The Foreign Contribution (Regulation) Amendment Bill, 2026 proposes a comprehensive legal framework governing the supervision, protection, management, and control of assets created through foreign contributions. At the heart of this proposed amendment is the introduction of a new statutory authority known as the Designated Authority. It is important to note a significant legal distinction here. Section 15 of the existing Foreign Contribution (Regulation) Act, 2010 already contains provisions regarding the vesting of assets. However, the 2026 Amendment Bill introduces an entirely new Chapter IIIA, establishing a far more elaborate and stringent administrative mechanism governing both the temporary and permanent vesting of such assets.
Under the proposed amendments, where an organisation’s FCRA registration is cancelled, voluntarily surrendered, allowed to lapse without renewal, refused renewal, or otherwise deemed to have ceased under the Act, its assets may initially vest temporarily in the Designated Authority. If the registration is not restored or a fresh registration is not granted within the prescribed period, those assets may permanently vest in the Government. At the same time, the Bill specifically recognises that places of worship must retain their religious character and purpose, and therefore contains a special provision protecting such institutions.
Following widespread concern that the proposed legislation could adversely affect schools, hospitals, convents, and other institutions established over several decades with foreign contributions, the leadership of the Catholic Bishops’ Conference of India (CBCI), together with several Metropolitan Archbishops, met the Union Home Minister. Media reports following the meeting indicated that assurances had been given that the proposed legislation would not have retrospective operation. While this assurance provides some temporary relief to Church institutions, the issue requires a much deeper constitutional analysis.
From the standpoint of constitutional jurisprudence, the absence of the word “retrospective” in the text of a statute does not, by itself, guarantee that previously acquired assets will remain unaffected. In legal interpretation, the nature of legislation is determined not merely by its wording but by its legal effect and practical consequences.
Practical Retrospective Effect
For example, suppose a charitable institution legally received foreign contributions twenty or thirty years ago under the law then in force and used those funds to construct a building. If, under the new legislation, that institution subsequently loses its FCRA registration and the building becomes vested in the Designated Authority, the law would, in practical terms, interfere with rights lawfully acquired in the past.
Constitutional Scrutiny
Even where legislation is not expressly retrospective, constitutional courts generally examine several important questions if it substantially affects vested rights:
ï Does the legislation impose unreasonable restrictions upon legally acquired rights?
ï Does it satisfy the constitutional doctrine of proportionality?
ï Have the affected institutions been afforded adequate safeguards of natural justice?
ï Does the legislation operate in an arbitrary or discriminatory manner?
Consequently, until Parliament enacts the final version of the legislation, it would be legally imprudent to arrive at definitive conclusions solely on the basis of governmental assurances without examining the final statutory text.
One of the most significant practical challenges posed by the proposed Amendment Bill-and one that is likely to generate extensive future litigation-concerns assets created through mixed funding. Most educational and healthcare institutions in India have not been established exclusively with foreign contributions. Consider, for instance, a charitable hospital whose capital investment consists of 80% domestic donations and only 20% foreign contributions.
Legal Complexity of Mixed Funding
Reading the provisions of the proposed Amendment Bill suggests that even where only a portion of an asset has been financed through foreign contributions, the entire asset could, at least prima facie, become subject to temporary vesting. Consequently, institutions may have to establish, through proper documentary evidence, the proportion of domestic funds invested in each asset. This could potentially result in assets worth several crores of rupees, substantially financed through domestic contributions, becoming temporarily immobilised and giving rise to prolonged legal disputes.
Ambiguity Surrounding ‘Proselytisation’ and ‘Religious Conversion’
The Amendment Rules, which came into force on 22 June 2026, introduce restrictive language concerning certain permissible religious activities by incorporating expressions such as “excluding proselytisation” and “excluding religious conversion.” However, a serious legal ambiguity arises because neither the FCRA Act nor the new Rules define the crucial expressions “proselytisation,” “religious conversion,” or “attempt to convert.”
This uncertainty gives rise to several important legal concerns.
Divergent Administrative Interpretations
In the absence of precise statutory definitions, different administrative authorities may interpret identical activities differently. Consequently, similar charitable activities may receive inconsistent treatment in different parts of the country.
Possibility of Divergent Administrative Assessments
Activities such as free educational assistance, medical camps, distribution of sewing machines, relief work, or other humanitarian programmes undertaken by Christian institutions or NGOs may, under certain administrative interpretations, be characterised as inducements for religious conversion. Such interpretations could adversely affect an institution’s FCRA registration.
Constitutional Position
Article 25(1) of the Constitution of India guarantees to every person—not merely citizens—the freedom to profess, practise, and propagate religion. In the landmark judgment Rev. Stainislaus v. State of Madhya Pradesh (1977) 1 SCC 677, the Supreme Court held that while the constitutional right to propagate religion includes the right to disseminate one’s religious beliefs, it does not include a fundamental right to convert another person.
At the same time, the distinction between legitimate religious propagation and conversion through force, fraud, or inducement depends upon the facts of each individual case. The ambiguity contained in the new Rules risks blurring this important constitutional distinction.
Major Changes Introduced by the FCRA (Amendment) Rules, 2026
The new Rules, effective from 22 June 2026, substantially restructure the regulatory framework governing NGOs. The principal changes include the following:
1. Purpose-Based and Geographic Licensing
At the time of application, organisations must specifically declare both their approved objectives and the States or Union Territories where those activities will be carried out.
2. Mandatory Filing of Form FC-6F
Every organisation presently holding FCRA registration must file Form FC-6F within one year of the Rules coming into force (on or before 21 June 2027), declaring the States and purposes for which it intends to continue operations.
3. Incremental Fee Structure
The basic registration fee applies only to one State and one approved purpose. Every additional State or purpose attracts an additional fee of ₹300.
4. Catalogue of 105 Permissible Activities
The Rules annex an extensive list of 105 permissible activities, classified into five principal categories:
Religious, Cultural
Economic, Educational, Social
5. Expanded Definition of “Chief Functionary”
The expression now extends beyond members of the governing body to include directors, trustees, office-bearers, and any person exercising substantial control or management over the organisation.
6. Restriction Relating to Foreign Nationals
As a general rule, organisations whose chief functionaries are foreign nationals of non-Indian origin will not ordinarily be granted FCRA registration or prior permission.
7. “Reasonable Activity” Requirement
For renewal of registration, organisations must demonstrate that they have spent at least ₹10 lakh during the previous two financial years on their approved objectives. Smaller organisations with limited funding may therefore face difficulties during renewal.
8. Seventy-Five Percent Utilisation Requirement
Recipients operating under prior permission must utilise at least 75% of the previously released funds before subsequent instalments are sanctioned. Applications must be made through Form FC-3BB.
9. Ultimate Donor Disclosure
Where funds are channelled through foreign funding agencies or Donor Advised Funds (DAFs), organisations must disclose in their annual return the identity of the ultimate donor from whom the funds actually originated.
10. Digital Footprint and Social Media Disclosure
Organisations must furnish details of their official websites and all social media platforms-including Facebook, Instagram, YouTube, and similar accounts-in the annual Form FC-4 return.
11. Monitoring of Publications
Details of books, articles, publications, media content, or other materials produced either by the organisation or by its chief functionaries, even in their personal capacity, must be disclosed to the Ministry of Home Affairs.
12. Mandatory UDIN in Audit Certificates
Audit certificates submitted by Chartered Accountants must now contain the Unique Document Identification Number (UDIN).
Practical Compliance Measures
Organisations presently registered under the FCRA should ensure that Form FC-6F is submitted on or before 21 June 2027, clearly identifying their approved purposes and geographical areas of operation.
Institutions should maintain meticulous accounting records distinguishing domestic funds from foreign contributions with respect to every immovable asset so that the source of funding can be clearly demonstrated if required.
Since the expressions “proselytisation” and “religious conversion” remain undefined in law, organisations receiving foreign contributions should exercise exceptional caution while drafting internal records, grant agreements, project reports, publicity materials, and social media content. Terminology capable of being misunderstood or misinterpreted should be carefully avoided, and all activities should be consistently documented as charitable, educational, humanitarian, or social welfare initiatives.
Organisations should also review the composition of their governing bodies. Where foreign nationals occupy positions that may now fall within the expanded definition of “Chief Functionary,” the institution should carefully examine whether constitutional or administrative restructuring is required to ensure compliance with the amended Rules.
Adv. Saju Jacob
(Advocate, Supreme Court of India)
