Funding topic 12 of 12
Foreign sources and difficult cases
An Indian bank transfer or rupee payment does not by itself establish an Indian source.
Classify the source
Identify the legal donor, citizenship or constitution, ownership where relevant, original source and nature of payment. Foreign-source and foreign-contribution definitions contain specific inclusions and exclusions. Indian citizens living abroad, foreign citizens and foreign-owned Indian entities require their respective statutory tests; do not classify by currency, surname or account location.
Prior compliance
Where the receipt is foreign contribution and FCRA applies, assess eligibility, registration or prior permission and the required banking route before receipt or use. A Board resolution or donor approval is not an FCRA permission. Use the current MHA portal because forms, notices and conditions change.
No pass-through workaround
Section 7 restricts onward transfer of foreign contribution by a registered or permitted recipient. Do not assume a domestic NGO can pass a foreign grant to the company because it has FCRA registration. Genuine procurement of goods or services needs separate analysis; changing a grant’s name to a service fee cannot cure a prohibited transfer.
Unexpected receipt
If an unexplained or potentially foreign contribution arrives, do not spend it or reflexively reroute it. Preserve bank and donor records and obtain prompt FCRA/banking advice on the lawful handling and reporting steps. Genuine commercial receipts may fall under relevant exclusions, but substance and evidence must support that conclusion.
Practical questions
Does payment in rupees make the contribution domestic?
No. Determine the legal donor and statutory source. Currency and the location of the remitting bank alone do not decide FCRA applicability.
Read the topic and sourcesCan an overseas Indian donate?
Check citizenship, source and nature of funds under the statutory definitions and current MHA guidance. An Indian citizen abroad and a foreign citizen or OCI are not interchangeable categories. Obtain evidence before deciding whether FCRA applies.
Read the topic and sourcesCan an FCRA-registered NGO pass foreign donations to us?
Do not assume so. Section 7 restricts onward transfer of foreign contribution. Obtain specialised advice on the actual arrangement; relabelling a grant as procurement does not make an otherwise prohibited transfer lawful.
Read the topic and sourcesCan we accept a foreign commercial training fee?
A genuine commercial receipt may fall within a relevant statutory exclusion, but assess the actual services, payer and evidence, alongside GST, income tax and banking rules. Never relabel a foreign donation as a service fee merely to avoid FCRA.
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