FCRA Amendment Bill, 2026: How This May Affect Non-profits

The Foreign Contribution (Regulation) Amendment Bill, 2026 (“2026 Bill”) introduces an important shift in how India regulates foreign funding. At a high level, the message is simple:

If your organisation loses (voluntarily or otherwise) Foreign Contributions Regulation Act, 2010 (“FCRA”) registration, the government now has a clear process to take over

assets created from foreign funds.

This idea is not entirely new but the way it is being implemented is. Indian law has

long taken the view that:

• Charitable assets don’t belong to founders

• They are meant for public purposes

Under the Income Tax Act,1961, if an NGO shuts down, its assets must go to another non-profit or be used for public benefit. Similarly, earlier FCRA (2020 amendment) already said that: assets created from foreign funding could go to the government if registartion is cancelled.

Existing Law on Asset Takeover: 

Section 15 of the FCRA allowed for a designated authority to manage the assets created out of the foreign contribution by an organisation whose FCRA certificate has been cancelled under Section 14 or surrendered under section 14A. The designated authority had the power to utilise the foreign contribution or dispose of the assets created out of it in case adequate funds are not available for running the organisation's activity.

This law only applied if your FCRA registration was cancelled or surrendered, not if you allowed to let it lapse upon the certificate's expiry. The idea was for the designated authority to apply foreign assets towards public good and only dispose them if necessary.

What has changed now:  

The law now clearly lays out how this takeover of foreign contribution and assets acquired under FCRA will happen.

The Bill introduces a system where if your FCRA registartion is:

a) cancelled

b) surrendered

c) or even expires without renewal

your foreign funds and related assets can be taken over by a government-appointed authority.

If your registration is not restored in time:

• This takeover becomes permanent

• Assets can even be:

  - transferred to government bodies

  - or sold with proceeds going to the Consolidated Fund of India

A Big Practical Concern: Mixed Funding Assets 

Many non-profits build assets with a mix of domestic and foreign funding. The 2026 Bill says: Assets created wholly or even partly using foreign funds shall be fully taken over. You can apply to recover the non-foreign portion but only if it is clearly seperable.

In real life, funding is often mixed and ascertaining asset value based on source of funding is not straightforward. This creates uncertainty for organisations that have invested in infrastructure using foreign funds, even if partly. A common example is Land bought with domestic funds with buildings and infrastructure constructed using foreign funds. It is unclear how the designated authority will take over such assets.

Another Tightening: Time Limits on Spending under Prior Permission route 

The Bill also allows the government to set: Deadlines for using foreign funds received under prior approval route. This means:

• Funds must be used not just for the right purpose

• But also, within a fixed time

Together with asset rules, the signals: Foreign funding is being pushed down short-term, programmatic use, rather than long-term investments.

Missed Opportunities

While the Bill is very clear on how the government can take over assets, some everyday issues remain unclear.

• Why speaking orders are on FCRA applications (especially rejections) are not the default?

• Is a foreign share holder of a Section 8 company limited by share capital an FC transaction

• What is the appeal process for administrative rejections?

Pacta's Take: This amendment reflects a consistent idea in Indian law: Assets created for public good is not private property. What's changed is the level of control. The government is now setting up a clear system to step in and manage those assets. For non-profits, this means:

• Pay close attention to FCRA renewals and compliance

• Be cautious about using foreign funds for infrastructure

• Think carefully about how assets are structured