FEMA Update No. 4

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The Central Government recently notified Foreign Contribution (Regulation) Amendment Rules, 2026, making significant changes in the Foreign Contribution (Regulation) Rules, 2011 (‘FCRA Rules’) related to registration of organisations and their compliance obligations. By a separate notification, the Government has also expanded the FCRA penalty/compounding framework to cover speculative investments, diversion or unauthorised utilisation of foreign contribution, and use for purposes or territories not covered by registration.

The Update elaborately covers these changes analysing the changes and their impact. According to the LKS FEMA Team, while these amendments aim to improve transparency and tracking of receipt and utilisation of foreign contribution, the same also enhance compliance obligations for organisations.