What is foreign contribution?

The Foreign Contribution (Regulation) Act, 2010 (FCRA) regulates the acceptance and use of foreign contributions by individuals, associations, and companies in India.

According to Section 2(1)(h) of the Act, “foreign contribution” means any donation, delivery, or transfer made by a foreign source in the form of:

1. Articles

(i) Any article given as a donation (other than a gift meant for a person’s personal use).
If the market value of such article in India, on the date of the gift, is more than ₹10 lakh, it will be treated as foreign contribution.

Examples

1. Donation Example

• A US-based NGO donates medical equipment worth ₹15 lakh to an Indian hospital trust.
  Since the value is above ₹10 lakh, it will be considered foreign contribution.

2. Gift for Personal Use (Exempted)

• A professor from London gifts his Indian friend a laptop worth ₹80,000 for personal use.
  Since it is a personal gift and below ₹10 lakh, it is not foreign contribution.

2.Currency

any currency, whether Indian or foreign;

Examples

1. Foreign Currency Example

• A donor from USA remits $20,000 (≈₹16.5 lakh) to an Indian NGO’s FCRA account.
  This is foreign contribution.

2. Indian Currency Example

• A foreign national working in India donates ₹2 lakh in Indian Rupees to an Indian trust.
  Even though it is Indian currency, because the donor is a foreign source, it is foreign contribution.

3. Indirect Donation Example

• An Indian businessman first receives €5,000 from Germany, then transfers ₹4 lakh from it to another NGO in India.
  This ₹4 lakh is still treated as foreign contribution (indirect transfer).

3. Securities

Any security (as defined under Section 2(h) of the Securities Contracts (Regulation) Act, 1956), and any foreign security (as defined under FEMA, 1999), if given as donation, delivery, or transfer by a foreign source, will be treated as foreign contribution.

Examples

1. Shares of Indian Company

• A foreign donor transfers 1,000 shares of Reliance Industries (worth ₹25 lakh) to an Indian charitable trust.
  This is foreign contribution, because shares = securities.

2. Foreign Bonds

• An NGO in India receives US Government Bonds worth $50,000 from a US foundation.
  This counts as foreign contribution (foreign security under FEMA).

3. Mutual Fund Units

• A foreign national gifts units of an Indian mutual fund worth ₹12 lakh to an NGO in India.
  Treated as foreign contribution because mutual fund units are also securities under SCRA.

Content Sources

Information compiled from: MCA, ICSI, SEBI, Income Tax Department, GST Portal, IP India, Supreme Court of India, BSE, NSE, and other authoritative sources.

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