India Tightens Foreign Funding Rules: Proselytisation Excluded, New Penalties Introduced

The Ministry of Home Affairs (MHA) has notified a comprehensive schedule of 105 permissible purposes for organisations receiving foreign contributions, explicitly excluding proselytisation from the religious category. The notification, issued under the Foreign Contribution (Regulation) Amendment Rules, 2026, aims to eliminate ambiguity in activities allowed under the Foreign Contribution Regulation Act (FCRA).

Organisations seeking fresh registration or already registered under FCRA must select their purpose or purposes from this schedule. The five primary categories are religious, cultural, economic, educational, and social, each with detailed sub-lists. Notably, the religious category lists 16 purposes such as religious education, moral instruction, discourses, and meditation retreats, but explicitly omits proselytisation.

Under the amended rules, NGOs must also declare the states or Union territories where they intend to carry out activities funded by foreign contributions. While they can specify multiple purposes and states, the registration fee of Rs 10,000 covers only one state and one purpose. For each additional purpose or state, an extra fee of Rs 300 applies.

Entities already registered under FCRA have one year from the commencement of the amended rules to inform the government, via a designated form, of the purposes and states for which they wish to retain registration.

The MHA has also introduced stringent penalties for violations. NGOs that use foreign contributions for unauthorised purposes, engage in speculative activities, or receive funds without valid registration or prior permission face a penalty of Rs 1 lakh or 30% of the amount involved, whichever is higher. If they fail to submit a hard copy of their application within one month, additional penalties apply. For speculative activities, the NGO must also surrender 100% of the returns generated.

An FCRA-registered entity seeking to change its scope of operations may apply for deletion or addition of a purpose or state via Form 6-F, subject to government approval.

Furthermore, associations with foreign nationals (excluding those of Indian origin) as key functionaries will ordinarily not be considered eligible for registration or prior permission. However, the government may grant exceptions in specific cases, provided the foreign contribution is used solely for activities in India consistent with the association's objectives.

All FCRA-registered entities must now disclose their social media accounts, official website, and ultimate donors in cases of donor-advised funds or other intermediary remittance vehicles in their annual returns (Form FC-4). They must also attach a detailed activity report.