Foreign Contribution explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Once a society holds an FCRA certificate or prior permission, the Foreign Contribution (Regulation) Act, 2010 and the Rules govern where the money may be received, what it may be used for, what must be reported and when. This article sets out those duties for a registered society, from receipt through utilisation to reporting and renewal, and the points where the society's governing body is involved. The ledger behind these duties is the part our books of accounts and compliance service handles.
It is written as per the Foreign Contribution (Regulation) Act, 2010 read with the Amendment Act, 2020, and the Foreign Contribution (Regulation) Rules, 2011 as amended by the notifications named in this article (latest consulted: S.O. 3272(E) dated 22 June 2026). Later amendments, notifications and Ministry of Home Affairs orders should be checked. Society law is a separate law and is not described here. For registration itself, see our article on FCRA registration for a society.
Receipt: only in the FCRA Account, into which no other funds may be deposited (section 17). No transfer to any other person (section 7). Utilisation: for the purposes for which it was received, no speculative business, administrative expenses not above twenty per cent. unless approved in advance (section 8), and only for activities in India. Reporting: utilisation accounts and changes within forty five days, the annual return in Form FC-4 within nine months, renewal within six months before expiry. The governing body's members are key functionaries.
Receipt
One designated account. Section 17(1) requires a person with a certificate or prior permission to receive foreign contribution only in an account designated "FCRA Account", opened in the branch of the State Bank of India at New Delhi that the Central Government specifies by notification. The notification is not in the texts consulted and no branch is named here. A society may open another FCRA Account in a scheduled bank of its choice to keep or utilise the contribution, and one or more accounts to which it transfers for utilising it. No funds other than foreign contribution may be received or deposited in any such account. Banks and authorised persons report to the Central Government under section 17(2), and under rule 16 within forty-eight hours of any transaction of receipt or utilisation. See section 17 and rule 16.
Interest and income. Interest accrued on foreign contribution and other income derived from it is deemed to be foreign contribution (section 2(1)(h), Explanation 2).
Persons barred from accepting. Section 3 lists persons who may not accept foreign contribution, among them a candidate for election, a member of a Legislature, a political party and its office-bearer, and a public servant, Judge or Government servant; see section 3.
No onward transfer. Section 7, as substituted in 2020, bars a registered person that receives foreign contribution from transferring it to any other person, and has no proviso. This is the section to read before any grant to another society, a federation or a field unit. See section 7.
Utilisation
| Duty | Provision | What it says |
|---|---|---|
| Purposes received for | Section 8(1)(a) | Utilise the contribution for the purposes for which it was received |
| No speculative business | Section 8(1)(a) proviso, rule 4 | Contribution and income from it not used for speculative business. Rule 4(1) treats as speculative an activity or investment with a risk of appreciation or depreciation linked to market forces, including mutual funds or shares, and participation in a scheme promising high returns not linked to the aims; a debt-based secure investment is not speculative; a separate register of investments is kept and submitted for audit |
| Administrative expenses | Section 8(1)(b), rule 5 | Not more than twenty per cent. of the contribution received in a financial year, unless the Central Government approves in advance. Rule 5 lists items including remuneration and travel of key functionaries, hired personnel, consumables, accounting and administering funds, vehicles, report writing, professional charges and rent |
| Carry forward | Rule 5, third proviso (from 1 January 2025) | The unspent part of allowable administrative expenses may be carried forward to the next financial year, for reasons mentioned in Form FC-4 |
| Purposes and States on the certificate | Rule 9(1B)(a) | Registration specifies the purposes and the States or Union territories |
| Use in India | Explanation 2 after rule 9(5) | Utilised only for activities in India in line with the association's stated objectives and the purposes for which received |
| Separate accounts | Section 19, rule 11 | A separate set of accounts and records, exclusively for foreign contribution |
| New utilisation account | Rule 9(1)(e), (2)(e) | Form FC-6D within forty five days of opening |
The 2026 notification changed the words in rule 5(i) and (iii) from members of the Executive Committee or Governing Council to "key functionaries". See section 8, rule 4 and rule 5. Our books of accounts and compliance team builds the ledger so that each of these limits can be read off it.
The governing body and changes
Rule 2(1)(ca)(v) makes an office bearer or member of the governing body, managing committee or other controlling authority of a society a key functionary. Three duties follow.
- Changes to be intimated. Rule 17A requires intimation in electronic form within forty five days of any change in name or address (FC-6A), nature, aims and objects and registration with local or relevant authorities (FC-6B), the designated FCRA bank account (FC-6C), a utilisation bank (FC-6D), and office bearers or key functionaries (FC-6E). A change is effective only after final approval of the Central Government. See rule 17A.
- Resolution first. The Notes added to Forms FC-6A to FC-6E in 2025 ask for a copy of the governing body resolution passed before effecting the change; the Note to FC-6E also asks for a Proforma 'AA' affidavit for each person being added or modified. See the Forms article.
- Liability. For section 39 a society is a "company" and a member of its governing body is a "director"; persons in charge of its business are deemed guilty of an offence by the society unless they prove lack of knowledge or all due diligence. See sections 39 and 40.
To add or delete a purpose or State, a society applies in Form FC-6F with a governing body resolution and the fee under rule 17B.
Reporting and renewal
- Annual return. Form FC-4, in electronic form, within nine months of the closure of the financial year, with the detailed activity report, three statements and the certified bank statement; a NIL report if nothing was received. See our FC-4 article.
- Website. The audited statement of accounts on receipts and utilisation is placed on the society's website, or the website specified by the Central Government, within nine months (rule 13(a)).
- Relatives. Rule 6 requires Form FC-1 within three months if a person receives more than ten lakh rupees in a financial year from relatives.
- Renewal. Form FC-3C within six months before expiry; rule 14A deems reasonable activity to be shown by utilisation of not less than ten lakh rupees of foreign contribution in the last two financial years. See rule 12.
- Ending. A certificate may be surrendered under section 14A in Form FC-7 (rule 15A). If a society ceases to exist or becomes defunct, section 22 sends its assets to the law under which it was registered.
Need help with a society's FCRA compliance?
The FCRA Account, the twenty per cent. limit and the governing body changes are where societies slip. Speak to our legal consultation team or our books of accounts and compliance team with your certificate and last return.
Key takeaways
- Receive only in the FCRA Account; no transfer to another person; use within the purposes and the twenty per cent. limit.
- Governing body changes are intimated within forty five days and take effect on approval; Form FC-4 is due within nine months.
Read next
- Rules 10 and 11: validity of certificate and separate accounts
- Rule 17: annual return in Form FC-4
- Rules 14 and 14A: suspension and reasonable activity
- Sections 21 and 22: candidates and disposal of assets
Disclaimer: Based on the Foreign Contribution (Regulation) Act, 2010 as enacted, read with the Amendment Act, 2020 and the other amendments named in this article, and on the Foreign Contribution (Regulation) Rules, 2011 as amended by the notifications named (latest consulted: S.O. 3272(E) dated 22 June 2026), as consulted on 2 October 2026. No consolidated official text was available; some provisions rest on a third-party copy and are identified as such. Later amendments, notifications and Ministry of Home Affairs orders should be checked. This article is general information, not legal advice; check the official text before acting.