CS Executive · Economic, Commercial and Intellectual Property Laws
Law relating to Foreign Contribution Regulation: CS Executive Guide
The Foreign Contribution (Regulation) Act, 2010 controls how individuals, associations and companies in India accept and use foreign contribution. It sets who may receive it, how to register, how to spend it and what happens on default. To answer questions, state the provision, apply it to the facts, then conclude with the section.
What this chapter covers
This chapter covers the Foreign Contribution (Regulation) Act, 2010, called FCRA. The Act regulates foreign contribution so that it is not used in ways that harm national interest. It works through a few clear levers: a prohibition on certain persons, registration or prior permission for others, rules on use, accounts and returns, and penalties.
The chapter is a good example of a regulatory statute with a fixed life cycle. A person applies, gets a certificate, receives money in a designated account, spends it for the stated purpose, keeps accounts, files returns, and risks suspension, cancellation or prosecution on default. If you learn it in that order, the sections fall into place.
It sits in Part I of Paper 6, Economic and Commercial Laws, next to other economic statutes. It links to your Paper 1 skills in reading statutes and to Paper 2 ideas such as registered bodies and compliance. The answer style is the same: provision, analysis, conclusion.
FCRA is a compact, rule-based chapter, so it rewards precise recall. Questions often ask for conditions, time limits and consequences, and these can be learned and written in a structured way. Small details such as the 20 per cent administrative expense limit, the five-year validity of a certificate, and the three-year bar after cancellation separate full answers from partial ones. Because the text is short, you can master it in less time than many other chapters in the paper.
Law relating to Foreign Contribution Regulation: topics in the order to study them
- 1FCRA 2010: Introduction, Definitions and ScopeStart here because every later section uses these terms, such as foreign contribution, person and prescribed authority.
- 2Prohibition on Acceptance of Foreign ContributionLearn who cannot receive foreign contribution before learning who can, so the exceptions make sense.
- 3Registration, Prior Permission and RenewalThis is the entry route for permitted persons, with conditions, validity and refusal, mainly in Section 12.
- 4Receipt, Utilisation and Administrative ExpensesOnce registered, you must know how money is received and spent, including the limit in Section 8.
- 5Accounts, Audit, Returns and DisclosureThese are the ongoing compliance duties that follow receipt and use of funds.
- 6Suspension, Cancellation and Management of Foreign ContributionThis shows what happens when conditions are breached, including Section 14 and its three-year bar.
- 7Powers of Inquiry, Seizure, Penalties and OffencesFinish with enforcement, since it only makes sense after you know the duties being enforced.
How to prepare Law relating to Foreign Contribution Regulation
Treat the Act as a life cycle and learn each stage with its conditions, time limits and consequences. Revise by writing short answers, not by rereading.
- Read the definitions first and make a one-page list of key terms with plain-word meanings.
- Draw the life cycle on one sheet: prohibition, application, certificate, receipt, use, accounts and returns, default, enforcement. Place each section on it.
- For Section 12, learn the conditions for registration as a checklist. Group them: genuineness of the applicant, past conduct, reasonable activity or project, character of office bearers, and effect on national interest.
- Memorise numbers with their sections: certificate valid for five years (Section 12), 20 per cent administrative expenses (Section 8), three-year bar after cancellation (Section 14), five-year bar after a repeat conviction (Section 38).
- Practise short cases. Write the provision, apply it to the facts in two or three lines, and end with a clear conclusion.
- Compare related provisions in pairs, such as registration versus prior permission, and Section 9 powers versus Section 12 grant, so you do not mix them.
- In the last week, revise from your one-page chart and attempt past-style questions under time.
Common mistakes in Law relating to Foreign Contribution Regulation
Writing the old 50 per cent limit on administrative expenses.
Fix: Use 20 per cent under Section 8(1)(b), with prior approval of the Central Government for anything above it.
Mixing up registration and prior permission.
Fix: Remember: registration gives a five-year certificate for ongoing receipt and needs reasonable activity in the chosen field; prior permission is for a specific purpose or amount and needs a reasonable project.
Listing Section 12 conditions loosely or incompletely.
Fix: Group the conditions into themes and tick them off in the answer, then apply the relevant ones to the facts.
Confusing the consequences of cancellation and of repeat conviction.
Fix: Cancellation under Section 14: three years' bar on registration or prior permission. Repeat conviction under Section 38: no acceptance of foreign contribution for five years.
Ending the answer without a conclusion or section reference.
Fix: Always finish with a clear one-line conclusion and cite the section, as the ICSI style expects.
Forgetting the natural justice step before cancellation.
Fix: State that no cancellation order can be made without giving the person a reasonable opportunity of being heard (Section 14(2)).
Last-day revision: Law relating to Foreign Contribution Regulation
- FCRA regulates acceptance and use of foreign contribution so it does not harm national interest.
- Section 12: apply to the Central Government in the prescribed form and manner with the fee.
- An applicant must open an FCRA Account and give its details in the application.
- Central Government may ordinarily decide within ninety days; if it does not grant in that time, it must communicate reasons.
- A certificate is valid for five years; prior permission is for the specific purpose or amount.
- Suspension continuing on the date of application makes a person ineligible to apply.
- Section 8: use contribution only for the purpose received; no speculative business.
- Administrative expenses are capped at 20 per cent of contribution received in a financial year; more needs prior Central Government approval.
- Section 14: certificate may be cancelled for false statements, breach of conditions, public interest, violation of the Act, or two years of no reasonable activity or becoming defunct.
- Cancellation needs a reasonable opportunity of being heard; the person is barred from registration or prior permission for three years.
- Section 38: after a repeat conviction under Section 35 or 37 relating to acceptance or use, no foreign contribution for five years from the later conviction.
- Section 9 lets the Central Government prohibit, or require permission or intimation, only if prejudice to listed interests is likely.
Law relating to Foreign Contribution Regulation practice questions
- Under the FCRA, 2010, a certificate of registration granted to Navjyoti Society and a prior permission granted to Sahyog Trust differ in the…
- A person granted prior permission under Section 11(2) of the FCRA, 2010 is found, after a summary inquiry on information received, to have p…
- Which of the following is a condition for grant of prior permission, but not for grant of a certificate of registration, under section 12(4)…
- Hope Foundation's FCRA certificate was cancelled under Section 14. It holds unspent foreign contribution and assets bought from it. Which st…
- Ananya Society was granted an FCRA certificate. Which of the following correctly describes its duty on records under the Act?
- Jan Seva Trust, registered under the FCRA, 2010, received foreign contribution and then handed part of it to Gram Vikas Samiti, an unrelated…
- A registered association receives foreign contribution for rural education and invests part of it, along with the income from it, in specula…
- Hope Trust, a registered NGO, receives foreign contribution of Rs 50,00,000 in a financial year. Under the Act as given, up to what amount c…
Law relating to Foreign Contribution Regulation in other exams
The same ground in other exams, if you are preparing for more than one or want another angle on it.
Law relating to Foreign Contribution Regulation: frequently asked questions
Is FCRA important for the CS Executive exam?
Yes. It is part of Paper 6, Part I, and the Act is short and rule-based. Questions on conditions, limits and consequences are easy to prepare for if you learn them precisely.
What is the limit on administrative expenses under FCRA?
Under Section 8(1)(b), administrative expenses should not exceed 20 per cent of the foreign contribution received in a financial year. Expenses above that need prior approval of the Central Government.
How long is an FCRA certificate valid?
A certificate of registration granted under Section 12 is valid for five years. Prior permission, by contrast, is valid only for the specific purpose or amount of foreign contribution proposed to be received.
What happens if an FCRA certificate is cancelled?
Under Section 14, the person must first be given a reasonable opportunity of being heard. After cancellation, the person is not eligible for registration or prior permission for three years from the date of cancellation.
How should I write an FCRA answer in the exam?
State the relevant provision in plain words, apply it to the facts given, and end with a clear conclusion that cites the section. Keep it short and structured.