FCRA Prior Permission Route

Recently, the Ministry of Home Affairs (MHA) announced a major change regarding the validity of foreign funds received through the prior permission route.

The update was communicated via a notice to all banks.

Key Change Introduced

New Validity Period: Foreign funds received through prior permission will now be valid only for four years for utilization.
- Earlier, there was no fixed time limit, funds could be used until fully exhausted.
Legal Implications: Failure to utilize the funds within the four-year window will be treated as a violation of the Foreign Contribution (Regulation) Act (FCRA), 2010.
- Non-compliance could invite punitive action under the Act.
Receiving Foreign Contribution: NGOs/individuals will have three years from the approval date to receive the foreign contribution.
Utilizing Foreign Contribution: The entire amount must be used within four years from the approval date.
Provision for Ongoing Approvals: For prior permissions already granted (where project duration exceeds three years),
- The four-year utilization period will be counted from April 7, 2025, the date of this new order.
Scope for Extension: The MHA mentioned it may consider extending the validity period on a case-to-case basis, depending on the merits of each request.

About Foreign Contribution under FCRA

Under the Foreign Contribution (Regulation) Act (FCRA), 2010 of India, “foreign contribution” broadly refers to any donation, delivery, or transfer made by a foreign source of:
- Articles (except personal gifts under a certain value),
- Currency (Indian or foreign),
- Securities (like shares, bonds, debentures, etc.).
Examples:
- If an NGO in India receives a donation from a UK-based trust, that will be considered a foreign contribution.
- If a foreign citizen gifts a large sum of money to an Indian journalist, that’s also foreign contribution

Specifically, “foreign contribution” includes

Donation, delivery or transfer made by any foreign source of:
- Any article (unless it’s a personal gift below ₹25,000 in market value),
- Any currency (Indian or foreign),
- Any foreign security.
Indirect transfer: Even if the contribution is first received by an Indian citizen/organization and then transferred to another person or entity, it is considered foreign contribution if the original source is foreign.
Coverage: Contributions received by individuals, associations, companies, NGOs, political parties (with strict limitations), and even some journalists and editors.

About FCRA Prior Permission

FCRA Prior Permission is an initial approval granted by the Ministry of Home Affairs (MHA) for organizations wishing to receive foreign contributions without permanent FCRA registration.
- In 2024, 58 applications for prior permission were processed and in 2025 , 20 NGOs received foreign donations via prior permission.
It allows receipt of a specific amount from a specific donor for designated activities or projects.
Prior permission is ideal for newly registered organizations seeking to accept foreign contributions for the first time.
Approval is granted for specific projects, activities, and specified donor contributions.

Eligibility for Prior Permission

The organization must be registered under:
- Societies Registration Act, 1860
- Indian Trusts Act, 1882
- Section 25 of Companies Act, 1956 (now Section 8 of Companies Act, 2013)
A commitment letter from the donor must specify the amount of contribution and purpose of donation.
Additional conditions apply if the donor and recipient have common members, ensuring no conflict of interest.

Differences Between Registration and Prior Permission

Aspect	FCRA Registration	Prior Permission
Purpose	For regular and long-term receipt of foreign contributions.	For receiving foreign funds for a specific project.
Eligibility	3 years of existence with ₹10 lakh spent on core activities.	New or existing organizations with a specific project.
Application Basis	Organization-based (overall activities).	Project-specific with donor commitment.
Documents Required	Audited statements, activity reports (last 3 years), certificates.	Project proposal, donor commitment letter, registration certificates.
Validity	5 years (renewable).	For the specific project/donor, limited duration.
Fundraising Scope	Multiple projects and donors.	Limited to the approved project and donor.
Processing Time	Longer due to detailed scrutiny.	Comparatively faster.
Credibility	Higher credibility for fundraising and partnerships.	Project-based credibility.
Compliance	Annual returns, dedicated FCRA bank account, audits.	Same compliance for the approved project.

Additional Reading: FCRA

Also Read
UPSC Daily Editorials	UPSC Daily Current Affairs
Daily Current Affairs Quiz	Daily Main Answer Writing
Check Out Previous Years Papers From PW Store	UPSC Test Series
Check Out UPSC NCERT Textbooks From PW Store	Check Out UPSC Modules From PW Store