Foreign Contribution Regulation in India: A Practical Guide to India’s 2026 Foreign Contribution Rules

Foreign contribution has long occupied a unique space in India’s regulatory landscape. While overseas philanthropic and development capital can play a significant role in supporting social, educational, cultural, economic, and charitable initiatives, it also raises questions of accountability, transparency, and regulatory oversight. Any individual, association, trust, society, or company that receives money, goods, or securities from abroad has to work within a strict framework built around a simple idea: foreign contribution may be accepted and used only by registered recipients, only for approved purposes, and only through a controlled banking channel.

India’s engagement with foreign philanthropic and development capital is governed by the Foreign Contribution (Regulation) Act, 2010, and the Foreign Contribution (Regulation) Rules, 2011. Under this framework, a single registration has enabled an organisation to receive foreign contribution and apply it across a range of causes and locations, supported by periodic reporting and oversight.

As the sector has grown and funding routes have become more varied, the framework has been periodically updated. On 22 June 2026, the Government notified a significant set of changes that tie registration to specific purposes and locations, set a concrete test of genuine activity, tighten oversight of how funds are received and spent, and revise the amounts payable to settle certain offences.

The Foreign Contribution (Regulation) Amendment Rules, 2026, read with a revised compounding notification, refine it further — linking registration to defined purposes and states, introducing the concept of “key functionaries”, and setting a measurable benchmark of activity.  Collectively, these changes reflect the Government’s continuing effort to bring greater precision, consistency, and oversight to the regulation of foreign contribution in India.

Q1. What counts as “foreign contribution”, and what is left out?

Foreign contribution means any money, goods, or securities that a foreign source gives, delivers, or transfers to a person or organisation. It covers foreign currency and also Indian currency, so long as the money comes from a foreign source. It covers most articles as well, although an article given purely as a personal gift stays outside the definition if its market value in India is within the limit the Government fixes from time to time. Shares and other securities, including foreign securities, are covered too.

If foreign contribution passes through one or more intermediaries before reaching the final recipient, it is still treated as foreign contribution. Interest earned on foreign contribution, or any other income arising from it, is itself treated as foreign contribution. Genuine commercial receipts are left out: money received as a fee, or as the cost of goods or services supplied in the ordinary course of business — such as fees charged by an Indian institution to a foreign student — is not foreign contribution.

Q2. What is a “foreign source”, and does money from an NRI or an OCI count?

A foreign source includes the government of any foreign country and its agencies. It includes most international agencies, but the United Nations and its specialised agencies, the World Bank, the International Monetary Fund, and any other agency the Government specifically notifies are excluded. Foreign companies, foreign corporations, and multi-national corporations are foreign sources, as are foreign trusts, foreign foundations, foreign trade unions, and societies or clubs formed outside India. A citizen of a foreign country is also a foreign source. An Indian company can even be treated as a foreign source where more than half of its share capital is held by foreign governments, foreign citizens, or foreign entities, unless that holding stays within the limits allowed for foreign investment under the foreign-exchange law.

Because the test turns on nationality rather than on where a person lives, a gift from an Indian citizen living abroad is generally not foreign contribution, as an Indian citizen is not a foreign source. A contribution from a person who holds foreign citizenship, however — including a person of Indian origin or an Overseas Citizen of India cardholder who has taken foreign nationality — is foreign contribution.

Q3. Is government registration required to receive foreign funds? Can organisations operate without it?

Any person or organisation that has a definite cultural, economic, educational, religious, or social programme must obtain a certificate of registration from the Central Government before accepting foreign contribution. An organisation that cannot yet meet the conditions for full registration can instead seek one-time prior permission to receive a specific amount from a specific foreign source. That prior permission is valid only for the specific purpose and the specific source for which it is granted.

The application for registration or prior permission is made to the Central Government in the prescribed form and with the prescribed fee. Registration is granted only if the organisation meets set eligibility conditions — for example, it must not be fictitious, must not have been prosecuted for wrongful religious conversion or for diverting funds, and must have undertaken reasonable activity in its chosen field. Accepting foreign contribution without either registration or prior permission is not permitted. The word “person” here is wide, covering individuals, Hindu undivided families, associations, and companies, so the requirement is not limited to NGOs alone.

Q4. Who is completely prohibited from receiving foreign contribution?

Some categories cannot accept foreign contribution at all, whether or not they register. These include candidates for election and members of any legislature. They include correspondents, columnists, cartoonists, editors, owners, printers, and publishers of registered newspapers. They include judges, government servants, and employees of any corporation or other body controlled or owned by the Government. They include political parties and their office-bearers, and organisations of a political nature notified by the Government.

They also include any association or company engaged in producing or broadcasting audio or audio-visual news or current-affairs programmes through any electronic or other mass-communication mode, along with its correspondents, columnists, editors, and owners. No one may accept foreign contribution on behalf of any of these barred persons either. A few genuine receipts are treated as exceptions — such as salary, payment in the ordinary course of business, a gift from a relative, a scholarship, or a remittance received through normal banking channels.

Q5. Which bank account must foreign contribution be received into?

Every registered organisation, and every organisation holding prior permission, must receive all foreign contribution into a single designated account called the “FCRA Account”. This account has to be opened in the specified branch of the State Bank of India in New Delhi that the Government notifies for this purpose.

After the money is received there, the organisation may open another “FCRA Account” in a scheduled bank of its choice to keep or use the funds. It may also open one or more further accounts in scheduled banks to which the foreign contribution can be transferred for use. No money other than foreign contribution may be received or deposited in the designated account. The designated account has to be opened, and its details given, at the time of applying for registration or prior permission.

Q6. What can foreign contribution be used for, and how much can go to administrative costs?

Foreign contribution must be used only for the purposes for which it was received. It cannot be used for speculative business. Speculative activity includes investments carrying a risk of market-linked gain or loss, such as mutual funds and shares, and schemes promising high returns like chit funds or land not tied to the organisation’s stated objectives. A debt-based secure investment is not treated as speculative.

Out of the foreign contribution received in a financial year, not more than twenty per cent may be spent on administrative expenses. Spending more than that on administration needs the prior approval of the Central Government. Administrative expenses cover items such as salaries of management personnel, office rent, utilities, and the cost of running the office, while direct programme costs — like the salaries of doctors in a hospital or teachers in a school — are excluded. Foreign contribution received by a registered organisation cannot be passed on to any other person.

Q7. How long is registration valid, how is it renewed, and what is the new minimum-activity test?

A certificate of registration is valid for five years. To keep it in force, an organisation must apply for renewal within the six months before it expires. The renewal application is made in the prescribed form with the prescribed fee, and a renewed certificate is normally granted for a further five years. Before renewing, the Government may inquire into whether the organisation still meets all the eligibility conditions.

A 2026 change now sets a concrete test of genuine work: for both renewal and cancellation, an organisation is treated as having carried out “reasonable activity” only if it has used at least ten lakh rupees of foreign contribution over the previous two financial years for its stated purpose. Only activity funded out of foreign contribution counts towards this test. An organisation that has not carried out reasonable activity for two consecutive years, or has become defunct, can have its registration cancelled. After a cancellation, the organisation cannot apply again for three years.

Q8. Under the June 2026 amendments, how is registration tied to specific purposes and states, what compliance measures must existing registered entities undertake to align with the revised framework?

Under the 2026 changes, a certificate of registration now specifies the exact purpose or purposes and the states or union territories for which registration is granted. Every application for registration must state the purposes for which it is sought, chosen only from an official list of purposes set out in a Schedule to the rules, and the states or union territories where the organisation proposes to work. That Schedule groups the permitted purposes into broad fields such as religious, cultural, economic, educational, and social activities.

An organisation that was already registered before these changes came into force must, within one year, tell the Central Government the purposes and the states or union territories for which it wishes to keep its registration. That intimation is filed in a dedicated form. Foreign contribution must then be used only for those approved purposes and only in those approved areas. The changes were notified on 22 June 2026 and took effect on that date.

Q9. Do additional states or purposes attract higher fees? What mechanism is prescribed for subsequently expanding or modifying the scope of an existing registration?

The base registration fee now covers only one state or union territory and one purpose. Each additional state or union territory attracts an extra fee of three hundred rupees, and each additional purpose attracts a further three hundred rupees.

An organisation that later wishes to add or drop a purpose, or a state or union territory, must apply for that change in a dedicated form. The application has to be accompanied by a resolution of the governing body approving it and by the prescribed fee. The Central Government may approve or reject that application after making such inquiry as it thinks fit.

The 2026 rules also introduce a defined class of “key functionaries”, including directors, partners, trustees, the karta of a Hindu undivided family, and office-bearers or governing-body members. An organisation whose key functionaries are foreign nationals, other than persons of Indian origin, will ordinarily not be granted registration or prior permission. The Central Government may, however, allow foreign nationals to be key functionaries in the cases and on the conditions it specifies by order.

Q10. How is the use of foreign contributions monitored under the 2026 framework? What are the consequences of a breach?

The 2026 rules confirm that foreign contributions may be used only for activities carried out in India, in line with the organisation’s stated objectives. Where funds come under prior permission in instalments, the next instalment is released only after at least seventy-five per cent of the previous instalment has been used and after a field inquiry into that use. The request for the next instalment is made in a dedicated application form.

Every organisation must give the Government intimation of the foreign contribution it receives and how it is used. It must file an annual return each year and keep separate accounts of foreign contribution and its utilisation. The annual return must now also carry a detailed activity report.

Breaking the rules can lead to suspension and then cancellation of the registration. Contraventions are punishable, and where no specific punishment is provided a residual penalty applies. Many offences can instead be settled by paying a fixed amount, known as compounding, and the Government revised those amounts in June 2026.

Disclaimer: This FAQ is intended for general information only and reflects the position as on 22 June 2026, when the Foreign Contribution (Regulation) Amendment Rules, 2026 and the related compounding notification were published. It is not legal advice and should not be relied upon in place of tailored professional guidance on a specific situation. AK & Partners, including its partners and associates, accepts no responsibility or liability for any loss or consequence arising from reliance on the contents of this FAQ.

For further queries or details, you may contact:

Ms. Kritika Krishnamurthy

Founding Partner

AK & Partners

info@akandpartners.in