Section 4 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.
Section 3 bars certain people from accepting foreign contribution. Section 4 lifts that bar in seven situations, such as salary from a foreign source or money from a relative, but only for the situation named, and subject to section 10.
This article reads section 4 as per the Act as enacted, read with the Foreign Contribution (Regulation) Amendment Act, 2020 (33 of 2020), which did not change section 4. Later amendments should be checked.
Section 3 does not apply to a person specified in it where the contribution is accepted (a) as salary, wages or other remuneration, or as payment in the ordinary course of business by a foreign source, (b) in international trade or commerce, (c) as agent of a foreign source dealing with Government, (d) as a gift to a member of an Indian delegation, (e) from a relative, (f) as remittance through official channels, or (g) as scholarship or stipend. Money received for any other purpose is deemed accepted in contravention of section 3.
How section 4 works
Section 4 begins: "Nothing contained in section 3 shall apply to the acceptance, by any person specified in that section, of any foreign contribution where such contribution is accepted by him, subject to the provisions of section 10". Three things are in that sentence.
- The section lifts the bar in section 3 only for "any person specified in that section", so it helps the persons listed in section 3(1), such as a Government servant or a candidate for election.
- It applies to the acceptance of contribution on the footing named in clauses (a) to (g).
- It is "subject to the provisions of section 10", which allows the Central Government to prohibit dealing with an article, currency or security accepted in contravention of the Act; see the article on section 10.
Anyone relying on a clause should record why the receipt fits it. If you are unsure whether a relationship or a payment fits, a short legal consultation before accepting the money is cheaper than correcting the position afterwards.
The seven exceptions
| Clause | Contribution accepted |
|---|---|
| (a) | By way of salary, wages or other remuneration due to him or to any group of persons working under him, from any foreign source, or by way of payment in the ordinary course of business transacted in India by such foreign source |
| (b) | By way of payment, in the course of international trade or commerce, or in the ordinary course of business transacted by him outside India |
| (c) | As an agent of a foreign source in relation to any transaction made by such foreign source with the Central Government or State Government |
| (d) | By way of a gift or presentation made to him as a member of any Indian delegation, provided it was accepted in accordance with the rules made by the Central Government on acceptance or retention of such a gift or presentation |
| (e) | From his relative |
| (f) | By way of remittance received, in the ordinary course of business, through any official channel, post office, or any authorised person in foreign exchange under the Foreign Exchange Management Act, 1999 |
| (g) | By way of any scholarship, stipend or any payment of like nature |
Clauses (a) and (b): pay and business
Clause (a) covers pay "due to him or to any group of persons working under him" and also payment in the ordinary course of business transacted in India by the foreign source. Clause (b) covers payment in the course of international trade or commerce, or in the ordinary course of business he transacts outside India. A journalist employed by a foreign publisher, for instance, receives salary that falls in clause (a). The test in each clause is pay that is due, or business in the ordinary course.
Clause (c): agent of a foreign source
Clause (c) is limited to an agent of a foreign source "in relation to any transaction made by such foreign source with the Central Government or State Government". It does not extend to an agent who deals with private parties.
Clause (d): Indian delegation
A gift or presentation to a member of an Indian delegation is excepted if it was accepted in accordance with the rules made by the Central Government on the acceptance or retention of such gifts. The rules are not described here.
Clause (e): relatives
Clause (e) excepts contribution from "his relative". "Relative" has the meaning given in the Companies Act, 1956 as section 2(1)(r) prints it; see the article on the definitions in section 2. The rule that deals with money from relatives is explained in rules 6 and 6A; this article does not state its content.
Example (invented). Ms. Meera Nair, a Government servant, receives a remittance from her brother, who lives abroad, to pay for a family function. Clause (e) can apply because the money is from her relative. The clause is about the source of the money; how far the Rules limit relatives' contributions is for the rule article linked above.
Clause (f): official channels
Clause (f) covers remittance in the ordinary course of business through any official channel, post office or any authorised person in foreign exchange under the Foreign Exchange Management Act, 1999. Our post on authorised person under that Act is a separate law.
Clause (g): scholarship or stipend
Clause (g) covers any scholarship, stipend or any payment of like nature. The phrase "of like nature" widens the clause to payments that resemble those two; it does not cover a donation for a project.
The proviso: a contribution for another purpose
The proviso says that if foreign contribution is received by any person specified under section 3 "for any of the purposes other than those specified under this section", the contribution is deemed to have been accepted in contravention of section 3. So the exceptions are tied to purpose. A person who legitimately receives a scholarship may not use the same channel for a donation to an organisation. The consequence of acceptance in contravention is punishment under section 35; see sections 35 and 36.
Need help with a receipt that does not fit neatly?
If a Government employee, journalist or office-bearer in your organisation has received or expects to receive money from abroad, document the purpose and the source before the money is used. Our legal consultation team can review the facts against section 4 with you.
Key takeaways
- Section 4 lifts the bar in section 3 only for "any person specified in that section".
- There are seven exceptions, from salary and business payments to scholarships and stipends.
- The exceptions are subject to section 10.
- Under the proviso, money accepted for any other purpose is deemed accepted in contravention of section 3.
- The relative clause rests on the definition of "relative" in section 2(1)(r).
Read next
- Section 3: who cannot accept foreign contribution
- Section 5: organisation of a political nature
- Section 10: prohibitory order
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.