Section 7 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.
Since the Amendment Act, 2020, section 7 is one sentence: a person who is registered, or who has prior permission, and who receives foreign contribution, shall not transfer it to any other person. The original section, which allowed transfers in some cases, was replaced.
This article reads section 7 as per the Foreign Contribution (Regulation) Amendment Act, 2020 (33 of 2020), paragraph 3, which substituted the section; the section as enacted is no longer in force and is described only to show what changed. Later amendments should be checked.
No person who is registered and granted a certificate or has obtained prior permission under the Act, and receives any foreign contribution, shall transfer such foreign contribution to any other person. The enacted section allowed a transfer to another registered person, and, with the Central Government's prior approval, a part to an unregistered one. The substituted section has no proviso and no such exception.
The text in force
Paragraph 3 of the Amendment Act, 2020 substituted this section for section 7:
"7. No person who— (a) is registered and granted a certificate or has obtained prior permission under this Act; and (b) receives any foreign contribution, shall transfer such foreign contribution to any other person."
The section is a prohibition with three working parts.
- Who: a person who both satisfies clause (a), meaning registered and granted a certificate, or having obtained prior permission, and satisfies clause (b), meaning receives any foreign contribution. The two clauses are joined by "and".
- What: "such foreign contribution". The definition of foreign contribution in section 2(1)(h), including Explanation 2 on interest and other income, is explained in the article on foreign contribution and foreign hospitality.
- To whom: "any other person". "Person" includes an individual, a Hindu undivided family, an association and a company registered under section 25 of the Companies Act, 1956 as section 2(1)(m) prints it; see the article on those definitions.
The section does not define "transfer". It also does not say, in so many words, whether paying a vendor for goods or paying wages counts. It is silent on those points, so read it with section 8, which requires the contribution to be utilised for the purpose for which it was received. If a case turns on what counts as a transfer, take advice on the text; groups of related entities can also review their registrations through our 12A, 80G and CSR registration service.
What changed: as enacted and as substituted
| As enacted | After the 2020 Amendment Act (in force) |
|---|---|
| A registered person who receives foreign contribution shall not transfer it to any other person unless that other person is also registered and had been granted the certificate or obtained the prior permission | No transfer of such foreign contribution to any other person |
| Proviso: with the prior approval of the Central Government, a part of the contribution could be transferred to a person without a certificate or prior permission, in accordance with the rules | No proviso |
The enacted section therefore had two doors: a transfer to another person who was also registered or permitted, and a transfer of a part, with prior approval, to a person who was not. The Amendment Act, 2020 closed both by replacing the section with a flat prohibition. For rules that operated under the old section, rule 24 of the Foreign Contribution (Regulation) Rules, 2011, which dealt with transfers to other persons, was omitted by a notification of 2020; its content is not described here.
An organisation that planned to pass a share of its foreign contribution to a partner organisation under the earlier scheme should therefore treat that plan as no longer available. Example (invented). Nirmaan Foundation, which holds a certificate, receives foreign contribution for a school project. It wishes to pass a portion to Vidya Mitra Samiti, which also holds a certificate. Under the enacted section this was allowed because the other person was also registered. Under the section in force, the text has no such exception; the foundation should not make the transfer, and should instead take advice on how the project can be run within the Act.
Related provisions
- Section 8 requires a registered person to utilise the contribution for the purpose for which it was received; see the article on section 8.
- Section 17, as substituted, requires receipt in an "FCRA Account" and allows a person to open further accounts for keeping or utilising the money received in that account. These are the person's own accounts and are discussed in the article on section 17.
- Section 3(2) and 3(3) forbid delivering currency to certain persons; see section 3.
- Section 35 punishes accepting, or assisting any person, political party or organisation in accepting, foreign contribution in contravention of the Act or any rule or order; see sections 35 and 36. Whether a particular transfer is an offence under it depends on the facts.
Because the definition of foreign contribution in Explanation 1 to section 2(1)(h) reaches a second or later recipient, money that has already been passed on under the earlier section may still be foreign contribution in the hands of its recipient. A recipient organisation that took money from a registered donor in earlier years should keep the record that shows how it was received and what it was used for.
Practical points for boards
First, check the grant agreements and memoranda of understanding that provide for passing money to implementing partners. Second, check whether a payment to a partner is a payment for services or goods or a transfer of contribution; the text does not draw this line, so take advice on the facts. Third, keep accounts that show each rupee received and each rupee used, since section 19 requires the account and record to be maintained as prescribed.
Need help with partner and grant structures?
If your organisation works through partners or has a group of related entities, the structure of money flows deserves a check against section 7. Start with our 12A, 80G and CSR registration desk and tell us how the funds move today.
Key takeaways
- The section in force is the one substituted by paragraph 3 of the Amendment Act, 2020.
- It bars a registered person, or one with prior permission, who receives foreign contribution from transferring it to any other person.
- The enacted proviso (prior approval to transfer a part to an unregistered person) and the enacted allowance for transfer to a registered person are gone.
- The section does not define "transfer"; take advice on borderline payments.
- Breach can attract section 35 depending on the facts.
Read next
- Section 8: utilisation and administrative expenses
- Section 11: registration or prior permission
- Section 17: the FCRA Account
- Section 1: short title, extent and commencement
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.