Socio Research & Reform Foundation

This amendment has been brought to further tighten the rules and reporting Forms. The changes are applicable from the date of publication in the Gazette.

In yesterday’s post, topics of Key Functionaries and applicability of FCRA towards For-Profit entities were covered.

In today’s post, issue relating to Project-wise disclosure of Purpose & Geographical Areas where projects are being implemented is being covered.

Purpose

• Govt has come out with a detailed schedule of 105 predefined categories covering Religious (16), Cultural (18), Economic (19), Educational (22), Social (30). A NPO desirous of registration under FCRA would need to select one or more of them in its application.
• The purpose as selected in its application would be specified in the FCRA registration certificate. Even current FCRA registered entities would need to comply with this requirement, within oneyear.
• In effect, above means, that if a NPO’s activities as covered in grants do not get covered within the purpose / activity specified in its registration certificate. It will need to apply for amendment. For this purpose, Govt has formulated a Form FC-6F. This will become quite an onerous responsibility, and in case delays are experienced as generally is the trend at FCRA, a major bottleneck.

Geographical Area

• Similar to as mentioned under Purpose above, all NPOs would need to ensure that the State in which they plan to undertake activity is mentioned in their Registration Certificate.
• A fee of Rs 300/- per state has been affixed for the same.

Consequences of above requirements

• Concern is, would this become a basis for some form of objection or even penalty, if the state covered in the FCRA Registration certificate is not included in the byelaws of the NPO.
• Please note ensuring geographical location in FCRA registered entity is important, since this information is also being sought in Annual Return (FC4), when Project-wise information (para 3(a)) and location of assets (para 3(ba)) & 3(bb)) is being asked for.
• Proposed Rule 17B (3) gives right to Govt to reject or approve the application after undertaking such inquiry as it deems fit.
• It is foreseen that this could become a basis of number of disputes and penal provisions by the Dept.

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Socio Research & Reform Foundation (NGO)                       
512 A, Deepshikha, 8 Rajendra Place,
New Delhi – 110008

This amendment has been brought to further tighten the rules and reporting Forms. The changes are applicable from the date of publication in the Gazette. Considering large number of amendments which impact several aspect of FCRA legislation, it is decided to cover various amendments through a series of posts. So please bear with us. In this post we cover impact of amendments on For-Proft entities.

Key Functionaries defined

• A Key functionary has now been formally defined. It includes Board members, Trustees, Office bearers of governing body (covering Trust, Society, Trade Union, etc). However Chief Functionary is still not defined, although it is the person who signs all documents to be submitted to the FCRA Dept online. Whoever signs application for registration / prior permission automatically becomes Chief Functionary. Subsequent changes, if any are informed to the FCRA Dept formally through Form FC-6E.
• Any other officer or person, by whatever name called, who has control over or responsibility for the management or affairs of such person. Thus, a CEO who is not a director or office bearer of an NPO would now be covered. Earlier say husband of a managing trustee, would largely run the organisation, without formally having a post. Now theoretically such a person would be covered by the definition of ‘Key Functionary’.
• Important pointto note, while For-Profits were covered earlier too, but now definition specifically states that partners in a partnership, Karta of HUF, director in a company will be covered.

The above raises a very interesting point, are For-Profit entities covered under FCRA. Theoretically once the definition of ‘Person’ was introduced through FCRA 2010 Act, For-Profit entities got covered, however how many have heard a For-Profit entity getting FCRA registration. There have been several instances, where FCRA Dept has refused to give FCRA registration on the ground that the applicant is likely to make ‘personal gains’. In fact clause (vi) of S.12(4), says exactly the same and is one of the ground for refusal to granting registration certificate.

I believe emphasis on partners, directors ismainly to discourage NPOs to start incorporating For-Profit entities, to avoid FCRA registration process.

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Socio Research & Reform Foundation (NGO)                       
512 A, Deepshikha, 8 Rajendra Place,
New Delhi – 110008

FCRA amendment Act 2026, which was introduced by the Govt on 25 March 2026 in the Parliament. The bill puts in place mechanism of how Govt would takeover the assets and properties of all those entities whose FCRA has been cancelled.

Well now, the Sector can breathe easy, at least there is a temporary relief to these entities, as the Govt has decided to put the amendment bill on hold. The Govt sensing opposition parties getting together and launching major protests, has for the time decided to put the Bill on hold.

The data provided on FCRA website dashboard is indicative of how many NPOs could be impacted if the Bill becomes an Act. The following data is based on today’s data as available on FCRA website:

Based on above data, it is so alarming to note that the Govt could potentially take over the assets of 71% of all FCRA registered entities, which have at one time or other registered under FCRA. This would be almost a death knell for the survival of the Sector.

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Socio Research & Reform Foundation (NGO)                       
512 A, Deepshikha, 8 Rajendra Place,
New Delhi – 110008

Many of SRRF Dialogue members would be involved in finalising their FC4 return. This year’s return has certain issues, which is creating a lot of confusion, amongst most NPOs. SRRF Dialogue is posting a para-wise Guidance to help members fill up their FC4 and comply.

Socio Research & Reform Foundation (NGO)
512 A, Deepshikha, 8 Rajendra Place,
New Delhi – 110008

FCRA Dept has started issuing show-cause notices to registered entities, which have not received FCRA funds in last three years (FY 2021-22 to 2023-24). A sample copy of the Notice issued can be seen here. The Show cause Notice is being issued under S.14(1)(e) of the FCRA 2010 Act. The section is reproduced below:

S.14(1)(e): The Central Govt may, if it is satisfied after making such inquiry as it may deem fit, by an order, cancel the certificate, if the holder of the certificate has not been engaged in any reasonable activity in its chosen field for the benefit of the society for two consecutive years or has become defunct.

If you have rec’d such a Notice, and you wish to continue with your FCRA registration, you will need to write to the FCRA Dept within 21 days from the date of Notice and convince the Dept that you wish to continue with the activities, and are in negotiation / making efforts to receive FCRA donations in near future.If possible, provide some documentary support for the same.

However, ultimately it will be the decision of the FCRA Dept whether it cancels the Notice or accepts your representation.

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Socio Research & Reform Foundation (NGO)                       
512 A, Deepshikha, 8 Rajendra Place,
New Delhi – 110008

Indian Social Action Forum vs Union of India.^[1] [WP(C) 10199/2016&CM APPL. 37992/2021 – Delhi HC: Order dt 24-07-2025)

Delhi HC (Justice NitinWasudeo Sambre & Justice Anish Dayal) decided in favour of appellant NGO – INSAF, whose FCRA renewal registration application was rejected by the FCRA Dept. vide its email communication dt 21-10-2016.

In its order the HC stated that it was concerned that the order was without reasons and even the basic considerations. It was only ‘one line email’ stating that the Union of India rejected the prayer of the petitioner for renewal for the period from 2016-2021. Although during the hearing, Union Govt has tried to justify its decision by narrating the reasons in the affidavit. Since the said order cannot be substantiated by these reasons, such conduct of Union of India reflects complete non-application of mind, and therefore can also be termed as in violation of principles of natural justice.

In view thereof the said order cannot be sustainable.

Subsequent affidavit submitted by Union of India, stated that the basis for rejection of renewal is on account of S.12(4)(e) of FCRA Act 2010, where certain criminal prosecution cases were pending against the office bearers. Petitioner informed the Court that in all the cases, the office bearer of the petitioner stood acquitted in all but one case. HC directed Union of India to consider the renewal requestof certificate afresh, within 90 days of the Order, and allowed the petitioner to submit all such material which it considers justifiable for claim of grant of renewal within 30 days. HC specified that it has adhered to the timeline of 90 days in view of the proviso to S.16 of the Act, requiring it to provide its decision and reasons for rejection with 90 days.

Socio Research & Reform Foundation (NGO)                       
512 A, Deepshikha, 8 Rajendra Place,
New Delhi – 110008

https://www.livelaw.in/pdf_upload/74824072025cw101992016160738-612534.pdf

UNION OF INDIA Versus M/S SHARMA CENTRE FOR HERITAGE EDUCATION, SLP(C)No. 26284-26285/2025[1]

We refer to Madras HC case that we reported only a few days back (https://blog.srr-foundation.org/?p=4788), where Justice N. Anand Venkatesh had decided in favour of appellant NGOs, whose FCRA registration was not renewed by FCRA Dept. HC had quashed the refusal letters of the Dept, and asked the FCRA Dept. to issue renewals.

FCRA Dept filed a Special Leave Petition in the SC, requesting to quash the HC Order. Matter was heard by Bench of Justices Vikram Nath & Sandeep Mehta. In a sharp comment to Additional Solicitor General representing Dept, Justice Nathasked

Have they misappropriated? is there any abuse of these funds received by them? There is no such finding at all. If they are doing some social service for the society, what is your problem? You monitor, keep a check, let them file their accounts annually – that’s all. Don’t complicate things, don’t further harass them. Comply with the High Court Order.

Effectively with this decision of SC, the two NPOs which had gone to the court for relief have been granted the relief. It is fervently hoped that more NPOs will pick up the baton and go to the courts for relief and not wait endlessly for FCRA Dept’s mercy.

Dept’s strict attitude while considering NPOs applications, can be seen from the unreasonably high rejection rate, that MHA has published in its Annual Report for FY 2023-24.

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Socio Research & Reform Foundation (NGO)                       
512 A, Deepshikha, 8 Rajendra Place,
New Delhi – 110008

[1]https://www.livelaw.in/top-stories/supreme-court-rejects-union-challenge-to-high-court-order-for-renewal-of-ngo-fcra-registration-304484

Madras HC quashes refusal to Renew FCRA because funds were transferred from one sister NGO to another without any malafide

Sharma Centre for Heritage Education & Ellen Sharma Memorial Trust vs Union of India &Anr.^[1] [CMA No. 746 of 2022 & WP No. 4887 of 2022 – Madras HC: Order dt 27-06-2025)

Madras HC (Justice N. Anand Venkatesh) decided in favour of appellant NGOs, whose FCRA registration was not renewed by FCRA Dept. The denial letter stated that renewal was denied based on S.16(1) read with S.12(4)(a)(vii) of FCRA 2010. The communication did not specify the nature of violation.

FCRA Dept in its response, filed a counter affidavit alleging violation under S.7 of the Act, stating that funds had been transferred among the sister NGOs without prior approval. Dept argued that this violation disqualified the NGOs from receiving renewal.

In its judgement, the HC recorded that the Dept’s communications have not contained any reasons except stating that the renewal was refused under S.16(1)…. Of the Act. Court held that the breach by the parties was minor, as the Dep’s own report delivered to the Court in sealed cover, did not show any material that the two Trusts had misused the FC and that there was no personal gain no diversion of fund for undesirable purposes. The court stated that transfer of funds, without any allegation of mis-proprietary is nothing more than a procedural breach. The Court quashed the FCRA refusals and stated that the petitioners should be granted renewal.

https://24law.in/story/madras-high-court-sets-aside-fcra-renewal-rejection-holds-technical-breach-under-amended-section-7

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Socio Research & Reform Foundation (NGO)                       
512 A, Deepshikha, 8 Rajendra Place,
New Delhi – 110008