By Notification S.O. 3287(E) dated 22 June 2026, the Central Government has amended the notification issued by the Ministry of Home Affairs vide S.O. 3025(E) dated 1 July 2022 under section 41(1) of the Foreign Contribution (Regulation) Act, 2010.
The 2026 notification substitutes serial numbers 3 and 4 of the Table in the earlier notification. The substituted entries deal with compounding of specified contraventions under section 8 and section 11 of the FCRA Act.
Substituted entry at serial number 3
Serial number 3 concerns offences punishable under section 37. The entry covers three kinds of utilisation related defaults under section 8:
- defraying foreign contribution beyond the permitted administrative expense limit;
- utilising foreign contribution in speculative activities in contravention of section 8(1) read with rule 4 of the FCRA Rules, 2011; and
- utilising foreign contribution for purposes other than the purpose for which it was received.
For administrative expenses, the amount prescribed is Rs. 1 lakh or 5% of the foreign contribution defrayed beyond the permissible limit, whichever is higher.
For speculative activities, the amount prescribed is 30% of the amount invested in speculative activity or Rs. 1 lakh, whichever is higher, together with 100% of the returns earned therefrom.
For utilisation for a purpose other than the purpose for which the contribution was received, the amount prescribed is 30% of the amount so utilised or Rs. 1 lakh, whichever is higher.
Substituted entry at serial number 4
Serial number 4 concerns offences punishable under section 35. The entry applies where foreign contribution is accepted or utilised in contravention of section 11 of the Act.
For accepting or utilising foreign contribution in contravention of section 11, the amount prescribed is Rs. 1 lakh or 30% of the foreign contribution received or utilised, as the case may be, whichever is higher.
The substituted entry also covers utilisation of foreign contribution for a purpose, or in a State or Union Territory, for which registration has not been granted. In such cases, the amount prescribed is 30% of the amount so utilised or Rs. 1 lakh, whichever is higher.
Revised compounding table
| Contravention | Relevant provision | Amount |
| Administrative expenses beyond permissible limit | Section 8 / Section 37 | Rs. 1 lakh or 5% of the excess amount, whichever is higher. |
| Speculative use of foreign contribution | Section 8(1), Rule 4 / Section 37 | 30% of the amount invested or Rs. 1 lakh, whichever is higher, and 100% of the returns earned. |
| Use for a purpose other than the purpose for which foreign contribution was received | Section 8(1)(a) / Section 37 | 30% of the amount so utilised or Rs. 1 lakh, whichever is higher. |
| Acceptance or utilisation in contravention of section 11 | Section 11 / Section 35 | Rs. 1 lakh or 30% of the foreign contribution received or utilised, whichever is higher. |
| Use for an unapproved purpose or in an unapproved State/Union Territory | Section 11, Rule 9(1B) / Section 35 | 30% of the amount so utilised or Rs. 1 lakh, whichever is higher. |
Compounding authority
For the substituted entries, the authority specified is the Director or, as the case may be, the Deputy Secretary in-charge of the section responsible for the administration of the Act.
Effect of the amendment
The amendment makes the compounding amount dependent on the nature and quantum of the contravention. The amount is fixed at Rs. 1 lakh only where the calculated percentage is lower. In larger matters, the applicable percentage will determine the amount.
The separate treatment of administrative expenses, speculative activities and wrong purpose utilisation is important. All three relate to use of foreign contribution after receipt, but the notification prescribes different measures for computing the compounding amount.
The entry relating to section 11 should also be read carefully. Registration or prior permission is not a general permission to receive and use foreign contribution for any purpose. The use must remain within the purpose, area and conditions for which approval has been granted.
No reopening of disposed matters
The notification expressly states that it shall not apply to cases disposed of before publication of the notification. It further states that no such disposed case shall be reopened.
FCRA registered associations and entities operating under prior permission should review the following areas in light of the substituted entries:
- Review whether administrative expenses are being tracked separately from programme expenses.
- Check whether the twenty percent administrative expense cap is monitored during the year and not only at the time of filing Form FC-4.
- Confirm that foreign contribution is not being placed in speculative instruments or used through informal treasury decisions.
- Map each foreign contribution receipt to the donor purpose, approved project, approved activity and permitted geographical area.
- Review prior permission cases separately, because use beyond the approved purpose, amount, donor or location may create a section 11 issue.
- Ensure board minutes, internal approvals, utilisation certificates and vouchers support the actual use of funds.
- If a deviation has already occurred, take professional advice before making explanations or compounding submissions to MHA.