Running an NGO in India involves more than just social impact. Legal compliance plays a critical role in ensuring transparency, credibility, and long-term sustainability. Among all regulations, FCRA compliance rules are the most crucial for NGOs receiving foreign contributions.
The Foreign Contribution (Regulation) Act, 2010 (FCRA) is administered by the Ministry of Home Affairs, and compliance is mandatory. Any lapse can lead to serious consequences, including cancellation of registration and freezing of bank accounts.
This guide explains FCRA requirements and other essential NGO compliance rules in India that every organization must follow.
What Is FCRA and Why It Matters for NGOs
FCRA regulates the acceptance and utilization of foreign contributions by NGOs, associations, and individuals in India.
Its core objective is to ensure that foreign funds do not adversely affect national interest, public order, or sovereignty. Any NGO receiving funds from outside India must strictly comply with FCRA provisions notified by the Ministry of Home Affairs.
👉 https://fcraonline.nic.in
Consequences of Non-Compliance
Failure to comply with FCRA can result in:
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Suspension or cancellation of FCRA registration
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Freezing of designated FCRA bank accounts
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Heavy penalties and legal proceedings
For NGOs dependent on overseas funding, FCRA compliance is mission-critical.
Mandatory Registration or Prior Permission Under FCRA
Before receiving foreign contributions, NGOs must obtain either FCRA registration or prior permission from the Ministry of Home Affairs.
FCRA Registration
This is suitable for NGOs with an established track record.
Key eligibility requirements include:
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Minimum 3 years of active operations
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Proven charitable activities
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Properly maintained financial statements
Once approved, FCRA registration is valid for five years and must be renewed on time via the FCRA portal.
Prior Permission
Prior permission is designed for newly formed NGOs.
It allows receipt of a specific foreign contribution from a specific donor for a defined project and duration. Each approval is project-specific and time-bound, and separate permission is required for each donor or project.
Designated Bank Account for Foreign Contributions
One of the most critical FCRA compliance rules relates to banking arrangements.
As per MHA notification, all foreign contributions must be received only in the designated FCRA account at the State Bank of India, New Delhi Main Branch.
👉 https://fcraonline.nic.in/fc3.html
Key Points to Remember
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No other bank account can receive foreign contributions
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Interest earned is also treated as foreign contribution
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Bank account details must always be updated on the FCRA portal
Any deviation is considered a serious violation under FCRA.
Separate Accounts for Proper Fund Management
NGOs must maintain separate books and bank accounts for:
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Foreign contributions (FCRA funds)
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Domestic donations and income
This separation ensures:
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Transparent fund tracking
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Easier audits and inspections
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Clear utilization reporting
Foreign funds may be transferred from the designated FCRA account to utilization accounts, but domestic funds must never be mixed with foreign contributions.
Annual Return Filing Under FCRA
All FCRA-registered NGOs must file annual returns, even if no foreign contribution was received during the year.
Returns are filed in Form FC-4 on the FCRA portal:
👉 https://fcraonline.nic.in
Key Disclosures in FC-4
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Amount of foreign contribution received
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Donor-wise and country-wise details
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Purpose-wise utilization
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Closing balance
Late or non-filing attracts penalties, and repeated defaults can lead to cancellation of FCRA registration.
Income Tax Act, 1961: Tax Compliance for NGOs
In addition to FCRA, NGOs must comply with the Income Tax Act, 1961, administered by the Income Tax Department.
👉 https://www.incometax.gov.in
To claim exemptions and attract donors, NGOs must obtain:
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12A / 12AB registration – for income tax exemption
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80G registration – allowing donors to claim tax deductions
Without these registrations, donations may become taxable, affecting donor confidence and funding prospects.
Laws Governing NGO Formation and Operations
The compliance framework also depends on the legal structure of the NGO.
Section 8 Companies
Governed by the Companies Act, 2013, Section 8 companies must comply with:
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Annual filings with the Registrar of Companies (ROC)
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Board meetings and statutory registers
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Financial reporting via the MCA portal
👉 https://www.mca.gov.in
Societies
Registered under the Societies Registration Act, 1860, societies must follow:
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State-specific renewal requirements
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Annual submission of governing body details
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Compliance with local registrar rules
Trusts
Governed by the Indian Trusts Act, 1882, trusts must ensure:
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Properly executed trust deed
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Regular audits
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Accurate records of trustees and assets
NGO Darpan ID: A Mandatory Requirement
Registration on the NGO Darpan portal, managed by NITI Aayog, is mandatory for NGOs.
👉 https://ngodarpan.gov.in
An NGO Darpan ID is required for:
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Applying for FCRA registration or renewal
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Receiving government grants
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Establishing credibility with donors and institutions
The portal acts as a centralised, verified database of NGOs in India.
Practical Tips to Stay Compliant
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Track FCRA renewal deadlines well in advance
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Maintain accurate and separate books of accounts
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File annual FCRA returns on time, even if nil
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Avoid mixing domestic and foreign funds
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Conduct periodic internal audits
Professional compliance support can help NGOs avoid costly mistakes and regulatory action.
Final Thoughts
Compliance with FCRA and other NGO compliance rules in India is not optional—it is the foundation of trust, transparency, and sustainability.
From mandatory registration and designated bank accounts to annual return filing and income-tax compliance, each requirement safeguards your NGO’s credibility.
NGOs that prioritise compliance can focus confidently on their mission, knowing they are legally secure, donor-ready, and future-proof.
