Govt Revises Penalties Under FCRA Involving Receipt of Foreign Contributions by NGOs

The home ministry has revised the compounding penalties for a number of offences under the Foreign Contribution (Regulation) Act (FCRA), 2010, involving the receipt and utilisation of foreign contributions by non-governmental organisations, according to a gazette notification.

The orders were notified by the ministry on Monday under powers conferred by section 41(1) of the Act.

The penalty for defraying foreign contributions beyond 20% of the contributions received for administrative expenses, in contravention of section 8 of the Act, will be ₹1 lakh or 5% of the amount spent beyond the limit, whichever is higher, the notification said.

The utilisation of foreign contribution in speculative activities, in contravention of section 8(1) of the Act read with rule 4 of the Foreign Contribution (Regulation) Rules, 2011, will now attract a penalty of ₹1 lakh or 30% of the amount invested in such activities, whichever is higher. In addition, 100% of the returns earned therefrom shall be recovered, the notification said.

In case a foreign contribution was utilised for purposes other than those for which it was received, a penalty of 30% of the amount utilised for purposes other than the purpose for which such foreign contribution was received, or ₹1 lakh, whichever is higher, shall be levied, it added.

A similar penalty will also be slapped in cases of accepting or utilising foreign contributions in contravention of the Act, or utilising the funds for a purpose or in a state or a Union Territory for which registration has not been granted, it said.

In a separate notification on Monday, the government also amended the rules for receiving foreign funds, requiring NGOs to choose from a predefined list of purposes and their areas of operation, allowing a range of faith-based activities, while explicitly excluding proselytisation from several categories eligible for registration under the Act.

The ministry also said any association having foreign nationals, other than those of Indian origin, as its key functionaries will "ordinarily not be considered" for the grant of registration or prior permission to receive foreign funds under the Act.

The amended rules carved an exception, allowing the government to specify such cases or circumstances through an order in which foreign nationals may be permitted to be "key functionaries" of an association for registration or prior permission under the FCRA, the notification said.

The government has notified a number of amendments in the FCRA Rules, 2011, tightening the accountability for how NGOs and other associations in India receive and use foreign money.

The amendments have broadened the definition of "key functionary in relation to a person other than an individual" to cover a wide range of roles, including company directors, partners in firms, trustees, the "Karta" of a Hindu Undivided Family and any person who has control over the management of the association.

The government has introduced a new clause wherein NGOs seeking registration for receiving foreign funds will have to specify the exact purpose and the states and Union territories of its operations.

"Every application for registration shall mention the purpose or purposes for which registration is sought, chosen only from such list of purposes as specified in the Schedule appended to these rules; and the states or Union territories in which the association proposes to undertake the activities," the notification said.

The details shall be specified on the certificate issued to the NGO, it added.

The applicants must now choose their activities from a "Schedule" provided in the rules, covering religious, cultural, economic, educational and social categories as purposes.

Under the religious purposes, various activities have been listed, ranging from construction, renovation and maintenance of religious places, religious education to promotion of devotional music, among others.

The rules specify that three purposes -- religious education, documentation of faith traditions and preservation of indigenous beliefs -- must be carried out "excluding proselytisation".

The condition has also been mentioned in the "documentation, preservation and revival of indigenous and tribal faith practices, rituals and systems of worship" and "conduct of religious education, moral instruction, satsangs, discourses and meditation retreats".

The NGOs receiving foreign funds must also now provide details of their social-media accounts in their applications for registration or renewal under the FCRA.

The rules give all associations registered before 2026 one year to disclose their specific purposes to the government and state what they want to keep in their registration.

The government has also introduced a fee structure under the amended rules, according to which an additional Rs 300 will be charged for each additional state or purpose added to the application.

To prevent inactive NGOs from holding on to licences, the government has introduced a minimum spending limit of Rs 10 lakh on foreign contributions for their chosen activities over the last two financial years.

For an NGO to renew its registration or avoid cancellation, it must have spent the amount of foreign contribution over the last two years on its chosen activities.

For the NGOs receiving foreign funds for a specific purpose under "Prior Permission", the second or any later instalment of funds will only be released after it has utilised at least 75% of the previous instalment, the notification said.

The government will conduct a field inquiry to verify the utilisation, it said.

If money comes through "intermediary remittance vehicles" or "donor advised funds", the NGOs must disclose the ultimate donors (the original source of the money) in their applications.

Annual returns must now include a "detailed activity report" alongside financial statements, the rules said.

The NGOs will have to declare if any books or articles have been published by them or their key, as they are prohibited from producing or broadcasting "news or current affairs".