected with adjudging confiscation under Section 29.

Thus, Section 26 connects the seizure process with the later confiscation proceedings.

Easy Flow Chart for Revision

Section 25 – Seizure

↓

Section 26(1) – Government specifies property for disposal

↓

Section 26(2) – Property forwarded without unnecessary delay

↓

Section 26(3) – Inventory prepared

↓

Application to Magistrate

↓

Section 26(4) – Magistrate allows application

↓

Section 26(5) – Certified inventory = Primary Evidence

↓

Section 26(6) – Seizure reported to competent Court

↓

Confiscation process under Section 29

Section 25 vs Section 26

Basis	Section 25	Section 26
Main subject	Seizure	Disposal of seized property
Property involved	Article, currency or security	Article, currency or security already seized
Main action	Officer seizes	Government specifies property for disposal and prescribed procedure follows
Authority	Authorised Gazetted Officer	Central Government + specified officers
Central Government’s role	Authorises the Gazetted Officer	Specifies property for disposal and determines manner
Key requirement	Reason to believe of FCRA contravention	Relevant property has been seized and falls within notified disposal procedure
Inventory	Not the main focus	Yes
Magistrate involvement	Not the central feature	Yes – certification of inventory
Evidence	Seizure itself	Certified inventory can serve as primary evidence
Court reporting	Not the main focus	Seizure must be reported to competent Court of Session/Assistant Sessions Judge
Memory trick	25 = Seize	26 = Dispose + Inventory + Certify + Report

Section 26 vs Section 29

These two sections should also not be confused.

Section 26	Section 29
Deals with disposal of specified seized property and related procedural/evidentiary requirements	Deals with adjudication of confiscation
Involves inventory preparation	Involves determination regarding confiscation
Magistrate certifies inventory	Competent judicial authority handles confiscation adjudication
Creates evidentiary mechanism	Determines the confiscation issue
Connected with seized property	Connected with whether property should be confiscated

CHAPTER VI : ADJUDICATION

Section 29 of FCRA, 2010 – Adjudication of Confiscation

Section 29 deals with who has the authority to decide whether an article, currency or security seized under the FCRA should be confiscated, returned, delivered to a person entitled to possession, or otherwise dealt with.

In simple terms:

Section 28 creates the possibility of confiscation, while Section 29 provides the authority and procedure for deciding that confiscation.

What Is “Adjudication of Confiscation”?

The word adjudication essentially means a formal determination by the competent judicial authority.

Therefore, Section 29 answers an important question:

Who will decide what should ultimately happen to the property that has been seized and is liable to confiscation?

The answer is:

Court of Session
or
Specified officer not below the rank of Assistant Sessions Judge, subject to prescribed limits.

Section 29(1)(a) – Power of Court of Session

Section 29 provides that confiscation may be adjudged:

by the Court of Session within whose local jurisdiction the seizure was made.

The important point is that the relevant Court of Session is determined by the place of seizure.

Example

Suppose an article is seized in a place falling within the jurisdiction of a particular Court of Session.

The Court of Session having jurisdiction over that place can adjudicate the confiscation.

“Without limit”

The Act states that the Court of Session can adjudge confiscation without limit.

This means the Court of Session is not subject to the monetary or other limits that may apply to the specifically notified subordinate adjudicating officer under Section 29(1)(b).

Section 29(1)(b) – Assistant Sessions Judge

Section 29 also allows adjudication by an officer:

not below the rank of Assistant Sessions Judge;
specified by the Central Government;
through a notification in the Official Gazette; and
subject to the limits prescribed.

This means the power is not given automatically to every Assistant Sessions Judge.

The officer must be specified by the Central Government in the manner provided by Section 29.

Comparison of the Two Adjudicating Authorities

Basis	Court of Session	Specified Officer
Provision	Section 29(1)(a)	Section 29(1)(b)
Authority	Court of Session	Officer not below rank of Assistant Sessions Judge
Who specifies?	Not applicable	Central Government
Method of designation	Existing judicial jurisdiction	Notification in Official Gazette
Jurisdiction	Court within whose local limits the seizure occurred	Subject to prescribed limits
Limit on adjudication	Without limit	Subject to prescribed limits
Basic function	Adjudicate confiscation	Adjudicate confiscation within prescribed limits

Section 29(2) – What Can the Judge Order?

After the adjudication is completed, the Sessions Judge or Assistant Sessions Judge may pass an appropriate order concerning the seized article, currency or security.

The provision allows the Judge to make an order regarding:

1. Confiscation

The property may be ordered to be confiscated where the legal requirements are satisfied.

2. Delivery to a person entitled to possession

The seized property may instead be delivered to a person who establishes that they are entitled to possess it.

3. Other appropriate disposal

The Judge may make such other order as is considered appropriate in accordance with the provision.

Confiscation vs Delivery

This is an important concept.

Section 29 does not mean that every seized article automatically becomes Government property.

The adjudicating authority examines the matter and can determine the appropriate outcome.

Outcome	Meaning
Confiscation	Property is legally forfeited in accordance with the FCRA.
Delivery	Property is handed over to a person who is legally entitled to possess it.
Other order	The adjudicating authority can make an appropriate order concerning the seized property as permitted by law.

Section 29 and Section 28

Sections 28 and 29 should be studied together.

Section 28	Section 29
Deals with confiscation of article, currency or security obtained in contravention of the Act	Deals with adjudication of confiscation
Establishes when property may be liable to confiscation	Determines who adjudicates and what order may be passed
Substantive confiscation provision	Adjudicatory provision
Focus = What can be confiscated?	Focus = Who decides and what happens to the property?

Easy memory:

Section 28 = Confiscation
Section 29 = Decision on confiscation

Complete flow:

Contravention

↓

Section 25 – Seizure

↓

Section 26 – Disposal / Inventory procedure where applicable

↓

Section 28 – Property may be liable to confiscation

↓

Section 29 – Competent authority adjudicates

↓

Confiscation / Delivery / Appropriate order

Section 30 – Procedure for Confiscation

Step	Procedure
1. Seizure	An article, currency or security is seized under the FCRA.
2. Proposed Confiscation	The seized property becomes subject to proceedings for possible confiscation.
3. Opportunity to Represent	The person from whom the property was seized must be given a reasonable opportunity to make a representation against confiscation.
4. Representation	The person may present their explanation, objections, facts and supporting documents against the proposed confiscation.
5. Consideration	The competent adjudicating authority considers the person’s representation.
6. Adjudication	After providing the required opportunity, the competent authority may decide whether confiscation is justified.
7. Confiscation Order	An order of confiscation may be passed only after the required opportunity of representation has been provided.

Simple Procedure Flow

Seizure → Proposed Confiscation → Reasonable Opportunity to Represent → Consideration of Representation → Adjudication → Confiscation Order

Key point: No confiscation adjudication without a reasonable opportunity to make a representation.

CHAPTER VII : APPEAL AND REVISION

Section 31 – Appeal: Procedure

Step	Procedure
1. Order under Section 29	A person is aggrieved by an order relating to confiscation made under Section 29.
2. First Appeal – Order by Court of Session	Appeal lies to the High Court to which that Court of Session is subordinate.
3. First Appeal – Order by Specified Officer	If the order was made by an officer specified under Section 29(1)(b), appeal lies to the Court of Session within whose local jurisdiction the order was made.
4. Time Limit	Appeal under Section 31(1) must normally be filed within 1 month from the date on which the order is communicated to the aggrieved person.
5. Delay Condonation	If sufficient cause prevented filing within one month, the appellate court may allow an additional 1 month.
6. Maximum Period	The appeal cannot be admitted after this additional one-month period. Thus, the maximum period is 2 months.
7. Other FCRA Orders	For certain orders under Sections 5, 12 and 14, the specified organisation/person/association may appeal directly to the High Court.
8. Time Limit for These Appeals	Such appeals must be filed within 60 days from the date of the order.
9. Territorial Jurisdiction	The High Court is determined by where the appellant ordinarily resides, carries on business, personally works for gain, or, for an organisation/association, where its principal office is located.
10. Nature of Appeal	Every appeal under Section 31 is treated as an appeal from an original decree.
11. Applicable Procedure	Order XLI of the Code of Civil Procedure, 1908, applies as far as may be applicable.

Appeal Flow – Section 29 Order

Court of Session Order
→ High Court
→ Within 1 month
→ Additional 1 month only for sufficient cause

Specified Officer’s Order
→ Court of Session
→ Within 1 month
→ Additional 1 month only for sufficient cause

Other FCRA Orders

Order under Sections 5 / 12 / 14
→ High Court
→ Within 60 days

Section 32 – Revision of Orders by Central Government: Procedure

Step	Procedure
1. Existing Order	An order has been passed by the Central Government in proceedings under the FCRA.
2. Revision Initiated	Revision may be initiated either by the Central Government on its own motion (suo motu) or on an application by the person registered under the Act.
3. Examination of Record	The Central Government calls for and examines the record of the relevant proceedings.
4. Inquiry	The Government may conduct an inquiry itself or direct another authority to conduct an inquiry.
5. Revisionary Order	After examination and inquiry, the Central Government may pass an appropriate order, subject to the provisions of the FCRA.
6. Suo Motu Time Limit	The Central Government cannot exercise revision on its own motion if the order was made more than 1 year earlier.
7. Application for Revision	A registered person seeking revision must normally apply within 1 year from the date the order was communicated to them or the date they otherwise became aware of it, whichever is earlier.
8. Delay	The Central Government may accept a delayed revision application if it is satisfied that the person was prevented by sufficient cause from applying within one year.
9. Appeal Restriction	Revision cannot be exercised where an appeal is available, the appeal period has not expired, and the person has neither waived the right of appeal nor filed an appeal.
10. Fee	A revision application must be accompanied by the prescribed fee.
11. Decision Not to Interfere	If the Central Government refuses to interfere with the order, such refusal is not treated as an order prejudicial to the applicant for the purposes of Section 32.

Simple Flow

Order by Central Government
↓
Suo motu revision OR application by registered person
↓
Examination of records
↓
Inquiry, if required
↓
Revisionary order

Important Time Limits

Situation	Time Limit
Central Government’s suo motu revision	Within 1 year from the order
Application by registered person	Within 1 year from communication/knowledge, whichever is earlier
Delayed application	May be admitted if sufficient cause is established

Important Restriction

Appeal available + appeal period still running + no waiver + no appeal filed = Revision cannot be exercised.

Memory line:

Section 32 = Central Government reviews its own FCRA orders, generally within 1 year, subject to the appeal restriction.

CHAPTER VIII : OFFENCES AND PENALITIES

Sections 33 to 35: Specific Offences and Penalties

Section	Provision	What it covers	Detailed explanation	Punishment / Consequence
Section 33	Making of false statement, declaration or delivering false accounts	Knowingly providing false information or obtaining registration/prior permission through dishonest means	A person commits an offence if they knowingly give a false intimation under Section 9(c) or Section 18, or seek prior permission or registration through fraud, false representation or concealment of a material fact. The requirement of knowledge is important; the provision targets deliberate falsehood rather than a mere accidental error.	Imprisonment up to 6 months, or fine, or both, on conviction by a court.
Section 34	Penalty for article, currency or security obtained in contravention of Section 10	Violation of a prohibitory order issued under Section 10	Where a person has been served with a Section 10 prohibitory order, they cannot pay, deliver, transfer or otherwise deal with the article, currency or security covered by that order in violation of it. The provision covers Indian as well as foreign article, currency or security.	Imprisonment up to 3 years, or fine, or both. The court may additionally impose a fine linked to the market value of the article or amount of the currency/security, or a part thereof.
Section 35	Punishment for contravention of any provision of the Act	General punishment for accepting foreign contribution in violation of FCRA	A person who accepts foreign contribution, or assists another person, political party or organisation in accepting foreign contribution or currency/security from a foreign source in violation of the FCRA, rules or orders can be punished under this section. This is a general penal provision for contraventions involving acceptance of foreign contribution where another specific punishment does not override it

Sections 36 to 38: Additional Penalty, Residual Offence and Repeated Offence

Section	Provision	Purpose	Detailed explanation	Penalty / Consequence
Section 36	Power to impose additional fine where article, currency or security is not available for confiscation	Prevents a person from escaping the financial consequence of confiscation merely because the property is no longer available to be confiscated	If a person does or fails to do something which makes an article, currency or security liable to confiscation, and that person is convicted, the court can impose an additional fine when the property is not available for confiscation.	Fine up to five times the value of the article/currency/security or ₹1,000, whichever is more. This is in addition to any other fine under the Act.
Section 37	Penalty for offences where no separate punishment has been provided	Acts as a residual/general penalty provision	Where a person fails to comply with a provision of the FCRA and the Act does not prescribe a separate penalty for that failure, Section 37 provides the applicable punishment.	Imprisonment up to 1 year, or fine, or both.
Section 38	Prohibition of acceptance of foreign contribution	Restricts repeat offenders from receiving foreign contribution	A person who has already been convicted under Section 35 or Section 37, insofar as the offence relates to acceptance or utilisation of foreign contribution, and is convicted again for such an offence, becomes prohibited from accepting foreign contribution.

Section 39: Offences by Companies

Section 39 is important because an offence may be committed through a company, firm, society, trade union or other association. The section determines when individuals connected with that entity can also be held responsible.

Provision	Rule	Detailed Explanation
Section 39(1)	Liability of company and responsible persons	If an FCRA offence is committed by a company, the company itself and every person who, at the time of the offence, was in charge of and responsible to the company for the conduct of its business are deemed guilty and can be proceeded against and punished.
Defence under Section 39(1)	Lack of knowledge / due diligence	A person covered by Section 39(1) can avoid punishment if they prove that the offence was committed without their knowledge or that they had exercised all due diligence to prevent the offence.
Section 39(2)	Consent, connivance or neglect	Even if a person is not automatically liable under Section 39(1), a director, manager, secretary or other officer can be deemed guilty where the offence occurred with their consent or connivance, or resulted from their neglect.
Company’s own liability	Entity can also be prosecuted	The company is not protected merely because individuals are also prosecuted. The statutory liability can extend to both the entity and responsible individuals.
Section 39 Explanation (a)	Meaning of “company”	For this section, “company” has a broad meaning. It includes a body corporate, firm, society, trade union or other association of individuals.
Section 39 Explanation (b)	Meaning of “director”	In relation to a firm, society, trade union or other association, “director” means a partner or member of the governing body, as applicable.

Section 39 – Liability Structure

Situation	Who can be liable?	Basis
Offence committed by company	Company	Entity’s statutory liability
Person in charge of business	Responsible person + company	Person was in charge of and responsible for conduct of business
Person seeks defence	Responsible person	Can prove no knowledge or due diligence
Director/manager/secretary/other officer	Individual officer	Consent, connivance or neglect
Firm	Firm + relevant responsible persons	Included within meaning of “company”
Society	Society + relevant responsible persons	Included within meaning of “company”
Trade union	Trade union + relevant responsible persons	Included within meaning of “company”
Other association	Association + relevant responsible persons	Included within meaning of “company”

Sections 40 and 41: Prosecution and Compounding

Section	Provision	Purpose	Procedure / Rule
Section 40	Bar on prosecution of offences under the Act	Prevents courts from taking cognizance of an FCRA offence without Government authorisation.	A court cannot take cognizance of an offence under the FCRA unless there is previous sanction of the Central Government or an officer authorised by it.
Section 41(1)	Compounding of certain offences	Allows eligible offences to be settled before prosecution is instituted.	Any FCRA offence not punishable with imprisonment only may, before prosecution begins, be compounded by officers/authorities specified by the Central Government, for the amount specified by notification.
Section 41(2)	Three-year restriction	Prevents repeated use of compounding for similar offences within a short period.	Compounding is unavailable for an offence committed within 3 years from the date a similar offence was previously compounded.
Explanation to 41(2)	Subsequent offence after 3 years	Determines how a later offence is treated.	A second/subsequent offence committed after 3 years from the previous compounding is treated as a first offence for Section 41.
Section 41(3)	Government supervision	Keeps compounding authorities under Central Government control.	Officers/authorities exercising compounding powers do so subject to the direction, control and supervision of the Central Government.
Section 41(4)	Application procedure	Establishes how compounding is requested.	Application must be made to the specified officer/authority in the prescribed form and manner, together with the prescribed fee.
Section 41(5)	Effect of compounding	Prevents prosecution after valid pre-prosecution compounding.	If the offence is compounded before prosecution is instituted, no prosecution can subsequently be instituted against that offender for that offence.
Section 41(6)	Compliance during compounding	Allows the authority to require missing statutory filings/returns to be completed.	While considering compounding for a compliance default involving permission, registration, return, account or document, the authority may direct the person/organisation to complete the required filing or registration within a specified period.

Section 41 – When Compounding Is Not Available

Situation	Position
Offence punishable with imprisonment only	Cannot be compounded under Section 41(1).
Prosecution already instituted	Section 41(1) specifically provides for compounding before institution of prosecution.
Similar offence committed within 3 years of previous compounding	Cannot be compounded under Section 41(2).
Similar offence after 3 years	Treated as a first offence for purposes of Section 41.

Sections 33–41 (Revision Chart)

Section	Topic	Core Rule	Maximum / Main Consequence
33	False statement/declaration	Knowingly providing false intimation or obtaining registration/prior permission through fraud, false representation or concealment	Up to 6 months / Fine / Both
34	Contravention of Section 10 order	Dealing with article/currency/security despite prohibitory order	Up to 3 years / Fine / Both + possible additional value-based fine
35	General contravention	Accepting or assisting in acceptance of foreign contribution in violation of FCRA/rules/orders	Up to 5 years / Fine / Both
36	Property unavailable for confiscation	Court may impose additional fine where property liable to confiscation is unavailable	Up to 5× value or ₹1,000, whichever is more
37	No separate penalty	Residual punishment where FCRA provides no specific penalty	Up to 1 year / Fine / Both
38	Repeat offence	Second conviction under Sections 35/37 relating to acceptance/utilisation of foreign contribution	5-year prohibition on accepting foreign contribution
39	Offences by companies	Company and responsible persons may be liable; officers may also be liable for consent, connivance or neglect	Punishment applicable to underlying offence
40	Bar on prosecution	Court requires previous Government sanction before taking cognizance	Previous sanction mandatory
41	Compounding	Eligible offences can be compounded before prosecution	No prosecution for compounded offence

CHAPTER IX : MISCELLANEOUS

FCRA Sections 42–51 – Detailed Notes

Below are Sections 42 to 51 of the Foreign Contribution (Regulation) Act, 2010 explained in detailed, original, exam-friendly table format.

Table 1 – Sections 42–47: Inspection, Investigation, Directions and Delegation

Section	Provision	Purpose	Detailed Explanation / Procedure
Section 42	Power to call for information or document	Gives an authorised inspecting officer additional powers during an inspection under Section 23.	An inspecting officer referred to in Section 23, if authorised by the Central Government, can seek information, documents and explanations necessary to determine whether an FCRA contravention has occurred.
Section 43	Investigation into cases under the Act	Provides a separate statutory investigation mechanism for FCRA offences.	The Central Government may specify an authority to investigate offences punishable under the FCRA. That authority has the powers of an officer-in-charge of a police station while investigating a cognizable offence, notwithstanding the Code of Criminal Procedure.
Section 44	Returns by prescribed authority to Central Government	Ensures reporting and administrative oversight.	The prescribed authority must provide the Central Government with the required returns and statements at the prescribed time and in the prescribed form and manner.
Section 45	Protection of action taken in good faith	Protects government authorities and officers from certain legal proceedings for bona fide actions under the Act.	No suit or other legal proceeding can be brought against the Central Government, the authority referred to in Section 44, or its officers for loss or damage caused or likely to be caused by anything done or intended to be done in good faith under the FCRA, rules or orders.
Section 46	Power of Central Government to give directions	Enables the Central Government to ensure effective implementation of the Act.	The Central Government may issue necessary directions to any other authority or any person/class of persons concerning the implementation of the FCRA.
Section 47	Delegation of powers	Allows the Central Government to distribute certain statutory powers/functions to other authorities.	By notification, the Central Government may direct that any of its powers or functions under the Act may also be exercised or discharged by a specified authority, subject to specified matters and conditions. Exception: the power to make rules under Section 48 cannot be delegated under this provision.

Section 42 – Power to Call for Information or Document

Point	Details
Who exercises the power?	An inspecting officer under Section 23 who is authorised by the Central Government for this purpose.
When can the power be exercised?	During an inspection of accounts or records in connection with a suspected contravention of the FCRA.
Who may be inspected?	Political party, person, organisation or association covered by Section 23.
Purpose	To determine whether there has been a contravention of the FCRA, rules or orders made under it.
Power (a)	Call for information from any person.
Power (b)	Require any person to produce or deliver a document or thing useful or relevant to the inspection.
Power (c)	Examine any person acquainted with the facts and circumstances relevant to the inspection.

Section 42 – Three Main Powers

Clause	Power	Simple Meaning
42(a)	Call for information	Ask a person for relevant information.
42(b)	Require documents/things	Demand production or delivery of relevant documents or things.
42(c)	Examine persons	Question a person familiar with the facts of the case.

Simple Flow

Section 23 Inspection
↓
Authorised Inspecting Officer
↓
Information / Documents / Relevant Things / Persons
↓
Examination of possible FCRA contravention

Section 43 – Investigation into Cases under the Act

Point	Details
Purpose	Investigation of offences punishable under the FCRA.
Who specifies the investigating authority?	Central Government
Nature of power	Statutory investigation power.
Important provision	It operates notwithstanding anything contained in the Code of Criminal Procedure, 1973.
Powers available	The specified authority has the powers of an officer-in-charge of a police station while investigating a cognizable offence.
Scope	Applies to offences punishable under the FCRA.
Importance	It provides the investigating authority with substantial investigative powers similar to those available in investigation of a cognizable offence.

Section 43 – Easy Flow

FCRA offence
↓
Central Government specifies investigating authority
↓
Authority investigates
↓
Powers equivalent to police station officer investigating cognizable offence

Section 44 – Returns by Prescribed Authority

Point	Details
Who has the duty?	The prescribed authority.
To whom are returns submitted?	Central Government.
What is submitted?	Returns and statements.
When?	At the time prescribed under the applicable rules.
How?	In the form and manner prescribed.
Purpose	Reporting, monitoring and administrative supervision under the FCRA.

Easy Formula

Prescribed Authority → Returns & Statements → Central Government → Prescribed time/form/manner

Section 45 – Protection of Action Taken in Good Faith

Point	Details
Purpose	Protection for bona fide actions taken under the FCRA.
Who is protected?	Central Government, Section 44 authority and its officers.
What is protected?	Acts done or intended to be done in good faith under the FCRA, rules or orders.
What legal proceedings are protected against?	Suit or other legal proceedings.
What type of harm is covered?	Loss or damage caused or likely to be caused by the protected act.
Important limitation	The protection is linked to actions done or intended to be done in good faith.

Key Point

Section 45 does not provide a blanket protection for every act. Its protection is specifically connected with acts done or intended to be done in good faith under the FCRA, rules or orders.

Section 46 – Power of Central Government to Give Directions

Point	Details
Who gives directions?	Central Government
To whom?	Any other authority or any person/class of persons.
Purpose	To ensure effective implementation of the provisions of the FCRA.
Nature of power	Administrative/directional power.
Scope	Directions may be given as the Central Government considers necessary for carrying the Act into execution.

Simple Flow

Need for implementation
↓
Central Government
↓
Direction
↓
Authority / Person / Class of Persons
↓
Execution of FCRA

Section 47 – Delegation of Powers

Point	Details
Who can delegate?	Central Government
Method	By notification.
What can be delegated?	Powers or functions of the Central Government under the FCRA.
To whom?	Such authority as may be specified in the notification.
Conditions	Delegation can be limited by specified matters and conditions.
Important exception	The power to make rules under Section 48 cannot be delegated under Section 47.
Purpose	To facilitate effective and practical administration of the Act by distributing functions to appropriate authorities.

Key Difference: Section 46 vs Section 47

Section 46	Section 47
Power to give directions	Power to delegate powers/functions
Central Government directs authorities/persons	Central Government authorises another authority to exercise specified powers/functions
Focus = Implementation through directions	Focus = Administrative delegation

Table 2 – Section 48: Power to Make Rules

Section 48 – General Rule-Making Power

Point	Details
Who makes rules?	Central Government
Method	By notification
Purpose	To carry out the provisions of the FCRA.
Nature	Delegated/subordinate legislation.
Scope	Section 48(2) gives specific examples of matters that may be dealt with by rules.
Residual clause	Rules may also provide for any other matter that is required to be or may be prescribed.

Section 48(2) – Matters for Which Rules May Be Made

Clause	Subject Matter	What the Rules May Prescribe
48(2)(a)	Value of article	Value of article referred to under Section 2(1)(h)(i).
48(2)(b)	Authority under Section 2(1)(p)	Authority that may be specified for the statutory purpose referred to in Section 2(1)(p).
48(2)(c)	Gifts/presentations	Acceptance or retention of gifts or presentations under Section 4(d).
48(2)(d)	Political nature organisation	Guidelines for determining when an organisation may be specified as an organisation of political nature under Section 5(1).
48(2)(e)	Speculative business	Activities or business treated as speculative business under Section 8(1)(a).
48(2)(f)	Administrative expenses	Elements and method for calculating administrative expenses under Section 8(2).
48(2)(g)	Foreign contribution intimation	Time and manner for furnishing information regarding foreign contribution under Section 9(c).
48(2)(h)	Foreign hospitality	Time and manner for furnishing information regarding foreign hospitality under Section 9(e).
48(2)(i)	Service of Section 10 order	Manner in which a copy of the Central Government’s order is served.
48(2)(j)	Registration/prior permission application	Form and manner of application under Section 12(1).
48(2)(k)	Application fee	Fee accompanying Section 12(1) application.
48(2)(l)	Registration/prior permission conditions	Terms and conditions for grant of certificate or prior permission under Section 12(4)(g).
48(2)(m)	Utilisation of foreign contribution	Manner of utilisation under Section 13(2)(b).
48(2)(n)	Vesting of foreign contribution	Authority with whom foreign contribution is to be vested under Section 15(1).
48(2)(o)	Management of foreign contribution	Period and manner for management of foreign contribution under Section 15(2).
48(2)(p)	Renewal application	Form and manner for application for renewal under Section 16(2).
48(2)(q)	Renewal fee	Fee accompanying renewal application.
48(2)(r)	Foreign remittance reporting	Prescribed amount, form, manner and reporting requirements for foreign remittance received by banks/authorised persons in foreign exchange under Section 17(2).
48(2)(s)	Intimation under Section 18	Time and manner in which registered persons/prior-permission holders give intimation.
48(2)(t)	Accounts	Form and manner of maintaining accounts of foreign contribution and its utilisation under Section 19.
48(2)(u)	Election candidate intimation	Time and manner in which a candidate gives intimation under Section 21.
48(2)(v)	Disposal of assets	Manner and procedure for disposal of assets under Section 22.
48(2)(w)	Confiscation limits	Limits within which confiscation may be adjudged by the specified officer under Section 29(1)(b).
48(2)(x)	Revision application fee	Fee accompanying an application for revision under Section 32(5).
48(2)(y)	Compounding	Form, manner and fee for application for compounding under Section 41(4).
48(2)(z)	Returns and statements	Form, manner and time for returns/statements by prescribed authority under Section 44.
48(2)(za)	Other prescribed matters	Any other matter that is required to be or may be prescribed.

Section 48 – Easy Understanding

FCRA Act
↓
Central Government makes rules
↓
Rules provide practical details
↓
Registration + Accounts + Returns + Fees + Intimation + Procedures + Other prescribed matters

Section 49 – Orders and Rules to Be Laid Before Parliament

Point	Details
Orders covered	Every order made under Section 5.
Rules covered	Every rule made by the Central Government under the FCRA.
Where are they laid?	Before each House of Parliament.
When?	As soon as may be after the order/rule is made.
Parliamentary period	Total period of 30 days.
Sessions	The 30 days may be comprised in one session or two or more successive sessions.
Modification by Parliament	If both Houses agree to modify the order/rule before expiry of the relevant period, it thereafter operates in the modified form.
Disapproval by Parliament	If both Houses agree that the order/rule should not be made, it thereafter has no effect.
Past actions protected	Modification or annulment does not invalidate anything already done under the order/rule before such modification or annulment.

Section 49 – Parliamentary Control Flow

Central Government makes Section 5 order / Rule
↓
Laid before both Houses of Parliament
↓
Total 30 days
↓
Both Houses may agree to modification
→ Order/rule operates in modified form

Both Houses agree it should not be made
→ Order/rule ceases to have effect

Important: Previous actions remain protected.

Section 50 – Power to Exempt in Certain Cases

Point	Details
Who has the power?	Central Government
When can exemption be granted?	When the Government considers it necessary or expedient in the interests of the general public.
Method	By order.
Who can be exempted?	Any person, association or organisation other than a political party, or an individual other than a candidate for election.
Extent of exemption	Exemption may be from all or any provisions of the FCRA.
Conditions	The exemption can be subject to conditions specified in the order.
Modification	Government may modify the exemption order when necessary.
Revocation	Government may revoke the exemption order.
Frequency	The Government may revoke or modify the order as often as may be necessary.

Persons/Entities Excluded from Exemption

Category	Can be exempted under Section 50?
Person	Yes
Association	Yes
Organisation	Yes
Political party	No
Individual	Yes
Candidate for election	No

Section 50 – Simple Flow

General public interest requires exemption
↓
Central Government considers it necessary/expedient
↓
Order issued
↓
Person / Association / Organisation / eligible individual exempted
↓
Conditions may apply
↓
Order may later be modified or revoked

Section 51 – Act Not to Apply to Certain Government Transactions

Point	Details
Section	Section 51
Main rule	The FCRA does not apply to transactions covered by this provision.
Transactions covered	Transactions between the Government of India and the Government of any foreign country or territory.
Parties	Government of India + Government of a foreign country/territory.
Effect	Such government-to-government transactions are outside the operation of the FCRA.
Purpose	To distinguish ordinary regulated foreign contributions from official transactions between governments.

Section 51 – Simple Formula

Government of India ↔ Government of Foreign Country/Territory

= FCRA does not apply

Sections 42–51 – Master Revision Table

Section	Topic	Core Point
42	Power to call for information/document	Inspecting officer can seek information, documents/things and examine relevant persons.
43	Investigation	Central Government may specify an authority with powers of a police station officer investigating a cognizable offence.
44	Returns by prescribed authority	Prescribed authority submits returns/statements to Central Government in prescribed form/time/manner.
45	Good-faith protection	Protects specified government authorities/officers against certain proceedings for acts done in good faith.
46	Directions	Central Government may issue directions for carrying out the Act.
47	Delegation	Central Government may delegate powers/functions, but not rule-making power under Section 48.
48	Rules	Central Government may make rules to carry out the FCRA.
49	Laying before Parliament	Section 5 orders and FCRA rules must be laid before both Houses for a total of 30 days.
50	Exemption	Central Government may exempt eligible persons/associations/organisations from all or some provisions in general public interest, subject to conditions.
51	Government transactions	FCRA does not apply to transactions between Government of India and a foreign government/territory.

Frequently Asked Questions (FAQs) on FCRA, 2010

1. What is the FCRA, 2010?

The Foreign Contribution (Regulation) Act, 2010 regulates the acceptance and utilisation of foreign contribution and foreign hospitality in India.

2. What is the main objective of FCRA?

Its main objective is to regulate foreign contributions and ensure that they do not adversely affect national interest.

3. Who administers the FCRA?

The Central Government, primarily through the Ministry of Home Affairs (MHA), administers the FCRA framework.

4. What is foreign contribution under FCRA?

Foreign contribution generally includes donations, delivery or transfer of articles, currency or securities received from a foreign source, subject to the Act’s definitions and exceptions.

5. Who can receive foreign contribution?

Eligible persons, associations and organisations can receive foreign contribution after obtaining FCRA registration or prior permission, subject to the Act and applicable rules.

6. Is FCRA registration required to receive foreign contribution?

Generally, an eligible organisation must have FCRA registration or prior permission before receiving foreign contribution.

7. What is FCRA prior permission?

Prior permission is approval for receiving a specified foreign contribution for a specified purpose, generally involving a specified donor and recipient.

8. What is the difference between FCRA registration and prior permission?

Registration provides broader approval to an eligible organisation, whereas prior permission generally relates to a particular foreign contribution and specified purpose.

9. Can every organisation receive foreign contribution?

No. Only entities satisfying the requirements of the FCRA and not falling within prohibited categories can receive foreign contribution.

10. Can political parties accept foreign contribution?

Political parties are prohibited from accepting foreign contribution under the relevant provisions of the FCRA.

11. What is foreign hospitality under FCRA?

Foreign hospitality refers to specified expenses such as travel, boarding, lodging, transport or medical treatment provided by a foreign source, as covered by the Act.

12. What happens if FCRA provisions are violated?

Depending on the nature of the violation, consequences may include penalties, imprisonment, confiscation, suspension or cancellation of FCRA registration.

13. Can FCRA authorities inspect accounts and records?

Yes. Under Section 23, an authorised inspecting officer may inspect accounts or records where there are recorded grounds to suspect a contravention of the Act.

14. Can accounts, records or property be seized under FCRA?

Yes. The Act provides for seizure of accounts, records, articles, currency or securities in specified circumstances.

15. What is Section 33 of the FCRA?

Section 33 deals with making false statements or declarations and obtaining registration or prior permission through fraud, false representation or concealment of material facts.

16. What is Section 35 of the FCRA?

Section 35 provides punishment for accepting or assisting in the acceptance of foreign contribution in contravention of the Act, rules or orders.

17. What is Section 39 of the FCRA?

Section 39 deals with offences by companies and may make the company and responsible persons liable, subject to the conditions and defences provided by the Act.

18. Can FCRA offences be compounded?

Yes. Certain offences may be compounded before prosecution, subject to the conditions prescribed under Section 41.

19. Can the Central Government grant exemption under FCRA?

Yes. Under Section 50, the Central Government may exempt eligible persons, associations or organisations from all or some provisions in the general public interest, subject to specified conditions.

20. Does FCRA apply to government-to-government transactions?

No. Under Section 51, the Act does not apply to transactions between the Government of India and the government of a foreign country or territory.