Foreign Contribution (Regulation) Act (FCRA): Revised Penalties and Accountability Rules

Key facts

• The Ministry of Home Affairs (MHA) revised compounding penalties under the Foreign Contribution (Regulation) Act (FCRA), 2010, for non-governmental organisations (NGOs).
• Penalties for administrative expenses exceeding 20% are ₹1 lakh or 5% of the excess amount, while speculative activities attract ₹1 lakh or 30% of the invested amount (whichever is higher) plus 100% recovery of returns.
• Utilising funds for purposes other than those received, or in unregistered states/Union Territories, attracts a penalty of ₹1 lakh or 30% of the amount utilised, whichever is higher.
• The definition of key functionary now includes company directors, partners in firms, trustees, the Karta of a Hindu Undivided Family, and any person with management control.
• Applicants must choose purposes from a Schedule covering religious, cultural, economic, educational, and social categories, with proselytisation excluded from religious education, documentation of faith traditions, preservation of indigenous beliefs, indigenous/tribal faith practices, and conduct of religious education, moral instruction, satsangs, discourses, and meditation retreats.
• To renew registration or avoid cancellation, NGOs must have spent a minimum of ₹10 lakh on foreign contributions over the last two financial years.
• For funds received under Prior Permission, subsequent instalments are released only after 75% utilisation of the previous instalment, verified by field inquiry.
• New requirements include disclosing social-media accounts, identifying ultimate donors for intermediary remittance vehicles, and submitting a detailed activity report with annual returns.
• A fee of ₹300 is charged for each additional state or purpose added to the application.