What is FCRA and Which NGOs in India Need It?

An international donor wants to fund your NGO's community project. A foreign company approaches your trust for a charitable contribution. A non-resident Indian living in the UK wants to donate to your temple's building fund. In all three cases, before you can accept a single rupee, you need to ask one question: does your organisation have FCRA registration?

The Foreign Contribution (Regulation) Act, 2010 — commonly called FCRA — is the central law governing the receipt and use of foreign funds by Indian organisations. It is administered by the Ministry of Home Affairs (MHA), not the Income Tax department. And unlike Section 12A or 80G, it operates on an entirely different compliance track.

This guide explains what FCRA is, who actually needs it, who is specifically exempted, how to apply, and what the 2020 amendments changed — including some provisions that caught many NGOs off guard.

What FCRA regulates

FCRA does not prohibit foreign donations. It regulates them. The law requires that:

1. Any organisation receiving foreign contributions must be registered under FCRA or must have obtained prior permission from MHA for a specific donation
2. Foreign funds must flow only through a designated FCRA bank account maintained at a specific branch
3. Foreign funds must be used only for the purposes declared in the FCRA application
4. Annual returns must be filed with MHA reporting all foreign funds received and spent

"Foreign contribution" under FCRA means any article, currency or security given by a foreign source. A "foreign source" includes:

• Any individual who is not a citizen of India
• Any foreign company, trust, foundation or association
• Any international organisation (UN agencies, World Bank, etc.)
• Any Indian company that is majority-owned (more than 50%) by foreign entities
• Foreign governments and their agencies

Who needs FCRA registration?

You need FCRA registration if your organisation:

• Has received, or intends to receive, any foreign contribution from a foreign source
• Plans to apply to foreign governments, foundations or CSR arms of foreign companies for grants

Types of organisations that commonly require FCRA registration:

• NGOs receiving international grants from foundations such as Ford Foundation, Bill & Melinda Gates Foundation, USAID-funded programmes, EU grants
• Religious institutions receiving donations from Indian diaspora abroad when those donations come through foreign bank accounts or foreign payment gateways
• Charitable trusts accepting CSR funds from foreign-majority Indian companies
• Research organisations and think tanks receiving foreign funding
• Educational institutions receiving foreign donations or scholarships

Who is specifically prohibited from FCRA registration?

Section 3 of FCRA prohibits certain categories of organisations from receiving foreign contributions entirely — registration is not possible for:

• Political parties and their functionaries
• Members of the Legislature (MPs and MLAs) and candidates for legislative elections
• Judges and government servants in their personal capacity
• Media organisations — newspapers, news channels, news agencies, unless specifically exempted
• Organisations of a clandestine or unlawful nature as determined by MHA

Prior permission vs registration — what is the difference?

FCRA offers two routes to receive foreign funds:

1. FCRA Registration (FC-3A) This is the standard route for established organisations. A registered organisation can receive foreign contributions from any eligible foreign source, for any purpose consistent with its stated objectives. Registration is valid for 5 years and must be renewed.

Eligibility criteria for registration:

• The organisation must be in existence for at least 3 years
• It must have spent at least ₹15 lakh on its charitable or religious activities during the preceding 3 years (excluding administrative expenses)
• It must have filed audited accounts and activity reports for the preceding years

2. Prior Permission (FC-3B) For organisations that do not yet meet the 3-year / ₹15 lakh threshold, or for organisations receiving a specific one-time grant, Prior Permission can be obtained for a particular foreign contribution from a particular source for a particular purpose.

Prior permission is project-specific and source-specific — if you later receive funds from a different foreign source for a different project, you need fresh prior permission (or must obtain full registration by then).

The designated FCRA bank account — a critical requirement

One of the most consequential provisions of the FCRA Amendment Act 2020 is the mandatory designated bank account rule:

All foreign contributions must be received only in a FCRA-designated account at the State Bank of India, Main Branch, New Delhi (IFSC: SBIN0000691).

This is not a recommendation. It is mandatory for all FCRA-registered organisations. Even if your organisation's primary bank is HDFC or ICICI or a cooperative bank, all incoming foreign funds must first arrive at the SBI New Delhi Main Branch FCRA account.

From this account, you may transfer funds to your regular operational account (your "utilisation account") at any scheduled commercial bank for day-to-day use.

The FCRA 2020 Amendments — key changes every NGO must know

The Foreign Contribution (Regulation) Amendment Act, 2020 introduced several significant changes that affected thousands of NGOs.

1. Mandatory SBI New Delhi designated account

As described above — all foreign inflows must come through the SBI Main Branch, New Delhi account. Previous accounts at other banks or other SBI branches are no longer valid designated accounts.

2. Administrative expense cap reduced to 20%

Prior to 2020, FCRA-registered organisations could spend up to 50% of foreign contributions on administrative expenses (salaries, rent, utilities, management costs). The 2020 amendment reduced this cap to 20%.

This has significantly impacted NGOs with high administrative costs. If your NGO receives ₹1 crore in foreign funds, only ₹20 lakh can go towards administrative costs — ₹80 lakh must be applied to programme activities.

3. No sub-granting to other organisations

FCRA-registered organisations can no longer transfer received foreign funds to another Indian organisation — even if that organisation is also FCRA-registered. Previously, "umbrella" grantee organisations could receive FCRA funds and distribute them to smaller grassroots NGOs.

This provision has significantly disrupted funding chains for smaller organisations that relied on FCRA-registered intermediary grantees.

4. Public servant association prohibition

Persons currently employed with the government — including elected representatives — are prohibited from being members or office-bearers of FCRA-registered organisations.

5. Aadhaar mandatory for all office bearers

All key functionaries (trustees, directors, office bearers) of an FCRA applicant must provide their Aadhaar numbers. Foreign nationals associated with the organisation must provide a copy of their passport.

How to apply for FCRA registration — online process

FCRA applications are filed on the MHA FCRA portal: fcraonline.nic.in

Step 1: Create an account Register on the FCRA portal using your organisation's email and mobile number.

Step 2: Open the SBI FCRA account Before applying, open a designated account at SBI Main Branch, New Delhi. Visit the nearest SBI branch and request an FCRA account (SB account under FCRA category). The account opening letter from SBI is required for the application.

Step 3: Fill Form FC-3A (for registration) or FC-3B (for prior permission) Enter organisation details, objectives, trustee/director information, Aadhaar details, and the details of the proposed or received foreign contribution.

Step 4: Upload documents Required documents include:

• Registration certificate of the organisation (trust deed, society registration, or company incorporation)
• Section 12A registration certificate (if applicable)
• PAN of the organisation
• Audited accounts for the last 3 years
• Activity report for the last 3 years
• SBI FCRA account opening confirmation
• Aadhaar and PAN of all key office bearers

Step 5: Pay the application fee Application fees are paid online. Currently: ₹500 for Prior Permission (Form FC-3B) and ₹2,000 for Registration (Form FC-3A).

Step 6: Submit and track After submission, MHA processes the application. Processing timelines vary significantly — typically 3 to 6 months for registration, sometimes longer. Applications may be sent back for additional documents.

Annual FCRA compliance

FCRA registration comes with mandatory annual filings.

Annual Return — Form FC-4

Every FCRA-registered organisation must file Form FC-4 annually by 31st December of the following financial year. The form reports:

• Total foreign contribution received during the year
• Details of each foreign source (name, country, amount, purpose)
• How the funds were applied (programme-wise expenditure)
• Closing balance of the FCRA account

Organisations that received no foreign contribution in a year must still file a nil return.

Penalty for late filing: ₹100 per day of delay. For missed filings, MHA may cancel the FCRA registration.

Audited accounts

FCRA accounts must be separately audited and the audited statements submitted with Form FC-4. The FCRA audit is separate from your income tax audit (ITR-7) though often done by the same CA.

Prior intimation for large receipts

If your organisation receives foreign contribution exceeding ₹1 crore in a financial year from a single foreign source, you must file prior intimation with MHA before the funds arrive.

FCRA renewal — every 5 years

FCRA registration is valid for 5 years from the date of grant. You must apply for renewal using Form FC-3C at least 6 months before expiry.

If you miss the renewal deadline and your registration expires, you must stop receiving foreign contributions immediately and apply for fresh registration — which means going through the full process again and waiting 3 to 6 months.

Do temples specifically need FCRA?

This is a common question. The answer depends entirely on the source of the donation.

A temple receiving donations from devotees visiting from the USA, UK or Australia — but making the donation in INR through Indian bank accounts or UPI — is generally not receiving "foreign contribution" as defined under FCRA. The nationality of the donor matters less than whether the funds originate from a foreign account or foreign source.

However, a temple receiving funds transferred from a foreign bank account — even from an NRI devotee's overseas account — is receiving foreign contribution and requires either FCRA registration or prior permission.

If your temple has a strong diaspora community making online donations from abroad, consult a CA or legal advisor to determine whether FCRA registration is necessary before accepting those funds.

How FCRA compliance connects to your accounting

FCRA funds must be accounted for separately from domestic donations. Your books must clearly distinguish:

• Domestic donations (regulated under Section 12A/80G)
• Foreign contributions (regulated under FCRA)

Mixing them — even accidentally — is a compliance violation. This is why FCRA-registered organisations maintain at least two separate bank accounts and two separate ledgers.

Managing these records accurately requires a systematic approach to expense tracking and financial reporting. The audit trail for FCRA funds is more stringent than for domestic donations — every foreign receipt must be traceable to the specific source, purpose and FCRA account.

For organisations managing both domestic and FCRA compliance, also see our guide on how to prepare for the annual trust audit.